TIDMANW
RNS Number : 9862W
Aberdeen New Thai Inv Trust PLC
29 April 2021
ABERDEEN NEW THAI INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEARED 28 FEBRUARY 2021
FINANCIAL HIGHLIGHTS
Ordinary share price Net asset value per Stock Exchange of
total return{A} Ordinary share total Thailand Index total
return{A} return
+4.5% +1.2% +10.1%
2020 -18.7% 2020 -16.6% 2020 -12.8%
Earnings per Ordinary Total dividend per
share (revenue) Ordinary share
14.6p 19.0p
2020 19.77p 2020 19.0p
{A} Alternative Performance Measure.
FINANCIAL CALAR
Payment dates of dividends 26 November 2020
25 June 2021
Financial year end 28 February 2021
Online Shareholder Presentation and 'Question 8 June 2021
and Answer' session
Annual General Meeting (functional only) 17 June 2021
Expected announcement of results for year ended May 2022
28 February 2022
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
"The Investment Manager has been particularly active over the
year, making some significant changes to reposition the portfolio
in order to benefit from good quality companies that are poised for
a turnaround."
Background and Results
For the year ended 28 February 2021 (the "Year"), the Stock
Exchange of Thailand Index ("SET Index") posted a total return of
10.1% in sterling terms. As was the case across most global
markets, Thai equities far outstripped the real economy, which was
severely hampered by the lockdown restrictions designed to counter
the spread of the COVID-19 pandemic ("COVID-19"). The outbreak of
COVID-19 saw the Prime Minister declare a state of emergency in
Thailand that remained in force throughout 2020, and continues to
remain so. This has devastated the tourism sector, which accounts
for almost a fifth of the Thai economy and also hurt manufacturing,
another key sector. Similar to most economies around the world,
Thailand's GDP contracted during 2020, falling by 6.1%. Despite the
difficult economic climate, the Thai stock market rebounded towards
the end of the Year, propelled by optimism that the rollout of
COVID-19 vaccines would bring forward a turnaround.
Against this backdrop, your Company's net asset value ("NAV")
per Ordinary share rose by only 1.2% on a total return basis,
whereas the Ordinary share price total return was 4.5%, with
dividends reinvested. Stock markets around the world focused on
technology and internet-related 'growth' stocks which market
exuberance rerated to steep or excessive valuations. Cyclical
'value' stocks performed poorly until the last quarter of the Year
when hopes of a post COVID-19 economic recovery spurred investor
interest. Your Company had a relatively poor showing compared to
the SET Index, and the Investment Manager discusses this in greater
detail in the Investment Manager's Report.
Earnings and Dividend
In total, the revenue earnings per Ordinary share were 14.6p for
the Year (2020 - 19.8p), a decrease of 26.4%, reflecting the severe
impact of COVID-19 on corporate earnings. An interim dividend of
8.0p per share (2020 - 8.0p) was paid to shareholders on 26
November 2020. The Board is declaring a second interim dividend per
Ordinary share of 11.0p (2020 - second interim dividend of 11.0p),
taking total dividends per share for the year to 19.0p (2020 -
19.0p). This unchanged total payment of 19.0p, which is in part
funded by a transfer from revenue reserves, represents a yield of
4.4% based on the 28 February 2021 share price of 433.0p. The
second interim dividend will be paid on 25 June 2021 to
shareholders on the register as at 28 May 2021, with an ex-dividend
date of 27 May 2021.
Overview
The Company's relative performance disappointed during the Year.
In particular, a surge in the SET Index in the last four months,
which reflected excess liquidity as governments and central banks
rushed to inject money into the global financial system, failed to
benefit the majority of the Company's holdings.
Investors drove stock prices higher on anticipation that the
heralded vaccine rollouts around the globe would hasten the end of
COVID-19. This greater appetite for risk supported a shift towards
riskier, more cyclical stocks and valuations exceeded actual market
fundamentals.
The Investment Manager has been particularly active over the
Year, making some significant changes to reposition the portfolio
in order to benefit from good quality companies that it believes
are poised for a turnaround and continues to adjust the composition
of the underlying holdings. The Investment Manager has increased
the portfolio's exposure to energy and utility holdings that have
recently benefited from the rise in energy prices and higher
demand. The Company's ownership of key financial holdings, that
traditionally pay out higher dividends and have proven resilient so
far, has also been increased. As such, the Company's portfolio is
strategically positioned to benefit from the rotation into these
value-driven stocks. Meanwhile, your Investment Manager has pared
back holdings that are more interest rate sensitive and less
resilient. You will find further information about these portfolio
changes in the Investment Manager's Report.
Gearing
During the Year, the Company maintained its loan of GBP10m (2020
- GBP10m) drawn down from its GBP15 million total facility with
Industrial and Commercial Bank of China Limited, London Branch,
which expires in October 2021. The net gearing level of 10.9% was
unchanged over the Year.
Discount and share buybacks
The Board continues to monitor closely the discount of the
Ordinary share price to the NAV per Ordinary share (including
income) and pursues a policy of selective buybacks of shares where
to do so is in the best interests of shareholders whilst also
having regard to the overall size of the Company. In pursuit of
this objective during the Year, the Company bought back and
cancelled 367,127 Ordinary shares (2020 - 92,338 Ordinary shares),
representing 2.2% (2020 - 0.6%) of the Company's issued share
capital at the start of the Year. An additional 127,930 Ordinary
shares were bought back for cancellation between 1 March 2021 and
the date of approval of this Annual Report resulting in 15,995,506
Ordinary shares in issue, with voting rights.
Duration
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 NAV (calculated including undistributed net revenue)
over the same period, notice will be given of a special resolution
to be proposed at the following AGM that the Company be put into
voluntary liquidation. Over the 12 weeks ended 28 February 2021,
the Company traded at an average discount of 12.5% and,
accordingly, no special resolution to wind up the Company will be
put to shareholders at the upcoming AGM.
I also note the Board's continuing commitment to providing
shareholders with an investment proposition of producing relative
outperformance of the Company's benchmark over the long term. As I
related in my Statement last year, should the performance over the
three years to 28 February 2023 not show outperformance of the SET
Index, the Board will undertake a full review of the Company's
investment management arrangements which may include, but is not
limited to, an option for shareholders to redeem shares for
cash.
Integration of Environmental Social and Governance ("ESG")
factors
There is growing evidence that suggests that ESG factors, when
integrated into investment analysis and portfolio construction, may
offer investors long-term performance advantages. The Board and
Investment Manager believe that ESG considerations should
ultimately help minimise the portfolio's exposure to non-financial
risks such as severe weather events, climate change, water risk,
supply chain risk and corruption, and this process should also help
identify compelling investment opportunities in new technologies
and robust, future-proofed companies with high standards of
governance. We outline our Investment Manager's ESG commitment and
investment approach below, followed by two case studies of
portfolio companies with strong ESG credentials.
Promotional Activities
Your Board is committed to regular and effective communication
with all stakeholders and continues to promote the Company through
the Manager's promotional activities, to which the Company
contributed GBP58,500 (excluding VAT) during the year ended 28
February 2021 (2020 - GBP58,500, excluding VAT). The Board reviews
regularly these promotional activities and encourages the Manager
to promote the benefits of the Company to a wider audience.
The Company's website and wider digital presence continues to be
enhanced. The Manager's investment trusts, including the Company,
may now be followed, on LinkedIn
(linkedin.com/company/aberdeen-standard-investment-trusts) and on
Twitter (twitter.com/AberdeenTrusts).
AGM
The Board has been watching closely the ongoing impact of the
COVID-19 pandemic upon the arrangements for the Company's upcoming
AGM on 17 June 2021. At the time of writing, Government advice
means that shareholder attendance at AGMs is not legally
permissible. It is very difficult to predict the extent to which
the current restrictions may be relaxed in the near future.
Accordingly, in order to provide certainty, whilst encouraging and
promoting interaction and engagement with our shareholders, the
Board has decided to hold an interactive Online Shareholder
Presentation (the "Presentation") at 9.30 am on Tuesday 8 June
2021. During the Presentation, shareholders will receive updates
from the Chairman and Investment Manager followed by an interactive
question and answer session. After the Presentation, shareholders
will have until 9.30am on 15 June 2021 to submit their proxy votes
prior to the AGM and I would encourage all shareholders to lodge
their votes in advance in this manner. Full details on how to join
the Presentation, including how to register, may be found at
www.workcast.com/register?cpak=1312670648328941
The Presentation will be available for viewing on the Company's
website shortly after 8 June 2021.
The AGM will, by necessity, be a functional only AGM, and will
be held at 9.30am on 17 June 2021 at Bow Bells House, 1 Bread
Street, London EC4M 9HH. Arrangements will be made by the Company
to ensure that the minimum number of shareholders required to form
a quorum will attend the meeting in order that the meeting may
proceed and the business be concluded. The Board considers these
arrangements to be in the best interests of shareholders given the
current circumstances.
The Board strongly discourages shareholders from attending the
AGM on 17 June 2021 and entry will be refused if Government
guidance so requires or if the Chairman considers it to be
necessary. Instead, shareholders are encouraged to exercise their
votes in respect of the meeting in advance. Any questions from
shareholders who are unable to join the Presentation on 8 June 2021
may be submitted by email to: New.Thai@aberdeenstandard.com. The
Board and/or the Manager will seek to respond to all such questions
received either before, or after the AGM.
On behalf of the Board I should like to thank shareholders in
advance for their co-operation and understanding and I very much
look forward to presenting to shareholders on 8 June 2021.
Outlook
The recent approval and arrival in Thailand of the Chinese-made
Sinovac Biotech vaccine, together with access to the AstraZeneca
vaccine in the second half of the Year, is positive news. Whilst
this points to a return to normality in 2022 and 2023, there will
be bumps along the way as evidenced currently by a new wave of
Covid-19 infections and the relatively slow rollout of vaccinations
nationally.
While domestic consumption is on the rebound, aided by fiscal
stimulus, the recovery in exports is still elusive, as is the
recovery of international tourism. Both will come and I am thus
cautiously optimistic that Thai equities will keep to their
recovery path after the low point reached in March 2020.
Thai companies have held steady through the crisis thus far,
through prudent cost management, healthy cash flow positions and
robust balance sheets.
On the political front, while anti-government protests have been
a recurrent theme over the last year, upheaval is not new in the
Kingdom's political landscape. Although I expect these popular
demands to continue, the stock market has proved remarkably
resilient in the past despite this period of unrest.
Over the last ten years Thai equities have delivered total
returns in sterling terms of 149.8%, as measured by the SET Index
whilst the Company has provided shareholders with a NAV return of
116.6% and share price total return of 133.4%. While the Year has
not been good in relative terms, I continue to have confidence in
your Manager's ability to position the portfolio for the better
days ahead.
Nicholas Smith,
Chairman
28 April 2021
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 investment policy is flexible enabling it to
invest in a diversified portfolio of securities (substantially in
the form of equities or equity-related securities such as
convertible securities and warrants but which may also include debt
securities) issued by companies, spread across a range of
industries, which are either (i) quoted on the SET or (ii) that are
unquoted and at, or near, initial public offering stage. There are
no restrictions on which market segment or geographical region
within Thailand that the Company may invest nor whether its
investments are in small, mid or large capitalisation
companies.
Risk Diversification
The Company's portfolio will comprise no less than 10 holdings
and the Investment Manager will at all times have due regard to the
spread of investment risk.
The Investment Manager is authorised to invest up to 10% of the
Company's net assets in the securities of any single company
although circumstances may occasionally arise when it may be in
shareholders' interests to make an investment that exceeds this
level.
The Investment Manager is authorised to invest in unquoted
securities provided that such investment, in aggregate, is limited
to 10% of the Company's net assets at the time any investment is
made.
The Company complies with Section 1158 of the Corporation Tax
Act 2010. The Company will not invest more than 10%, in aggregate,
of the value of its gross assets in investment trusts or investment
companies whose shares are admitted to listing on the London Stock
Exchange, provided that this restriction does not apply to
investments in any such investment trusts or investment companies
which themselves have stated investment policies to invest no more
than 15% of their gross assets in other investment trusts or
investment companies admitted to the Official List. In any event,
the Company invests no more than 15% of its gross assets in other
listed investment companies (including listed investment
trusts).
In addition, the Company will not:
-- invest in physical commodities;
-- enter into derivative transactions for speculative purposes;
-- take legal or management control of any of its investee companies; or
-- conduct any significant trading activity.
Gearing
The Board is responsible for setting the gearing limits in place
for the Company subject to a maximum level of 25% of net assets
(measured when new borrowings are incurred). It is intended that
this power should be used to leverage the Company's portfolio in
order to enhance returns when and to the extent that it is
considered appropriate to do so. Gearing will be tactical in nature
and used in relation to specific opportunities or circumstances.
The Directors will take care to ensure that borrowing covenants
permit maximum flexibility of investment policy.
Benchmark
The Company's benchmark is the Stock Exchange of Thailand Index
("SET Index") in sterling-adjusted total return terms.
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to
assess the Company's success in achieving its objective and to
determine 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 return The Board considers the Company's NAV capital
of the and total return figures, relative to the SET
Net Asset Value ("NAV") Index, to be the best indicator of performance
relative over time. The figures for this financial year
to the SET Index and for the past three and five years are set
out in the published Annual Report and a graph
showing NAV total return performance against
the SET Index over the past ten years is shown
in the published Annual Report.
------------------------ ------------------------------------------------
Discount to NAV The discount at which the Company's share price
trades relative to the NAV (including income)
per share is closely monitored by the Board.
A graph showing the discount over the last
five years is shown in the published 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 above.
------------------------ ------------------------------------------------
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, including emerging 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 which is available from the Company's website:
newthai-trust.co.uk.
The principal risks and uncertainties faced by the Company are
reviewed at least annually by the Audit and Management Engagement
Committee in the form of a detailed risk matrix and heat map and
are summarised in the table below, together with any mitigating
actions. In addition the Board has identified two emerging risks
which it considers are likely to become more relevant for the
Company in the future. Namely the implications for the Company's
investment portfolio of a changing climate, and the longer term
prospect of volatility in international trade relations as a
consequence of a more assertive foreign policy by the US towards
both China and Russia. The Board assesses these emerging risks as
they develop and will consider how the Company may mitigate these
risks if they become material.
The key risk facing the Company during the year was the outbreak
of COVID-19 which caused significant economic disruption and
contributed to global stock market volatility. The Manager, on
behalf of the Board, sought assurances from its key service
providers, as well as its own operations, that they were each
invoking business continuity procedures and appropriate contingency
arrangements to ensure that they were able to continue to meet
their contractual obligations to the Company.
Other than as set out above, the Company's principal risks and
uncertainties have not changed materially since the date of
approval of the Annual Report and are not expected to change
materially for the current financial year.
Description Mitigating Action
Discount volatility - being the risk The Board has agreed with the Manager
that the Company's share price may certain parameters within which
fluctuate and vary considerably from the Company may buy back its own
the underlying NAV of the Ordinary shares bearing in mind that the
shares. External factors which may Company's operating costs would
influence the discount include market be spread across a reduced number
conditions, general investor sentiment of shares. These parameters are
and the interaction of supply and reviewed on an ongoing basis. Any
demand for the Ordinary shares. shares repurchased may be either
cancelled or held in treasury.
Dividends - the Company will only The Board monitors this risk by
pay a dividend on the Ordinary reviewing and challenging, at each
shares to the extent that it has meeting, short and longer-term
profits or revenue reserves available income forecasts prepared by the
for that purpose. The ability of Investment Manager covering portfolio
the Company to pay a dividend, investment yield as well as the
and any future dividend growth, expected operating costs of the
will depend primarily on the level Company. The Company benefits from
of income received from its investments. revenue reserves which may be drawn
Accordingly, the amount of the upon to smooth dividends payable
dividends paid to Ordinary shareholders to shareholders where there is
may fluctuate. a shortfall in revenue returns.
Financial and Gearing - the financial The financial risks associated
risks associated with the portfolio with the Company include market
could result in losses to the Company. risk, liquidity risk and credit
risk, all of which are mitigated
Whilst the use of gearing should by the Investment Manager. Further
enhance the total return on the details of the steps taken to mitigate
Ordinary shares where the return the financial risks associated
on the Company's underlying assets with the portfolio are set out
is rising and exceeds the cost in note 16 to the financial statements.
of borrowing, it will have the The Board is responsible for determining
opposite effect where the underlying the gearing strategy for the Company,
return is less than the cost of with day-to-day gearing decisions
borrowing, further reducing the being made by the Investment Manager.
total return on the Ordinary shares. Borrowings are short term in nature
A fall in the value of the Company's and particular care is taken to
investment portfolio could result ensure that any bank covenants
in a breach of bank covenants and permit maximum flexibility of investment
trigger demands for early repayment. policy. The Board has agreed certain
gearing restrictions with the Manager
and reviews compliance with these
guidelines at each Board meeting.
Loan agreements are entered into
following review by the Company's
lawyers.
Foreign exchange risks - the Company The Company's multi-currency bank
accounts for its activities and facility permits borrowings to
reports its results in sterling be drawn down in certain non-sterling
while investments are made and currencies if required. The Board
realised in Thai baht; bank borrowings monitors the Thai baht/sterling
are presently denominated in sterling. exchange rate at each meeting.
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, including the level of
investment income.
Investment objective - the setting The Board keeps the investment
of an unattractive strategic proposition objective and policy under regular
to the market and the failure to review. An annual strategy meeting
adapt to changes in investor demand is held by the Board including
may lead to the Company becoming the review of reports from the
unattractive to investors, a decreased Manager's investor relations team
demand for its shares and a widening and updates on the market from
discount. the Company's broker.
Liquidity risk - this is the risk Liquidity risk is not considered
that the Company will encounter to be significant as, whilst liquidity
difficulty in meeting obligations is limited in certain stocks which
associated with financial liabilities. the Company holds, the majority
In addition, the Company may accumulate of the Company's assets comprise
investment positions which represent readily realisable securities which
more than normal daily trading can be sold to meet funding requirements
volumes which may make it difficult if necessary. The Board reviews,
to realise investments quickly. at each meeting, the liquidity
profile of the Company's investment
portfolio.
Operational and Cyber - the Company The Board receives reports from
has contracted with third parties the Manager biannually on internal
for the provision of all systems controls and risk management and
and services (in particular, those receives equivalent assurances
of the Standard Life Aberdeen Group) from all its other significant
and any control failures and gaps service providers on at least an
in these systems and services could annual basis. This includes monitoring
result in a loss or damage to the by the Manager, on behalf of the
Company. Board, of service providers' planning
for business continuity and disaster
recovery, together with their policies
and procedures designed to address
The Directors have evaluated the the risk posed to the Company's
financial position of the Company operations by cyber-crime. Further
with particular attention to the details of the internal controls
economic and social impacts of which are in place are set out
COVID-19. As indicated in the Chairman's in the Audit and Management Engagement
Statement, COVID-19 presented significant Committee's Report. The depositary,
challenges both to Thailand and BNP Paribas Securities Services,
the rest of the world. The Board presents at least annually on the
takes comfort from the Investment Company's compliance with AIFMD.
Manager's selection of stocks with The Board notes that there were
robust balance sheets and resilient a number of potential risks stemming
business models. from COVID-19 which may have affected
the operations of the Company.
These included investment risks
surrounding the Thai companies
in the portfolio such as employee
absence, reduced demand, lower
turnover and supply chain breakdowns.
The Manager will continue to assess
the performance of the underlying
investee companies, together with
their responses to COVID-19, and
be pro-active in taking investment
decisions where necessary.
The Manager, on behalf of the Board,
has sought assurances from its
key service providers, as well
as its own operations, that they
are each invoking business continuity
procedures and appropriate contingency
arrangements to ensure that they
are able to continue to meet their
contractual obligations to the
Company. The Manager has communicated
these assurances to the Board as
part of regular updates since the
Company's year end which, to date,
have indicated no interruption
of service.
Performance risk - being the risk The Investment Manager seeks to
that the portfolio, managed by diversify market risk by investing
the Investment Manager, suffers in a wide variety of companies
a fall in its market value which with strong balance sheets and
would have an adverse effect on the earnings power to pay increasing
shareholders' funds. The Company's dividends. In addition, investments
investments are subject to normal are made in diversified sectors
market fluctuations and the risks in order to reduce the risk of
inherent in the purchase, holding a single large exposure; at present
or selling of equity securities the Investment Manager may not
and there can be no assurance that invest more than 10% of the Company's
appreciation in the value of those net assets in any single stock.
investments will occur. The Investment Manager is authorised
The Investment Manager's investment to invest in unquoted securities
process concentrates on a company's provided that such investment,
business strategy, management, in aggregate, is limited to 10%
financial strength and ownership of the Company's net assets at
structure as well as evaluating the time any investment is made,
relevant Environmental, Social which assist with diversifying
and Governance ("ESG") factors, stock-specific market risk.
with a view to seeking companies The Investment Manager believes
that it can invest in for the long that diversification should be
term. This quality test means that looked at in absolute terms rather
there are stocks listed on the than relative to the SET Index.
SET Index which the Investment The performance of the portfolio
Manager will not invest in due relative to the SET Index and the
to a perceived lack of transparency underlying stock weightings in
or poor ESG scores. the portfolio against their index
weightings are monitored closely
by the Board.
Political risk and exchange controls Given the nature of the risks to
- in common with the majority of which the Company's investments
Asian stock markets, investments are subject, which are those inherently
in Thailand are subject to a greater associated with a single-country
degree of political risk than that fund, there are limited options
with which investors might be familiar. available to the Board for mitigating
In addition, investments purchased these risks. The Board believes
by the Company may be subject, that mitigation is best effected
in the future, to exchange controls by careful selection of the constituents
or withholding taxes in the Thai of the Company's portfolio with
jurisdiction. In the event that high-calibre, financially-sound
exchange controls or withholding companies, with good management
taxes are imposed with respect and excellent growth potential.
to any of the Company's investments, The Manager is well-placed to achieve
the effect will generally be to this through its team of investment
reduce both the income received managers based in Bangkok, supported
by the Company from its investments by colleagues in Singapore.
and/or the capital value of the Investment in Thai equities involves
affected investments. a greater degree of risk than that
usually associated with investment
in major securities markets. Through
regular interaction with the Manager
and other commentators, the Board
stays up-to-date with the latest
political and economic news in
Thailand.
Regulatory and Governance - failure The Board is responsible for ensuring
to comply with relevant regulation the Company's compliance with applicable
(including the Companies Act, the regulations. Monitoring of this
Financial Services and Markets compliance, and regular reporting
Act, the Alternative Investment to the Board thereon, has been
Fund Managers Directive, accounting delegated to the Manager. The Board
standards, investment trust regulations receives updates from the Manager
and the Listing Rules, Disclosure and AIC briefings concerning industry
Guidance and Transparency Rules changes. From time to time, the
and Prospectus Rules) may have Company also employs external advisers
an adverse impact on the Company. covering specific areas of compliance.
Any change in the Company's tax
status or in taxation legislation
(including the tax treatment of
dividends or other investment income
received by the Company) could
affect the value of the investments
held by the Company and the Company's
ability to provide returns to shareholders The Company sets out in the published
or alter the post-tax returns to Annual Report its compliance with
shareholders. the AIC Code on Corporate Governance,
In addition, a failure of corporate published in February 2019.
governance by the Board, in terms
of its duty to act in the best
interests of all shareholders,
could be to the disadvantage of
the Company. Corporate governance
extends to all aspects of the operation
of the Board including its membership,
the indirect effect of reputational
damage as well as covering its
external responsibilities to the
Company's stakeholders in the widest
sense.
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 Aberdeen
Standard Investments on behalf of a number of investment companies
under its management. The Company's financial contribution to the
programme is matched by Aberdeen Standard Investments.
Representatives of Aberdeen Standard Investments report quarterly
to the Board with analysis of the promotional activities as well as
with updates on the shareholder register and any changes in its
composition.
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 Aberdeen
Standard Investments investor relations programme which involves
regional roadshows as well as promotional and public relations
campaigns.
Board Diversity Policy
The Board recognises the importance of having a range of
skilled, experienced individuals with the right knowledge
represented on the Board in order to allow the Board to fulfil its
obligations. The Board also recognises the benefits, and is
supportive, of the principle of diversity in its recruitment of new
Board members however it does not consider appropriate the setting
of diversity targets. As at 28 February 2021 there were two male
Directors and two female Directors (2020: two male Directors and
two female Directors).
Our Focus on Environmental, Social and Governance ("ESG")
Environment
The Company has no material 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. The Investment Manager is mindful of the
environmental policies of portfolio companies and seeks to ensure
that all investee companies comply with both international and
regional environmental regulations.
Social
The Company has no employees as the Board has delegated day to
day management and administrative functions to ASFML. There are
therefore no disclosures to be made in respect of employees.
Governance
The Board acknowledges the risks associated with investment in
companies which fail to conduct business responsibly. The Board has
noted the corporate stewardship and sustainability programme of
Aberdeen Standard Investments, which can be found at:
aberdeenstandard.com/en/responsible-investing.
The Manager integrates ESG research and analysis across its
investment process and further information may be found below.
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
(the "Review Period") is an appropriate period over which to
report. The Board considers that the Review Period reflects a
balance between looking out over a long term horizon and the
inherent uncertainties of looking out further than three years.
In assessing the viability of the Company over the Review
Period, the Directors have assessed the following factors:
-- the Company's principal risks and uncertainties as set out in the Strategic Report above;
-- the relevance of the Company's investment objective;
-- the demand for the Company's shares indicated by the level of premium and/or discount;
-- the level of income generated by the Company's portfolio as compared to its expenses;
-- the overall liquidity of the Company's investment portfolio; and
-- the GBP15m multi-currency revolving credit facility, which is
repayable in October 2021, and any requirement for the Company to
repay or refinance the drawn-down element of the credit facility
prior to, or at, its maturity date.
In addition, the Board has considered that significant economic
or stock market volatility, or further regulatory uncertainty,
could have an impact on its assessment of the Company's prospects
and viability in the future.
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 in particular
the potential short and longer term impact of COVID-19, in the form
of a large economic shock, a period of significant stock market
volatility, a significant reduction in the liquidity of the
portfolio or changes in investor sentiment, and how these factors
might affect 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 2022 and 12 weeks ended 28 February 2023, individually,
will not exceed 15%. This would negate the requirement to put a
special resolution to wind up the Company to shareholders at the
AGMs to be held in either 2022 or 2023.
Future
Further details on the Directors' expectations regarding the
future, may be found in the Chairman's Statement and the Investment
Manager's views are included in its Report.
On behalf of the Board
Nicholas Smith,
Chairman
28 April 2021
PROMOTING THE SUCCESS OF THE COMPANY
The Board requires to report on how it has discharged, under
section 172 of the Companies Act 2006, its duty to promote the
success of the Company for the benefit of its members
(shareholders) as a whole, taking into account the likely long term
consequences of its decisions, the need to foster relationships
with the Company's stakeholders, and the impact of the Company's
operations on the environment. In addition the Board must act
fairly between shareholders and be cognisant of maintaining the
reputation of the Company. The following focusses on the year under
review but forms part of the application of these duties over this
and successive reporting periods.
The Purpose of the Company and Role of the Board
The purpose of the Company is to act as a vehicle to provide,
over time, financial returns (both income and capital) to its
shareholders. Investment trusts, such as the Company, are long-term
investment vehicles and are typically externally managed, have no
employees, and are overseen by an independent non-executive board
of directors.
The Board, which during the year comprised four independent
non-executive Directors with a broad range of skills and experience
across all major functions that affect the Company, retains
responsibility for taking all decisions relating to the Company's
investment objective and policy, gearing, corporate governance and
strategy, and for monitoring the performance of the Company's
service providers.
The Board's philosophy is that the Company should operate in a
transparent manner where all parties are treated with respect as
well as the opportunity to offer practical challenge and
participate in positive debate which is focused on the aim of
achieving the expectations of shareholders and other stakeholders
alike. The Board reviews the culture and manner in which the
Manager operates at its regular meetings and receives regular
reporting and feedback from the key service providers.
The Company's main stakeholders are Shareholders, the Manager,
Investee Companies, Service Providers, Debt Providers and the
Environment and Community.
How the Board Engages with Stakeholders
The Board considers its stakeholders at Board meetings and
receives feedback on the Manager's interactions with them.
Stakeholder How the Board Engages
------------------------- ---------------------------------------------------------------
Shareholders Shareholders are key stakeholders and the Board
places great importance on communication with them.
The Board welcomes all shareholders' views and aims
to act fairly between all shareholders. The Manager
and Company's broker regularly meet with current
and prospective shareholders to discuss performance
and shareholder feedback is discussed by the Directors
at Board meetings. Regular updates are provided
to shareholders through the Annual Report, Half
Yearly Report, Manager's monthly factsheets, company
announcements, including daily net asset value announcements,
and via the Company's website.
The Company's AGM normally provides a forum, both
formal and informal, for shareholders to meet and
discuss issues with the Board and Investment Manager.
The Chairman's Statement sets out the particular
arrangements which the Company has had to adopt
for the next AGM in light of COVID-19 and includes
details of how Shareholders may submit questions
to the Board and Manager in advance of the AGM and
also join an interactive Online Shareholder Presentation
on 8 June 2021. However, to encourage and promote
interaction and engagement with shareholders, the
Board has decided to hold an interactive Online
Shareholder Presentation at 9.30 am on Tuesday 8
June 2021. Full details on how to join the Presentation
are set out in the Chairman's Statement.
The Board hopes to welcome shareholders to the AGM
next year.
------------------------- ---------------------------------------------------------------
Manager The Investment Manager's Report details the key
investment decisions taken during the year. The
Investment Manager has continued to manage the Company's
assets in accordance with the mandate provided by
shareholders, with the oversight of the Board.
The Board regularly reviews the Company's performance
against its investment objective and the Board undertakes
an annual strategy review to ensure that the Company
is positioned well for the future delivery of its
objective for its stakeholders.
The Board receives presentations from the Investment
Manager at every Board meeting to help it to exercise
effective oversight of the Investment Manager and
the Company's strategy.
The Board, through the Audit and Management Engagement
Committee, formally reviews the performance of the
Manager at least annually.
------------------------- ---------------------------------------------------------------
Investee Companies Responsibility for actively monitoring the activities
of portfolio companies has been delegated by the
Board to the Manager which has sub-delegated that
authority to the Investment Manager. The Board has
also given discretionary powers to the Investment
Manager to exercise voting rights on resolutions
proposed by the investee companies within the Company's
portfolio. The Manager reports on a quarterly basis
on stewardship (including voting) issues.
Through engagement and exercising voting rights,
the Investment Manager actively works with companies
to improve ESG.
------------------------- ---------------------------------------------------------------
Service Providers The Board seeks to maintain constructive relationships
with the Company's suppliers, either directly or
through the Manager, through regular meetings and
review of KPI reporting. The Audit and Management
Engagement Committee conducts an annual review of
the performance, terms and conditions of the Company's
main service providers to ensure they are performing
in line with Board expectations and providing value
for money.
------------------------- ---------------------------------------------------------------
Debt Providers On behalf of the Board, the Manager maintains a
positive working relationship with Industrial and
Commercial Bank of China, the provider of the Company's
GBP15m multi-currency loan facility, ensuring compliance
with its loan covenants and arranging for regular
updates for the lender on the Company's business
activities, where requested.
------------------------- ---------------------------------------------------------------
Environment and Community The Board and Manager are committed to investing
in a responsible manner and the Investment Manager
integrates ESG considerations into its research
and analysis as part of the investment decision-making
process.
------------------------- ---------------------------------------------------------------
Specific Examples of Stakeholder Consideration During the
Year
While the importance of giving due consideration to the
Company's stakeholders is not new, and is considered as part of
every Board decision, the Directors were particularly mindful of
stakeholder considerations during the following decisions
undertaken during the year ended 28 February 2021.
Share Buy Backs
During the year the Company bought back and cancelled 367,127
shares, providing a small accretion to the NAV per share and a
degree of liquidity to the market at times when the discount to the
NAV per share had widened in normal market conditions. It is the
view of the Board that this policy is in the interest of all
shareholders.
ESG
The Board is responsible for overseeing the work of the
Investment Manager and this is not limited solely to the investment
performance of the portfolio companies. The Board also has regard
for environmental, social and governance matters that subsist
within the portfolio companies. The Board is supportive of the
Investment Manager's pro-active approach to ESG engagement.
PERFORMANCE 1 year 3 year 5 year
return return return
% % %
--------------------------------------------- -------- -------- --------
Total return (capital return plus dividends
reinvested)
Share price{A} +4.5 -18.2 +23.7
Net asset value{A} +1.2 -19.9 +19.3
SET Index +10.1 -7.7 +55.2
Capital return
Share price -0.2 -26.9 +6.1
Net asset value -2.7 -27.2 +4.8
SET Index +6.8 -16.0 +32.4
--------------------------------------------- -------- -------- --------
{A}Alternative Performance Measure
Source: Aberdeen Standard Investments,
Morningstar & Lipper
FINANCIAL HIGHLIGHTS 28 February 28 February % change
2021 2020
--------------------------------------------- ------------ ---------------- ------------
Total assets (GBP'000) 91,612 95,787 -4.4
Equity shareholders' funds (net assets)
(GBP'000) 81,612 85,787 -4.9
Market capitalisation (GBP'000) 69,814 71,569 -2.5
Ordinary share price 433.00p 434.00p -0.2
Net asset value per Ordinary share (capital
value) 506.17p 520.22p -2.7
Discount to net asset value per Ordinary
share {A} 14.5% 16.6%
Stock Exchange of Thailand ("SET") Index
(Sterling adjusted, capital return) 35.53 33.26 +6.8
Net gearing {A} 10.85% 10.89%
Dividends and earnings
Revenue return per share 14.56p 19.77p -26.4
Total dividends per share 19.0p 19.0p -
Dividend cover {A} 0.77 1.04
Revenue reserves (prior to payment of
second interim dividend) (GBP'000) {B} 3,592 4,328
Operating costs
Ongoing charges ratio {A} 1.27% 1.30%{C}
--------------------------------------------- ------------ ---------------- ------------
{A} Considered to be an Alternative Performance Measure
{B} Reflects dividends paid during the year.
{C} Revised from 1.24% to include costs associated with holding collective
investment schemes, in accordance with current AIC guidance.
DIVIDS
Rate Ex-dividend Record date Payment date
date
------------------------- ------ ------------ ------------ -------------
Second interim dividend 11.0p 27 May 2021 28 May 2021 25 June 2021
2021
First interim dividend 8.0p 29 October 30 October 26 November
2021 2020 2020 2020
------------------------- -------------
Total 2021 19.0p
------------------------- ------ ------------ ------------ -------------
Second interim dividend 11.0p 28 May 2020 29 May 2020 26 June 2020
2020
First interim dividend 8.0p 24 October 25 October 22 November
2020 2019 2019 2019
------------------------- ------ ------------ ------------ -------------
Total 2020 19.0p
------------------------- ------ ------------ ------------ -------------
TEN YEAR FINANCIAL RECORD
Year to 28 February 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
---------------------- ------- -------- ------- -------- ------- -------- -------- -------- ------- -------
Total revenue
(GBP'000) 2,961 2,934 3,715 3,546 3,573 3,894 3,945 4,165 4,355 3,264
---------------------- ------- -------- ------- -------- ------- -------- -------- -------- ------- -------
Per share (p)
Net revenue
return 8.87 7.39 8.73 8.20 8.89 10.31 11.12 18.50 19.77 14.56
Net dividends
paid/proposed 8.00 7.00 8.00 8.20 8.50 10.30 11.10 18.00 19.00 19.00
Net asset value 387.73 569.58 418.64 542.49 483.03 600.22 694.80 641.45 520.22 506.17
Ordinary share
price 311.25 537.50 353.75 458.25 408.00 510.00 592.00 552.00 434.00 433.00
---------------------- ------- -------- ------- -------- ------- -------- -------- -------- ------- -------
Equity shareholders'
funds (GBP'000) 72,106 120,873 87,175 112,640 95,932 111,212 117,168 106,371 85,787 81,612
---------------------- ------- -------- ------- -------- ------- -------- -------- -------- ------- -------
INVESTMENT MANAGER'S REPORT
Overview
Thai equities rose in the year ended 28 February 2021 (the
"Year"), rebounding from the disruption caused by the state of
emergency to contain the COVID-19 pandemic at the beginning of the
Company's financial year. The unprecedented fiscal stimulus and
monetary easing introduced worldwide, as well as the more recent
vaccine rollout, helped share prices in the broader region to
recover in the final quarter of the year. However, Thai stocks
lagged as travel curbs temporarily crippled its large tourism
sector. Separately, severe droughts heightened concerns around the
kingdom's crucial agricultural exports. On the political front,
pro-democracy protests in Bangkok also muted sentiment, alongside
worries of a potential influx of refugees from Myanmar following
the military coup.
Unsurprisingly, Thailand's GDP contracted by 6.1% in 2020,
largely a result of nationwide curfews in the initial stages of the
pandemic. The government's policy response included tax relief,
loan repayment moratoriums, soft loans for small and medium-sized
enterprises, aid for the tourism-related and medical sectors, as
well as cash handouts for individuals.
Energy stocks rallied with the return of crude oil prices to
pre-pandemic levels. China's 2060 carbon-neutral goal and the
electric vehicle boom further lifted prospects for alternative
energy power producers and related industrials.
The financial sector rebounded with the relaxation of lockdown
measures in October. Levels of non-performing loans were lower than
expected, against substantial loan provisioning made earlier in the
Year. Moreover, the Bank of Thailand removed the restrictions that
had been imposed on dividend payments by financial institutions,
signalling that the risk of high levels of bad debt had abated.
This led to hopes that net interest margins would improve, given
the lower credit cost to lenders and central banks' shift away from
last year's monetary easing.
Portfolio
Your Company's net asset value returned 1.2% in sterling total
return terms for the Year, whereas the benchmark Stock Exchange of
Thailand index ("SET Index") rose by 10.1%.
This was disappointing and due principally to the portfolio's
positioning. Your Company's holdings lagged the SET Index,
primarily owing to the volatility witnessed in utilities earlier in
the Year, followed by an unprecedented rally in the technology
sector towards the end of the financial year.
A significant detractor to performance was the lack of exposure
to Delta Electronics (Thailand) ("Delta") whose share price soared
over seven-fold in the Year on optimism generated by accelerated
global electronics demand, such as from data centres. This was
compounded by the relatively low free float which restricted the
availability of Delta's shares. Despite the promising growth
prospects, we believe the company's share price had become
excessively optimistic. At its share price peak, Delta's market
capitalisation exceeded even that of its parent company and major
shareholder. Within this peer group, we prefer Hana
Microelectronics as being more sensibly valued and offering quality
exposure to consumer electronics and microelectronics demand,
particularly in mobile devices, which continue to grow at a robust
rate.
In the energy sector, your Company's sizeable exposure proved
costly, and again, the pandemic was the primary factor in
disrupting these infrastructure investments. At the stock level,
Electricity Generating Public Co lagged as a relatively low growth
outlook limited its capacity to pay dividends. The company's
well-diversified portfolio includes natural gas, coal, biomass,
hydro, solar, wind and geothermal fuel sources, but a lack of
clarity around its expansion plans weighed on its share price.
Nevertheless, we remain optimistic about the company as we believe
its robust balance sheet and cash flow, as well as solid
shareholder backing, should help it overcome these concerns.
Moreover, it offers exposure to projects across various countries
in the Asia Pacific rim. Encouragingly, its portfolio investments
support Thailand's transition to a lower carbon economy which, in
the longer term, stands to benefit from the push towards ambitious
climate targets by regional governments.
Conversely, mitigating the poor performance were the Company's
holdings in the services sector, which remains the portfolio's
largest sectoral exposure. Haad Thip's new and efficient
soft-drinks factory, as well as other productivity improvements,
supported its share price. The company is the sole bottler and
distributor of Coca-Cola in southern Thailand, as well as the
market leader for non-alcoholic drinks. It remained financially and
operationally sound throughout the pandemic and was able to
maintain its dividend.
Another services holding that performed well was Mega
Lifesciences, which manufactures prescription drugs,
over-the-counter products and nutraceuticals. Not only has it
developed an extensive local network, but it also offers exposure
to interesting emerging and frontier markets, including Myanmar,
Vietnam, and Cambodia. The company experienced robust revenue
growth, supported by recurring orders from hospitals. Near term
concerns arising from COVID-19 also boosted the sales of health
supplements.
In the financial sector, we were encouraged that the overall
asset quality of the portfolio's underlying holdings was
maintained, defying the slow economic turnaround. Reported earnings
from both Tisco Financial Group and AEON Thana Sinsap beat market
expectations with a sharp decline in provisions for bad debts.
Portfolio Changes
We actively monitor about a hundred stocks, ranging from
regional leaders to smaller ones that have the potential of
evolving into larger companies over time. Our stock-picking process
screens out many others that fail to meet our stringent quality
criteria.
The prospect of a global economic recovery came with a greater
risk appetite. During the past six months, our work on smaller
companies which began about three years back bore fruit. Having
been laggards for a few years, small caps in Asia finally began to
rise faster than large caps during the second half of the Year. We
took the opportunity to take profits from small cap holdings that
had a good run, including top contributors such as Haad Thip, Mega
Lifesciences, Hana Microelectronics, AEON Thana Sinsap and Thai
Stanley Electric. We also made use of the small cap rally to exit
ThaiRe Life and Dynasty Ceramic, and sell off illiquid names such
as Siam City Cement and Krungthai Car. Against these, we built up
positions which we believe are poised to benefit when the Kingdom
emerges from the pandemic-related restrictions, which is likely to
lift companies in the financial, retail and cyclical sectors.
In the financial sector, we took the opportunity to increase our
high conviction positions, while selling companies with less
resilient balance sheets. Among these additions were Kasikornbank,
which we see as being best-placed to take advantage of the shift
towards digital banking. We also increased our holding in Bangkok
Bank, which we believe offers the strongest asset quality in an
uncertain economic outlook.
Among the smaller companies, we introduced insurance broker TQM
Corp and added to Tisco Financial. TQM started as a non-life
insurance business before developing new business channels in other
fragmented insurance segments. We believe its large client base of
over a million domestic customers and digital platforms will help
it gain market share. Additionally, we like its solid balance
sheet, low debt and steady premium growth.
Two new holdings with interesting growth stories bought by the
Company stemmed from the boom in online shopping. We initiated a
holding in Kerry Express Thailand, an integrated logistics services
provider with extensive networks across Southeast Asia. We also
subscribed to the initial public offer of SCG Packaging, a
subsidiary of Siam Cement Group, which the Company already owns.
SCG Packaging offers exposure to the recovery in domestic
consumption via packaging products and services, including in
Vietnam and Indonesia. The company has put resources into
developing a diverse range of packaging products using high-quality
and eco-friendly materials. We also introduced CP All, the
undisputed leader of Thailand's convenience retail sector. Its
7-Eleven master franchise has over 10,000 outlets across the
kingdom. Its other notable business segments include retail
warehouse operator Siam Makro and the recently acquired hypermarket
chain Tesco Lotus.
We also adjusted the Company's resources holdings to benefit
from higher energy and water consumption. New companies purchased
included WHA Utilities and Power, Gulf Energy Development and B
Grimm Power (see the case study below).
In the first six months of the Year, we introduced Airports of
Thailand and Intouch Holdings, the major shareholder of Thailand's
largest mobile network operator Advanced Info Service, another
portfolio company. Against these, to reduce some financial risk
where balance sheets were more highly geared or business models
less resilient in the wake of the pandemic, we sold completely
Asset World Corporation, Banpu, Banpu Power, Bumrungrad Hospital,
Interhides, Krungthai Car, LPN Development, Dynasty Ceramic, Siam
City Cement, Kiatnakin Bank, Siam Commercial Bank, and ThaiRe Life
Assurance.
Outlook
Thai equities are likely to benefit from the rotation from
sectors in North Asian markets with lofty valuations into cyclical
stocks in the domestic market. The government has done well in
curbing the spread of COVID-19 early in the pandemic, although the
risks of new infections remain including a resurgence of cases in
April. As the world learns to manage new outbreaks, the rollout of
vaccines globally should eventually lead to a revival of the
tourist trade, boosting the economy. We believe the portfolio is
well-positioned for a domestic recovery and leveraged growth
through banks and other financials, and via its balanced exposure
to energy and utilities. Moreover, exports are benefiting from
higher activity levels among its trading partners, including China,
Japan, the US and Vietnam. In the longer term, the country is
expected to gain from its membership of the Regional Comprehensive
Economic Partnership, the world's largest trading bloc, formed in
late 2020. Its membership includes China, several developed
economies in the Asia Pacific, as well as certain other countries
in Southeast Asia and Indochina.
Importantly, we have continued to intensify our Environmental,
Social and Governance ("ESG") engagement with portfolio companies,
including Siam Cement and CP All, and encourage all of our investee
companies to improve their disclosures in this regard. This should
improve their ratings where it can be demonstrated that businesses
have a responsible and more sustainable proposition. Your Company
currently has an ESG ranking of 'AA' from ratings agency MSCI which
is higher than that of 'A' for the SET Index.
Thailand is home to many outstanding businesses and is also the
gateway to a handful of rapidly-growing frontier markets, including
Cambodia, Laos, Myanmar and Vietnam. As such, the Company is poised
to benefit from their transformation, with many Thai corporates
already positioned to become regional leaders. Investment due
diligence is conducted by experienced professionals in Thailand,
and supported by regional sector specialists as well as third-party
resources. As long-term investors, we remain confident that the
portfolio's high-quality underlying holdings, with steady credit
lines, robust balance sheets, strong cash flow and prudent
management will stand the Company in good stead beyond the current
global health crisis.
Aberdeen Standard Investments (Asia) Limited,
Investment Manager
28 April 2021
INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS
As at 28 February 2021
PTT Public Company CP All
Thailand's national energy company, The sole operator of 7-Eleven
with interests in upstream operations convenience stores in Thailand.
via PTT Exploration and Production It has exposure to cash and carry
(PTTEP), gas transmission pipelines, operator Siam Makro, while its
refineries, petrochemicals, power investment in Tesco's Thai and
generation and downstream oil trading Malaysian operations provides
and marketing. longer-term growth opportunities.
Airports of Thailand Advanced Info Service
Operator of six airports in Thailand Thailand's largest mobile operator,
including Bangkok, Chiang Mai and which is targeting prepaid-to-postpaid
Phuket generating income from aeronautical migration and accelerated 5G adoption
and non-aeronautical activities, to drive revenue growth, backed
the latter including rents, services by a strong network and solid
and concessions. balance sheet.
Central Pattana Tisco Financial Group
Thailand's largest developer of A financial services group focused
shopping malls, with related businesses on retail lending, in particular
in offices and, more recently, hire purchase and car loans. Its
residential property development. capital buffer, dividend and return
It is a unit of conglomerate Central on equity are among the highest
Group. across its peers.
Bangkok Dusit Medical Services Osotspa
Operator of the largest private A leading beverages and personal
hospital network in Thailand, BDMS care producer in Thailand and
provides exposure to rising domestic neighbouring countries including
demand for healthcare. Cambodia, Laos and Myanmar.
Home Product Center Siam Cement
The leading retailer of building Thailand's largest industrial
materials and home improvement conglomerate with operations in
products in Thailand, with more petrochemicals, cement, paper
than 90 stores nationwide. and building materials with operations
in Bangladesh, Cambodia, Sri Lanka
and Vietnam as well as in Thailand.
INVESTMENT PORTFOLIO - OTHER INVESTMENTS
As at 28 February 2021
Valuation Total Valuation
2021{A} assets 2020{A}
Company Sector GBP'000 % GBP'000
-------------------------------- ----------------------------- ---------- ------- ----------
PTT Public Company Energy & Utilities 6,109 6.7 6,792
CP All Commerce 5,288 5.8 -
Airports of Thailand Transportation & Logistics 5,284 5.8 -
Information & Communication
Advanced Info Service Technology 4,684 5.1 4,905
Central Pattana Property Development 4,258 4.6 4,069
Tisco Financial Group Banking 4,127 4.5 2,215
Bangkok Dusit Medical Services Health Care Services 3,612 3.9 3,301
Osotspa Food & Beverage 3,431 3.7 3,853
Home Product Center Commerce 3,397 3.7 3,830
Siam Cement Construction Materials 3,272 3.6 3,612
-------------------------------- ----------
Top ten investments 43,462 47.4
--------------------------------------------------------------- ---------- ------- ----------
Kasikornbank Banking 3,070 3.4 2,437
Bangkok Bank Banking 2,826 3.1 2,324
B Grimm Power Energy & Utilities 2,811 3.1 -
Toa Paint Construction Materials 2,711 3.0 2,698
PTT Exploration & Production Energy & Utilities 2,649 2.9 2,813
Land & Houses{B} Property Development 2,602 2.8 3,929
Mega Lifesciences Commerce 2,477 2.7 2,397
Bangkok Insurance Insurance 2,438 2.7 3,413
Thai Stanley Electric Automotive 2,426 2.6 2,813
Gulf Energy Energy & Utilities 2,244 2.4 -
-------------------------------- ----------
Top twenty investments 69,716 76.1
--------------------------------------------------------------- ---------- ------- ----------
Aeon Thana Sinsap Finance & Securities 2,140 2.3 3,809
Hana Microelectronics Electronic Components 1,915 2.1 2,470
Electricity Generating Energy & Utilities 1,849 2.0 2,031
SCG Packaging Packaging 1,722 1.9 -
Information & Communication
Intouch Holdings Technology 1,697 1.9 -
Siam Global House Commerce 1,678 1.8 952
Minor International {C} Food & Beverage 1,501 1.7 2,702
Central Retail Commerce 1,477 1.6 1,291
Haad Thip Food & Beverage 1,186 1.3 1,519
Tesco Lotus Retail Growth
Freehold & Leasehold Property
Fund (Local market shares) Property Fund & REITS 1,037 1.1 1,981
-------------------------------- ----------
Top thirty investments 85,918 93.8
--------------------------------------------------------------- ---------- ------- ----------
WHA Utilities Energy & Utilities 1,006 1.1 -
Eastern Water Resources
Development & Management Energy & Utilities 904 1.0 2,496
Goodyear (Thailand) Automotive 777 0.8 748
TQM Corporation Insurance 712 0.8 -
Kerry Express Transportation & Logistics 699 0.8 -
Muang Thai Insurance Insurance 480 0.5 1,066
-------------------------------- ----------
Total investments 90,496 98.8
--------------------------------------------------------------- ---------- ------- ----------
Net current assets{D} 1,116 1.2
--------------------------------------------------------------- ----------
Total assets 91,612 100.0
--------------------------------------------------------------- ---------- ------- ----------
{A} Purchases and/or sales effected during the
year will result in 2020 and 2021 values not
being directly comparable.
{B} Holding includes investment in both common
stock and non-voting depositary receipts.
{C} Holding includes investment in both common stock and warrants.
{D} Excludes bank loans of GBP10,000,000.
Note: Unless otherwise stated, foreign stock is held.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ENGAGEMENT
Whilst the management of the Company's investments is not
undertaken with any specific instructions to exclude certain asset
types or classes, the Investment Manager embeds Environmental,
Social and Governance ("ESG") factors into the research of each
asset class as part of the investment process. ESG investment is
about active engagement, in the belief that the performance of
assets owned by the Company can be improved over the longer
term.
What is ESG, and why do we do it?
ESG considerations have been an integral part of the Investment
Manager's decision-making process for almost 30 years. The
Investment Manager believes that ESG factors are financially
material and can meaningfully affect a company's performance.
Hence, a company's ability to generate returns sustainably for
investors depends on the management of its environmental impact,
its consideration of the interests of society and all stakeholders,
and on the way it is governed. By putting ESG factors at the heart
of its investment process, the Investment Manager aims to generate
better outcomes for the Company's shareholders. The three factors
can be considered as follows:
-- Environmental factors relate to how a company conducts itself
with regard to environmental conservation and sustainability. Types
of environmental risks and opportunities include a company's energy
consumption, waste disposal, land development and carbon footprint,
among others.
-- Social factors pertain to a company's relationship with its
employees and suppliers. Risks and opportunities can include (but
are not limited to) a company's initiatives on employee health and
well-being, and how supplier relationships align with corporate
values.
-- Corporate governance factors can include the corporate
decision-making structure, independence of board members, the
treatment of minority shareholders, executive compensation and
political contributions, among others.
At the investment stage, ESG factors and analysis help to frame
where best to invest by considering material risks and
opportunities alongside other financial metrics. Due diligence can
ascertain whether such risks are being adequately managed, and
whether the market has understood and priced them accordingly.
The Investment Manager is an active owner, voting at shareholder
meetings in a deliberate manner, working with companies to drive
positive change, and engaging with policymakers on ESG and
stewardship matters.
Can we measure it?
There are elements of ESG that can be quantified, for example
the diversity of a board, the net carbon impact of a company, and
the level of employee turnover. While diversity can be monitored,
measuring inclusion is more of a challenge. Although it is possible
to measure the level of staff turnover, it is more challenging to
quantify corporate culture. Relying on calculable metrics alone
would lead potentially to misleading insights. As active managers,
quantitative and qualitative assessments are blended to better
understand the ESG performance of a company.
The Investment Manager's analysts consider such factors in a
systematic and globally-applied approach to assess and compare
companies consistently on their ESG credentials, both regionally
and against their peer group. Some of the key questions asked of
companies include:
-- How material are ESG issues for this company, and how are they being addressed?
-- What is the quality of this company's governance, ownership structure and management?
-- Are incentives and key performance indicators aligned with
the company's strategy and the interests of shareholders?
The questions asked differ from company to company; the type of
questions poised to a bank would be quite different from those of a
semiconductor manufacturing firm. Having considered the regional
universe and peer group in which the company operates, an ESG score
is assigned ranging from 1 to 5. This proprietary ESG score is
applied to every stock within the Manager's investment
universe.
The ESG Scoring System
Having considered the regional universe and peer group in which
a company operates, the Investment Manager allocates it an ESG
score between one and five. This is applied across every stock
covered globally. Examples of each category and a small sample of
the criteria used are detailed below:
1. Best in class ESG considerations are a material part of the company's
core business strategy.
Excellent disclosure.
Makes opportunities from strong ESG risk management.
2. Leader ESG considerations are not market-leading.
Disclosure is good, but not best in class.
Governance is generally very good.
---------------------------------------------------------
3. Average ESG risks are considered in the normal course of the
company's business.
Disclosure in line with regulatory requirements.
Governance is generally of a high standard but some
minor concerns.
---------------------------------------------------------
4. Below average Evidence of some financially material controversies.
Poor governance or limited oversight of key ESG issues.
Some issues in treating minority shareholders poorly.
---------------------------------------------------------
5. Laggard Many financially material controversies.
Severe governance concerns.
Poor treatment of minority shareholders.
---------------------------------------------------------
Climate Change
Climate change is one of the most significant challenges of the
21st century and has big implications for investors. The energy
transition is underway in many parts of the world, and policy
changes, falling costs of renewable energy, and a change in public
perception are happening at a rapid pace. Assessing the risks and
opportunities of climate change is a core part of the investment
process. In particular, the Investment Manager considers:
· Transition risks and opportunities
Governments could take robust climate change mitigation actions
to reduce emissions and transition to a low-carbon economy. This is
reflected in targets, policies and regulation and can have a
considerable impact on high-emitting companies.
· Physical risks and opportunities
Insufficient climate change mitigation action will lead to more
severe and frequent physical damage. This results in financial
implications, including damage to crops and infrastructure, and the
need for physical adaptation such as flood defences.
The Investment Manager has aligned its approach with that
advocated by the investor agenda of the Principles for Responsible
Investment ("PRI") - a United Nations-supported initiative to
promote responsible investment as a way of enhancing returns and
better managing risk.
The PRI provides an intellectual framework to steer the massive
transition of financial capital towards a more sustainable global
economy. It also encourages fund managers to demonstrate climate
action across four areas: investments; corporate engagement;
investor disclosure; and policy advocacy as explained below:
FOCUS OBJECTIVE AIM
--------------------
Investments Research & Data Provide high quality climate-change Provide relevant
insights and thematic research high-quality
across asset classes and regions. data and insights
This includes using climate-related on climate-change
data as an input into the trends, risks
investment process. and opportunities
that are fully
integrated
into our decision
making and
drive positive
outcomes for
our clients
----------------------- ----------------------------------------- -------------------
Investment Integration Understand the potential impacts
of climate-change risks and
opportunities across regions
and sectors, integrate these
into our investment decisions
and understand the implications
for our portfolios.
----------------------- ----------------------------------------- -------------------
Client Solutions Understand client needs in
relation to climate change
and low-carbon product demand.
Develop innovative climate-related
client solutions and products
across all asset classes.
----------------------- -----------------------------------------
Corporate Investee Engagement Better understands investee
Engagement & Voting exposure and management of
climate change risks and opportunities.
Influence investee companies
on management of climate change
risks and opportunities via
engagement and voting. Highlight
expectation to apply the Task
Force on Climate-related Financial
Disclosures ("TCFD") framework
when reporting on climate-related
data.
----------------------- -----------------------------------------
Policy Advocacy Collaboration Collaborate with climate-change-related
& Influence industry associations and
participate in relevant initiatives.
Engage with peers and policymakers
to drive industry developments
and best practice.
----------------------- -----------------------------------------
Investor Disclosure Disclosure Disclose climate-change-related
data using the TCFD reporting
framework across the four
pillars: governance, strategy,
risk management, metrics and
targets.
----------------------- ----------------------------------------- -------------------
Importance of Engagement
The Investment Manager is committed to regular, ongoing
engagement with the companies in which it invests, to help to
maintain and enhance their ESG standards into the future.
As part of the investment process, the Investment Manager
undertakes a significant number of company meetings each year on
behalf of the Company. Your Company is supported by on-desk ESG
analysts, as well as a well-resourced specialist ESG Investment
team. These meetings provide an opportunity to discuss various
relevant ESG issues including board composition, remuneration,
audit, climate change, labour issues, human rights, bribery and
corruption. Companies are strongly encouraged to set clear targets
or key performance indicators on all material ESG risks.
ESG engagements are conducted with consideration of the 10
principles of the United Nations Global Compact, and companies are
expected to meet fundamental responsibilities in the areas of human
rights, labour, the environment and anti-corruption.
This engagement is not limited to a company's management team.
It can include many other stakeholders such as non-government
agencies, industry and regulatory bodies, as well as activists and
the company's customers and clients.
ESG CASE STUDIES
B.Grimm Power
What does the company do?
B.Grimm Power is one of the largest decentralised power
producers in Thailand, supporting the industrial sector and
economic growth in Southeast Asia. It builds and operates gas-fired
and renewable energy plants in Thailand, Laos, Cambodia, Vietnam,
the Philippines and South Korea. It is owned by multinational
conglomerate, B.Grimm Group, which has been in existence for over a
century.
What is the company's environmental impact?
Co-generation power plants, which lower energy costs and carbon
footprint, comprise about two-thirds of B.Grimm Power's portfolio.
Such facilities recycle heat when electricity is generated and are
installed near the point of consumption to reduce energy loss
during distribution to end-users. The other one third of its power
generating assets focus on renewable energy, such as
hydroelectricity, solar energy and wind. The power producer does
not use coal-fired energy, which is a major source of air pollution
and greenhouse gas emissions.
The environmental importance of B.Grimm's work was evidenced by
Asian Development Bank financing of the company's certified climate
bond for a mega-sized solar farm in Vietnam. Separately, this is
the first major Thai power utility to officially announce a target
for Net Zero Carbon Emission by 2050.
What are its investment merits and competitive advantage?
B.Grimm Power grew its net operating profits by 21% last year
despite the adverse impact of COVID-19. The healthy earnings
profile is driven by an under-penetrated industrial market and
overseas expansion. Being more reliable and cost-effective than the
national grid, the company sees untapped potential in converting
factories to its power supply service. It also operates some of the
largest solar projects in Vietnam, which is the fasting-growing
Southeast Asian market for renewable energy investments. We believe
B.Grimm Power's reputation and track record will help it to
maintain a good project pipeline for expansion in the region.
CP ALL
What does the company do?
CP ALL is a retail chain business and the sole operator of
7-Eleven convenience stores in Thailand. With around 11,640 stores
nationwide, it is the dominant convenience store operator in the
country. It has also diversified its business through its various
subsidiaries, offering services such bill payment collections,
information technology and logistics and maintenance for retail
equipment. In 2013, CP ALL acquired Siam Makro, which operates
membership-based Cash-and-Carry trade centres, while in 2020 it
bought hypermarket chain Tesco Lotus, with its network of over
2,000 stores across Thailand.
How does the company rate in ESG terms and what is our
interaction?
CP ALL has clear and well defined guidelines that support its
environmental, social and governance goals. The company's key goals
in terms of environmental sustainability are with regard to supply
chain management and materials resourcing. It is aware of the
impacts on the environment of its business operations throughout
the value chain, and is committed to reducing the negative impacts
arising from business operations, as well as from its products and
services. For example, the company began rethinking its beverages
packing (coffee cups and lids), it replaced plastic straws with
paper ones and installed bins for waste separation at all stores.
Since January 2020, it ceased providing plastic bags at its
7-Eleven stores nationwide. This also resulted in a cost saving of
800 million baht.
In terms of corporate governance, we engaged with CP ALL to
better understand the improvements made to its internal controls
since an insider trading incident seven years ago. We were pleased
with the progress, most notably the establishment of a corporate
governance committee, which is also responsible for sustainability
issues. Separately, we also used the opportunity to encourage
better disclosure for issues, such as product safety and quality,
carbon emissions, and raw material sourcing. There have also been
encouraging discussions on increasing both board independence and
diversity of skillsets, which were well received. We are encouraged
by CP ALL's response and will continue our dialogue on these
issues.
CP ALL was rated "excellent" according to the Corporate
Governance Report of Thai-listed companies published in 2020 by the
Thai Institute of Directors' Association.
What are the company's investment merits and competitive
advantage?
CP ALL is a defensive consumer holding with improving sales and
resilient margins. Like other consumer holdings it was hurt by the
pandemic, with lower footfall and tighter margins pressuring sales
growth. We expect that improving consumption trends will fuel CP
ALL's earnings growth momentum.
DIRECTORS' REPORT
The Directors present their Report and the audited financial
statements of the Company for the year ended 28 February 2021,
taking account of any events between the year end and the date of
approval of this Report.
Results and Dividend
The financial statements for the year ended 28 February 2021
indicate a total return attributable to shareholders of GBP543,000
(2020 - loss of GBP16,937,000).
The Directors declared an interim dividend per share of 8.0p
(2020 - 8.0p), payable on 26 November 2020 to shareholders on the
register as at 30 October 2020 with an ex-dividend date of 29
October 2020.
The Directors are declaring a second interim dividend per share
of 11.0p (2020 - second interim dividend of 11.0p per share) to be
paid on 25 June 2021 to shareholders on the register on 28 May
2021. The ex-dividend date is 27 May 2021.
Investment Trust Status
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 2021.
Individual Savings Account
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, Buybacks and Voting Rights
During the year ended 28 February 2021 the Company bought back
and cancelled 367,127 Ordinary shares (2020 - 92,338 Ordinary
shares). As at 28 February 2021, the Company's issued share capital
consisted of 16,123,436 Ordinary shares (2020 - 16,490,563 Ordinary
shares) with each share holding one voting right in the event of a
poll. An additional 127,930 Ordinary shares were bought back for
cancellation between 1 March 2021 and the date of approval of this
Annual Report resulting in 15,995,506 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.
Manager and Company Secretary
The Company has appointed Aberdeen Standard Fund Managers
Limited ("ASFML"), part of the Standard Life Aberdeen Group, as its
alternative investment fund manager. ASFML has been appointed to
provide the Company with investment management, risk management,
administration, company secretarial services and promotional
activities. The Company's portfolio is managed by Aberdeen Standard
Investments (Asia) Limited ("ASIAL"), by way of a group delegation
agreement in place between ASFML and ASIAL. In addition, ASFML has
sub-delegated promotional activities to Aberdeen Asset Managers
Limited ("AAM") and administrative and secretarial services to
Aberdeen Asset Management PLC (the "Company Secretaries").
Until 28 February 2020, the management fee was charged to the
Company on the following basis: a monthly fee, payable in arrears,
calculated at an annual rate of 0.9% of NAV, with a rebate to the
Company for any fees received in respect of any investments by the
Company in investment vehicles managed by the Standard Life
Aberdeen Group.
From 1 March 2020, the management fee is charged to the Company
on the following basis: a monthly fee, payable in arrears,
calculated at an annual rate of 0.9% of the Company's market
capitalisation, with a rebate to the Company for any fees received
in respect of any investments by the Company in investment vehicles
managed by the Standard Life Aberdeen Group (see Note 4 to the
financial statements). In addition, there is an annual cap which
limits the management fee to the equivalent of 1.15% of NAV,
calculated monthly.
The fees payable to ASFML during the year ended 28 February 2021
are disclosed in Notes 4 and 5 to the financial statements. The
investment management fees and bank loan interest costs were
charged 25% to revenue and 75% to capital during the year ended 28
February 2021 (2020: 25%/75%).
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. There are no performance fee
arrangements.
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 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.
Accordingly, 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.
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 principles identified in the UK Corporate Governance Code
published in July 2018 (the "UK Code") for the year ended 28
February 2021. The UK Code is available on the Financial Reporting
Council's ("the FRC") website: frc.org.uk.
Governance
The Board has also considered the principles and recommendations
of the AIC Code of Corporate Governance as published in February
2019 ("the AIC Code"). 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 from theaic.co.uk, the AIC's website.
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 (provision 9);
-- the need for an internal audit function (provision 25); and
-- executive directors' remuneration and establishment of a
remuneration committee (provision 33 and provisions 35 to 40).
For the reasons set out in the AIC Code 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.
Directors
The Board consists of a non-executive Chairman and three
non-executive Directors. The Senior Independent Director is Andy
Pomfret.
The Directors attended scheduled Board and Committee meetings
during the year ended 28 February 2021 as follows (with their
eligibility to attend the relevant meeting in brackets):
Director Board Meetings Audit and Management Nomination Committee
Engagement Committee Meetings
Meetings
Nicholas Smith 4 (4) 3 (3) 2 (2)
=============== ====== ====== ======
Andy Pomfret 4 (4) 3 (3) 2 (2)
=============== ====== ====== ======
Sarah MacAulay 4 (4) 3 (3) 2 (2)
=============== ====== ====== ======
Anne Gilding 4 (4) 3 (3) 2 (2)
--------------- ------ ------ ------
There were an additional three meetings of a Committee of the
Board during the year. One of the Board meetings held during the
year included a focus on strategic matters including review of the
relevance to investors of the Company's investment objective and
policy, consideration of feedback from retail and institutional
shareholders, an assessment of the future prospects for the Company
and a review of the Company's longer term performance and the
associated terms of the management agreement with ASFML.
The names and biographies of each of the Directors are shown in
the published Annual Report 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 as a whole to provide clear and effective leadership and
proper stewardship of the Company.
The Directors have agreed a tenure policy that the Chairman of
the Board should not serve as a Director beyond the Annual General
Meeting following the ninth anniversary of their appointment to the
Board. However, this period may be extended in exceptional
circumstances, or to facilitate effective succession planning and
the development of a diverse Board. The Company announced
previously that, in accordance with the implementation of this
policy, the Board had expected the current Chairman, Nicholas
Smith, to retire from the Board at the AGM due in June 2022,
following the ninth anniversary of his appointment as a Director in
March 2022. However, the other Directors, led by Andy Pomfret as
Senior Independent Director, have determined that it is in the best
interests of shareholders that Nicholas Smith defer his retirement
pending the conclusion of the three year performance measurement
period which is due to end on 28 February 2023, which was announced
in the Annual Report for the year ended 28 February 2020 (see the
Chairman's Statement).
All of the Directors will retire at the AGM in 2021 in
accordance with the AIC Code. Nicholas Smith, Andy Pomfret, Sarah
MacAulay and Anne Gilding, all being eligible, offer themselves for
individual re-election as Directors of the Company. The Board as a
whole believes that each Director standing for re-election remains
independent of the Manager 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, each Director's individual performance
continues to be effective and demonstrates commitment to the role.
In support of their re-election as Directors at the AGM each Board
member's individual contribution is set out in the published Annual
Report. The Board therefore has no hesitation in recommending the
re-election as Directors of Nicholas Smith, Andy Pomfret, Sarah
MacAulay and Anne Gilding at the AGM.
The Role of the Chairman and Senior Independent Director
The Chairman is responsible for providing effective leadership
to the Board, by setting the tone of the Company, demonstrating
objective judgement and promoting a culture of openness and debate.
The Chairman facilitates the effective contribution of, and
encourages active engagement by, each Director. In conjunction with
the Company Secretary, the Chairman ensures that Directors receive
accurate, timely and clear information to assist them with
effective decision-making. The Chairman acts upon the results of
the Board evaluation process by recognising strengths and
addressing any weaknesses and also ensures that the Board engages
with major shareholders and that all Directors understand
shareholder views.
The Senior Independent Director acts as a sounding board for the
Chairman and acts as an intermediary for other directors, when
necessary. The Senior Independent Director takes responsibility for
an orderly succession process for the Chairman and leads the annual
appraisal of the Chairman's performance. The Senior Independent
Director is also available to shareholders to discuss any concerns
they may have.
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
Standard Life Aberdeen Group also takes a zero-tolerance approach
and has its own detailed policy and procedures in place to prevent
bribery and corruption.
In relation to the corporate offence of failing to prevent tax
evasion, it is the Company's policy to conduct all business in an
honest and ethical manner. The Company takes a zero-tolerance
approach to facilitation of tax evasion whether under UK law or
under the law of any foreign country and is committed to acting
professionally, fairly and with integrity in all its business
dealings and relationships.
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 published 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 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 and the Auditor, in
connection with the financial statements, appear in the published
Annual Report.
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. This confirmation is given and should be
interpreted in accordance with the provisions of section 418 of the
Companies Act 2006.
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.
Substantial Interests
As at 28 February 2021 the following were registered, or had
notified the Company, as being interested in 3% or more of the
voting rights for the Company's Ordinary share capital:
Shareholder Number of shares held % held
------------------------------------------------------------------ ---------------------- -------
City of London Investment Management 4,535,652 28.1
================================================================== ====================== =======
Funds managed by Standard Life Aberdeen plc 2,329,834 14.4
================================================================== ====================== =======
Lazard Asset Management 3,241,585 13.8
================================================================== ====================== =======
Aberdeen Investment Trust ISA and Share Plans (non-discretionary) 1,738,213 10.8
================================================================== ====================== =======
Ohio PERS 1,015,846 6.8
================================================================== ====================== =======
Interactive Investor (non-discretionary) 640,582 4.0
================================================================== ====================== =======
Hargreaves Lansdown (non-discretionary) 622,831 3.9
------------------------------------------------------------------ ---------------------- -------
The above share interests were unchanged as at the date of
approval of this Report other than in relation to the following
notifications, with the date of notification to the Company shown
in brackets:
Shareholder Number of shares held % held
-------------------------------------------- ---------------------- -------
Funds managed by Standard Life Aberdeen plc
(25 March 2021) 2,068,904 12.9
============================================ ====================== =======
City of London Investment Management
(1 April 2021) 4,638,902 29.0
============================================ ====================== =======
Lazard Asset Management
(2 April 2021) 2,264,559 14.1
-------------------------------------------- ---------------------- -------
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 investments 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.
In October 2018, the Company entered into a GBP15m three-year
multi-currency revolving loan facility ("the Facility") with
Industrial and Commercial Bank of China Limited, London Branch of
which GBP10m was drawn down under the Facility at 28 February
2021.
In advance of expiry of the Facility in October 2021, the
Company will enter into negotiations with its bankers. 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.
The Directors are mindful of the principal risks and
uncertainties and emerging risks disclosed in the Overview of
Strategy and in note 16 to the financial statements. Having given
careful consideration to market developments since the end of the
financial year, including the continued impact of COVID-19, the
Directors believe that the Company has adequate financial resources
to continue in operational existence for at least twelve months
from the date of this Report. 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 (including income) 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 2021, the
Ordinary shares traded at an average discount of 12.5% to the
underlying NAV per share (including income), therefore no such
resolution will be put to the Company's shareholders at the
forthcoming AGM.
Independent Auditor
As explained in the Audit and Management Engagement Committee's
Report, the Directors will propose resolutions at the AGM to
re-appoint Deloitte LLP as auditor for the year to 28 February 2022
and to authorise the Directors to determine Deloitte LLP's
remuneration.
Disclosures in Strategic Report
The Company has chosen, in accordance with section 414C(11) of
the Companies Act 2016 to include, in the Strategic Report likely
future developments in the Company's business as well as
information relating to the Company's greenhouse gas emissions, and
in note 16 to the financial statements, information concerning the
Company's use of financial instruments.
The UK Stewardship Code and Proxy Voting
Responsibility for actively monitoring the activities of
portfolio companies has been delegated by the Board to the Manager
which has sub-delegated that authority to the Investment Manager.
The Directors note the corporate stewardship and sustainability
programme of the Standard Life Aberdeen Group, which can be found
at -
standardlifeaberdeen.com/corporate-stewardship-and-sustainability.
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
Manager's Customer Services Department. The Company responds to
shareholder correspondence.
The Board's policy is to communicate directly with shareholders
and their representative bodies without the involvement of Aberdeen
Standard Investments 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.
Special Business at the AGM
The AGM will be held on 17 June 2021 and the AGM Notice and
related notes may be found in the published Annual Report.
Resolutions relating to the following items of special business
will be proposed at the AGM:-
Authority to Allot Relevant Securities
Ordinary Resolution 10 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 1.6m Ordinary shares). Such
authority will expire on the date of the AGM in 2022 or on 31
August 2022, whichever is earlier. This means that the authority
will have to be renewed at the AGM in 2022.
Limited Disapplication of Pre-emption Provisions
Resolution 11, 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 12 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
10, Resolution 11 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 1.6m Ordinary shares) other than according to the
statutory pre-emption rights.
Such authority, which will expire on the date of the earlier of
the AGM in 2022 or 31 August 2022, 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 12, 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
12, to purchase up to a maximum of approximately 2.4m 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 12 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 12, may be held in Treasury. The
authority sought under Resolution 12 will expire on the earlier of
date of the AGM in 2022 and 31 August 2022, whichever is earlier,
unless renewed prior to such time.
Recommendation
The Board considers that all Resolutions to be put to
shareholders at the AGM are in the best interests of the Company
and its members as a whole. The Board believes that the passing of
each Resolution is likely to promote the success of the Company for
the benefit of all its members. 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 18,000 Ordinary
shares.
On behalf of the Board
Nicholas Smith,
Chairman
28 April 2021
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 but not for the content of any information
included on the website that has been prepared or issued by third
parties. 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.
On behalf of the Board
Nicholas Smith,
Chairman
28 April 2021
STATEMENT OF COMPREHENSIVE INCOME
Year ended 28 February Year ended 28 February
2021 2020
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------ -------- -------- -------- -------- --------- ---------
Losses on investments 10 - (1,188) (1,188) - (19,262) (19,262)
Income 3 3,264 - 3,264 4,355 - 4,355
Management fee 4 (156) (467) (623) (245) (735) (980)
Administrative expenses 5 (394) - (394) (407) - (407)
Currency losses - (97) (97) - (108) (108)
---------------------------------- ------ ---------
Net return/(loss) before finance
costs and taxation 2,714 (1,752) 962 3,703 (20,105) (16,402)
Finance costs 6 (29) (87) (116) (33) (101) (134)
---------------------------------- ------ ---------
Return/(loss) before taxation 2,685 (1,839) 846 3,670 (20,206) (16,536)
Taxation 7 (303) - (303) (400) (1) (401)
---------------------------------- ---------
Return/(loss) after taxation 2,382 (1,839) 543 3,270 (20,207) (16,937)
---------------------------------- ------ -------- -------- -------- -------- --------- ---------
Return/(loss) per Ordinary
share (pence) 9 14.56 (11.24) 3.32 19.77 (122.16) (102.39)
---------------------------------- ------ -------- -------- -------- ======== ========= ---------
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
2021 2020
Notes GBP'000 GBP'000
-------------------------------------------- ------ ------------ ------------
Non-current assets
Investments at fair value through profit
or loss 10 90,496 95,057
-------------------------------------------- ------ ------------ ------------
Current assets
Debtors and prepayments 11 664 314
Money market funds 18 506 511
Cash at bank and in hand 189 149
-------------------------------------------- ------ ------------
1,359 974
-------------------------------------------- ------ ------------ ------------
Creditors: amounts falling due within
one year
Bank loans 12 (10,000) (10,000)
Other creditors 12 (243) (244)
-------------------------------------------- ------ ------------
(10,243) (10,244)
-------------------------------------------- ------ ------------ ------------
Net current liabilities (8,884) (9,270)
-------------------------------------------- ------ ------------ ------------
Net assets 81,612 85,787
-------------------------------------------- ------ ------------ ------------
Share capital and reserves
Called-up share capital 13 4,031 4,123
Share premium account 19,391 19,391
Capital redemption reserve 1,504 1,412
Capital reserve 53,094 56,533
Revenue reserve 3,592 4,328
-------------------------------------------- ------------
Equity shareholders' funds 81,612 85,787
-------------------------------------------- ------ ------------ ------------
Net asset value per Ordinary share (pence) 14 506.17 520.22
-------------------------------------------- ------ ------------ ------------
The financial statements were approved and authorised for issue by
the Board of Directors on 28 April 2021 and were signed on its behalf
by:
Nicholas Smith
Chairman
The accompanying notes are an integral part of the financial
statements.
STATEMENT OF CHANGES IN EQUITY
Year ended 28 February 2021
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 2020 4,123 19,391 1,412 56,533 4,328 85,787
Purchase of own shares for
cancellation (92) - 92 (1,600) - (1,600)
(Loss)/return after taxation - - - (1,839) 2,382 543
Dividends paid (see note 8) - - - - (3,118) (3,118)
------------------------------ ---------
Balance at 28 February 2021 4,031 19,391 1,504 53,094 3,592 81,612
------------------------------ -------- -------- ----------- --------- -------- ---------
Year ended 28 February 2020
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 2019 4,146 19,391 1,389 77,245 4,200 106,371
Purchase of own shares for
cancellation (23) - 23 (505) - (505)
(Loss)/return after taxation - - - (20,207) 3,270 (16,937)
Dividends paid (see note 8) - - - - (3,142) (3,142)
------------------------------ ---------
Balance at 28 February 2020 4,123 19,391 1,412 56,533 4,328 85,787
------------------------------ -------- -------- ----------- --------- -------- ---------
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
2021 2020
Notes GBP'000 GBP'000
-------------------------------------------------- ---------------------- ------------ ------------
Operating activities
Net return/(loss) before finance costs
and taxation 962 (16,402)
Adjustment for:
Losses on investments 1,188 19,262
Currency losses 97 108
Decrease/(increase) in accrued dividend
income 141 (8)
Decrease/(increase) in other debtors excluding
tax 1 (17)
Decrease in other creditors (10) (36)
Overseas withholding tax (317) (400)
Stock dividends (3) -
-------------------------------------------------- ---------------------- ------------ ------------
Net cash flow from operating activities 2,059 2,507
Investing activities
Purchases of investments (35,470) (17,072)
Sales of investments 38,368 13,632
-------------------------------------------------- ---------------------- ------------
Net cash from/(used in) investing activities 2,898 (3,440)
Financing activities
Interest paid (132) (119)
Equity dividends paid 8 (3,118) (3,142)
Loan drawn down - 4,350
Buyback of Ordinary shares 13 (1,575) (505)
-------------------------------------------------- ------------
Net cash (used in)/from financing activities (4,825) 584
-------------------------------------------------- ---------------------- ------------ ------------
Increase/(decrease) in cash and cash equivalents 132 (349)
-------------------------------------------------- ---------------------- ------------ ------------
Analysis of changes in cash during the
period
Opening balance 660 1,117
Effect of exchange rate fluctuations on
cash held (97) (108)
Increase/(decrease) in cash and cash equivalents
as above 132 (349)
-------------------------------------------------- ---------------------- ------------ ------------
Closing balance 695 660
-------------------------------------------------- ---------------------- ------------ ------------
The accompanying notes are an integral part of the financial statements.
A reconciliation of net debt can be found in note 15.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 28 FEBRUARY 2021
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") issued in October 2019. 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 Company's assets consist substantially of equity shares
in companies listed on recognised stock exchanges and in most
circumstances are realisable within a short timescale. The
Board has set limits for borrowing and regularly reviews actual
exposures, cash flow projections and compliance with banking
covenants. The Board has also performed stress testing and
liquidity analysis. The Company has a GBP15 million multi-currency
revolving loan facility which expires in October 2021 and the
Board has considered the ability of the Company to refinance
it. Having taken these factors into account as well as the
impact of COVID-19 and having assessed the principal risks
and other matters set out in the Viability Statement (unaudited),
the Directors believe that, after making enquiries, the Company
has adequate resources to continue in operational existence
for the foreseeable future and has the ability to meet its
financial obligations as they fall due for a period of at least
twelve months from the date of approval of this Report. Accordingly,
they continue to adopt the going concern basis of accounting
in preparing the financial statements.
Critical accounting judgements and key sources of estimation
uncertainty. The preparation of financial statements requires
the use of certain significant accounting judgements, estimates
and assumptions which requires management to exercise its judgement
in the process of applying the accounting policies and are
continually evaluated. The Board considers that there are no
accounting judgements, estimates and assumptions which would
significantly impact the financial statements.
(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
column of the Statement of Comprehensive Income except as follows:
- expenses directly relating 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.
These expenses are charged to the capital column of the Statement
of Comprehensive Income and are separately identified and disclosed
in note 10; and
- the Company charges 75% of investment management fees and
finance costs to the capital column of the Statement of Comprehensive
Income, in accordance with the Board's expected long term return
in the form of capital gains and income respectively from the
investment portfolio of the Company.
(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. Dividends are recognised in the financial
statements in the period in which they are paid.
3. Income
2021 2020
GBP'000 GBP'000
-------- --------
Income from investments
Overseas dividends 3,258 4,339
Stock dividends 3 -
--------
3,261 4,339
--------------------------------------- -------- --------
Other income
Deposit interest - 3
Interest from money market funds 3 13
--------------------------------------- -------- --------
3 16
--------------------------------------- -------- --------
Total income 3,264 4,355
--------------------------------------- -------- --------
4. Management fee
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------- -------- --------
Management fee 156 467 623 245 735 980
--------- --------- --------- --------- -------- --------
For the year ended 28 February 2021 management and secretarial
services were provided by Aberdeen Standard Fund Managers Limited
("ASFML").
Until 28 February 2020 the management fee was payable monthly
in arrears based on an annual amount of 0.9% of the net asset
value of the Company, excluding commonly managed funds held in
the portfolio (2020 - none), valued monthly. With effect from
1 March 2020 the management fee has been payable monthly in arrears
based on an annual amount of 0.9% of the market capitalisation
of the Company valued monthly. This is also subject to an annual
cap which limits the management fee to the equivalent of 1.15%
of NAV, calculated monthly. The rebate provisions remain in place.
The management agreement is terminable on one year's notice. The
total of the fees paid and payable during the year to 28 February
2021 was GBP623,000 (2020 - GBP980,000) and the balance due to
ASFML at the year end was GBP106,000 (2020 - GBP136,000).
5. Administrative expenses
2021 2020
GBP'000 GBP'000
---------- ---------
Promotional activities 59 59
Directors' fees 108 115
Auditor's fees for:
- audit of the Company's annual accounts 25 24
- other assurance services 2 2
Custody fees 56 55
Legal & professional fees 32 50
Listing fees 18 17
Directors' and officers' insurance 5 5
Printing and stationery 21 19
Registrar's fees 13 13
Savings scheme expenses 14 3
Other expenses 41 45
---------
394 407
--------------------------------------------------------- ---------- ---------
The management agreement with ASFML also provides for the provision
of promotional activities. The total fees paid and payable under
the management agreement in relation to promotional activities
were GBP59,000 (2020 - GBP59,000) with a balance of GBP10,000
(2020 - GBP10,000) being due to ASFML at the year end. The Company
has an agreement with ASFML for the provision of company secretarial
services and administration services; no separate fee is charged
to the Company in respect of this agreement.
6. Finance costs
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- --------
On bank loans 29 87 116 33 101 134
7. Taxation
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(a) Analysis of charge
for the year
Overseas withholding
tax 303 303 400 1 401
------------------------------------ -------- -------- -------- -------- --------- ---------
Total tax charge 303 - 303 400 1 401
------------------------------------ -------- -------- -------- -------- --------- ---------
(b) Factors affecting tax charge for the year. The UK corporation
tax rate is 19% (2020 - 19%).The tax assessed for the year
is lower than the standard rate of corporation tax in the UK.
The differences are explained below:
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------
Net return before
taxation 2,685 (1,839) 846 3,670 (20,206) (16,536)
------------------------------------ -------- -------- -------- -------- --------- ---------
Corporation tax at
standard rate of
19% (2020 - 19%) 510 (349) 161 697 (3,839) (3,142)
Losses on investments
not taxable - 226 226 - 3,660 3,660
Currency losses not
taxable - 18 18 - 21 21
Non-taxable overseas
income (619) - (619) (825) - (825)
Expenses not deductible
for tax purposes 2 - 2 2 - 2
Overseas withholding
tax 303 - 303 400 - 400
Loan relationships
not utilised 5 16 21 4 19 23
Excess management
expenses not utilised 102 89 191 122 140 262
------------------------------------ -------- -------- -------- -------- --------- ---------
Total tax charge 303 - 303 400 1 401
------------------------------------ -------- -------- -------- -------- --------- ---------
(c) Factors that may affect future tax charges . At the year end,
the Company has an unrecognised deferred tax asset of GBP2,844,000
(2020 - GBP2,354,000) arising as a result of accumulated unrelieved
management expenses and loan relationship deficits of GBP14,968,000
(2020 - GBP13,850,000). 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.
On 3 March 2021 the UK government announced an intention to
increase the UK corporation tax rate to 25% with effect from
1 April 2023. If enacted this will impact the value of UK deferred
tax balances, and the tax charged on UK profits generated in
2023 and thereafter. The impact of these proposed changes has
yet to be assessed.
8. Dividends on equity shares
2021 2020
GBP'000 GBP'000
------------------ ------------------
Amounts recognised as distributions to equity
holders in the year:
Second interim dividend 2020 - 11.00p (2019 -
final dividend - 11.00p) 1,811 1,821
Return of unclaimed dividends (1) (1)
First interim dividend 2021 - 8.00p (2020 - 8.00p) 1,308 1,322
------------------
3,118 3,142
------------------------------------------------------------- ------------------ ------------------
The second interim dividend of 11.0p per Ordinary share, payable
on 25 June 2021 to shareholders on the register on 28 May 2021
and has not been included as a liability in the financial statements.
The table below sets out the total dividends paid and proposed
in respect of the financial year, which is the basis upon which
the requirements of Sections 1158-1159 of the Corporation Tax
Act 2010 are considered. The net revenue available for distribution
by way of dividend for the year is GBP2,382,000 (2020 - GBP3,270,000).
2021 2020
GBP'000 GBP'000
First interim dividend 2021 - 8.00p (2020 - 8.00p) 1,308 1,322
Second interim dividend 2021 - 11.0p (2020 -
11.0p) 1,760 1,811
------------------------
3,068 3,133
--------------------------------------------------------- ---------------- ------------------------
Subsequent to the year end the Company has purchased for cancellation
a further 127,930 Ordinary shares; therefore the amount reflected
above for the cost of the second interim dividend for 2021 is
based on 15,995,506 Ordinary shares, being the number in issue
at the date of approval of this Report.
9. Return per Ordinary share
2021 2020
GBP'000 p GBP'000 p
-------- ----------- --------- -----------
Revenue return 2,382 14.56 3,270 19.77
Capital return (1,839) (11.24) (20,207) (122.16)
-----------
Total return 543 3.32 (16,937) (102.39)
------------------------------------------ -------- ----------- --------- -----------
Weighted average number of Ordinary
shares in issue 16,363,800 16,540,884
10. Investments at fair value through profit or loss
2021 2020
GBP'000 GBP'000
----------- ---------
Opening book cost 81,022 71,524
Opening investment holding gains 14,035 37,785
-------------------------------------------------------- ----------- ---------
Opening fair value 95,057 109,309
Analysis of transactions made during the year
Purchases at cost 35,473 16,446
Sales proceeds received (38,846) (11,436)
Losses on investments (1,188) (19,262)
-------------------------------------------------------- ----------- ---------
Closing fair value 90,496 95,057
-------------------------------------------------------- ----------- ---------
Closing book cost 75,040 81,022
Closing investment gains 15,456 14,035
---------
Closing fair value 90,496 95,057
-------------------------------------------------------- ----------- ---------
Investments listed on a recognised stock exchange 90,496 95,057
-------------------------------------------------------- ----------- ---------
The Company received GBP38,846,000 (2020 - GBP11,436,000) from
investments sold in the period. The book cost of these investments
when they were purchased was GBP41,455,000 (2020 - GBP6,947,000).
These investments have been revalued over time and until they
were sold any unrealised gains/losses were included in the fair
value of the investments.
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 losses on investments in the Statement
of Comprehensive Income. The total costs were as follows:
2021 2020
GBP'000 GBP'000
Purchases 37 49
Sales 41 15
--------------
78 64
--------------------------------------------------- ----------- --------------
The above transaction costs are calculated in line with the AIC
SORP. The transaction costs in the Company's Key Information
Document are calculated on a different basis and in line with
the PRIIPs regulations.
11. Debtors: amounts falling due within one year
2021 2020
GBP'000 GBP'000
----------- ----------
Prepayments and accrued income 174 300
Amounts due from brokers 478 -
Other debtors 12 14
----------------------------------------------------------------- ----------- ----------
664 314
12. Creditors: amounts falling due within one year
(a) Bank loan. In October 2018 the Company entered into a three
year GBP15,000,000 multi-currency revolving credit facility
with Industrial and Commercial Bank of China (ICBC). At the
year end, GBP10,000,000 (2020 - GBP10,000,000) had been drawn
down at an all-in rate of 0.85075% (2020 - 1.53225%) which
will mature on 10 May 2021 (2020 - 10 March 2020).
The terms of the loan facility with ICBC contain a covenant
that the borrowings should not exceed 25% 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 GBP40 million.
The Company met both these covenants during the year and also
during the period from the year end to the date of this Report.
2021 2020
(b) Other creditors GBP'000 GBP'000
Amounts due to brokers 25 -
Sundry creditors 218 244
---------- ---------
243 244
13. Called-up share capital
2021 2020
GBP'000 GBP'000
--------------------- ----------------------
Allotted, called up and fully paid:
Opening balance of 16,490,563 (2020 - 16,582,901)
Ordinary shares of 25p each 4,123 4,146
Repurchase of 367,127 (2020 - 92,338) Ordinary
shares of 25p each for cancellation (92) (23)
----------------------
Closing balance of 16,123,436 (2020 - 16,490,563) 4,031 4,123
--------------------------------------------------------- --------------------- ----------------------
During the year ended 28 February 2021, the Company bought back
and cancelled 367,127 Ordinary shares of 25p each (2020 - 92,338)
for a total consideration of GBP1,600,000 (2020 - GBP505,000).
This represented 2.3% of the Company's issued Ordinary share capital
as at 28 February 2021.
Subsequent to the year end the Company bought back and cancelled
a further 127,930 Ordinary shares of 25p each for a total consideration
of GBP573,000.
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:
2021 2020
------------------------------------------ ------------- ------------
Net assets attributable (GBP'000) 81,612 85,787
------------------------------------------------ ------------- ------------
Number of Ordinary shares in issue 16,123,436 16,490,563
------------------------------------------------ ------------- ------------
Net asset value per share (p) 506.17 520.22
------------------------------------------------ ------------- ------------
15. Analysis of changes in
net
debt
At At
28 February Currency Cash 28 February
2020 differences flows 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash and short term deposits 660 (97) 132 695
Debt due within one year (10,000) - - (10,000)
---------------------
(9,340) (97) 132 (9,305)
------------------- ----------------------- --------------- ---------------------
At At
28 February Currency Cash 28 February
2019 differences flows 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash and short term deposits 1,117 (108) (349) 660
Debt due within one year (5,650) - (4,350) (10,000)
---------------------
(4,533) (108) (4,699) (9,340)
------------------- ----------------------- --------------- ---------------------
A statement reconciling the movement in net funds to the net cash
flow has not been presented as there are no differences from the
above analysis.
16. 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 Aberdeen
Standard Fund Managers Limited ("ASFML") under the terms of its
management agreement with ASFML (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 ASFML collectively
assume responsibility for ASFML's obligations under the AIFMD including
reviewing investment performance and monitoring the Company's risk
profile during the year.
ASFML is a fully integrated member of the Standard Life Aberdeen
Group, which provides a variety of services and support to ASFML
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 Standard Investments 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 and Risk Management.
The team is headed up by the Group's Head of Risk, who reports
to the CEO 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
("SHIELD").
The Group's Internal Audit Department is independent of the Risk
Division and reports directly to the Group's 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 Standard Life 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 variable rate, revolving, and uncommitted
facilities. The variable rate facilities are used to finance opportunities
at low short-term fixed rates and the revolving and uncommitted
facilities provide flexibility in the short-term. Current bank
covenant guidelines state that the total borrowings will not exceed
25% 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 Statement of Financial
Position date was as follows:
Weighted
average
period for Weighted
which rate average Fixed Floating
is fixed interest rate rate
rate
At 28 February 2021 Years % GBP'000 GBP'000
-------------------------------------------------- ---------------- -------------- ----------- ---------
Assets
Sterling - - - 189
---------
189
-------------------------------------------------------- ---------------- -------------- ----------- ---------
Liabilities
Bank loans - Sterling 0.24{A} 0.85 (10,000) -
-------------------------------------------------------- ---------------- -------------- ----------- ---------
{A} Equivalent to three months.
Weighted
average
interest
rate
Fixed Floating
Weighted rate rate
average
period for
which rate
is fixed
At 28 February 2020 Years % GBP'000 GBP'000
-------------------------------------------------- ---------------- -------------- ----------- ---------
Assets
Sterling - 0.49 - 149
---------
149
-------------------------------------------------------- ---------------- -------------- ----------- ---------
Liabilities
Bank loans - Sterling 0.16{A} 1.53 (10,000) -
-------------------------------------------------------- ---------------- -------------- ----------- ---------
{A} Equivalent to two months.
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 2021 28 February 2020
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 90,496 478 90,974 95,057 - 95,057
Sterling - (9,362) (9,362) - (9,270) (9,270)
----------------
Total 90,496 (8,884) 81,612 95,057 (9,270) 85,787
---------------------- -------------- ----------- ----------- ---------------- -------------- ----------------
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 2021 would have increased/(decreased)
by GBP9,050,000 (2020 - increased/(decreased) by GBP9,506,000)
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 25% (2020 - 25%) of net assets. Details of
borrowings at 28 February 2021 are shown in note 12.
Liquidity risk exposure. At 28 February 2021 the Company's bank
loan, amounting to GBP10,000,000 (2020 - GBP10,000,000), was due
for repayment or roll-over within three months (2020 - 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;
- 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:
2021 2020
Statement Statement
of of
Financial Maximum Financial Maximum
Position exposure Position exposure
Current assets GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---- --------------- ---------------- -------------- ------------------------
Loans and receivables 664 664 314 314
Money market funds 506 506 511 511
Cash at bank and in hand 189 189 149 149
------------------------
1,359 1,359 974 974
-------------------------------- ---- --------------- ---------------- -------------- ------------------------
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.
17. 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 2021 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Quoted equities 89,719 777 - 90,496
--------
Net fair value 89,719 777 - 90,496
------------ --------- -------- --------
Level Level Level Total
1 2 3
As at 28 February 2020 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Quoted equities 94,309 748 - 95,057
--------
Net fair value 94,309 748 - 95,057
------------ --------- -------- --------
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.
The Company's holding in Goodyear (Thailand) of GBP777,000 (2020:
GBP748,000) is classified as Level 2 due to the lack of active
trading in the stock.
18. 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 published
Annual Report.
Transactions with the Manager. The Company has agreements with
ASFML 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. Money market funds
held at the year end of GBP506,000 (2020 - GBP511,000) were managed
by ASFML.
19. 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.
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
FRS 102 and the AIC SORP. The Directors assess the Company's performance
against a range of criteria which are viewed as particularly relevant
for closed-end investment companies.
Total return. Total return is considered to be an alternative performance
measure. NAV and share price total returns show how the NAV and share
price has performed over a period of time in percentage terms, taking
into account both capital returns and dividends paid to shareholders.
NAV total return involves investing the same net dividend in the NAV
of the Company with debt at fair value on the date on which that dividend
was earned. Share price total return involves reinvesting the net dividend
on the date that the share price goes ex-dividend.
The tables below provide information relating to the NAVs and share
prices of the Company on the dividend reinvestment dates during the
years ended 28 February 2021 and 28 February 2020 and total return for
the year.
Dividend Share
2021 rate NAV price
-------- ----------------
28 February 2020 N/A 520.22p 434.00p
28 May 2020 11.00p 516.67p 433.00p
29 October 2020 8.00p 444.44p 375.00p
28 February 2021 N/A 506.17p 433.00p
-------- ----------------
Total return +1.2% +4.5%
-------- ----------------
Dividend Share
2020 rate NAV price
-------- ----------------
28 February 2019 N/A 641.45p 552.00p
30 May 2019 11.00p 661.60p 562.50p
24 October 2019 8.00p 663.72p 575.00p
28 February 2020 N/A 520.22p 434.00p
-------- ----------------
Total return -16.6% -18.7%
-------- ----------------
Discount to net asset value per Ordinary share. The discount is the
amount by which the share price of 433.00p (2020 - 434.00p) is lower
than the net asset value per share of 506.17p (2020 - 520.22p), expressed
as a percentage of the net asset value.
Dividend cover. Revenue return per share of 14.56p (2020 - 19.77p)
divided by total dividends per share of 19.0p (2020 - 19.0p) expressed
as a ratio.
Net gearing. Net gearing measures the total borrowings of GBP10,000,000
(2020 - GBP10,000,000) less cash and cash equivalents of GBP1,148,000
(2020 - GBP660,000) divided by shareholders' funds of GBP81,612,000
(2020 - GBP85,787,000), expressed as a percentage. Under AIC reporting
guidance cash and cash equivalents includes net amounts due to or from
brokers at the year end of GBP453,000 due from brokers (2020 - GBPnil)
as well as cash and cash equivalents of GBP695,000 (2020 - GBP660,000).
Ongoing charges . Ongoing charges is considered to be an alternative
performance measure. The ongoing charges ratio has been calculated in
accordance with guidance issued by the AIC as the total of investment
management fees and administrative expenses and expressed as a percentage
of the average net asset values with debt at fair value throughout the
year.
2021 2020
Investment management fees (GBP'000) 623 980
Administrative expenses (GBP'000) 394 407
Less: non-recurring charges (GBP'000) (2) (24)
----------------------------------------------------- -----------
Ongoing charges (GBP'000) 1,015 1,363
----------------------------------------------------- ------- ------------- -----------
Average net assets{A} (GBP'000) 81,370 110,133
-----------
Ongoing charges ratio (excluding look-through
costs) 1.25% 1.24%
----------------------------------------------------- ------- ------------- -----------
Look-through costs{A} 0.02% 0.06%
Ongoing charges ratio (including look-through
costs) 1.27% 1.30%
----------------------------------------------------- ------- ------------- -----------
{A} Costs associated with holdings in collective investment schemes
as defined by the Committee of European Securities Regulators' guidelines
on the methodology for the calculation of the ongoing charges figure,
issued on 1 July 2010.
During both years net asset values with debt at fair value equated to
net asset value with debt at amortised cost due to the short-term nature
of the bank loans.
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations.
The Annual Financial Report announcement is not the Company's statutory
accounts. The above results for the year ended 28 February 2021 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 2020 and 28 February
2021 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 2020 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 2021 and will also be available from
the Company's website: newthai-trust.co.uk. The Company's AGM will be
held at 9.30am on 17 June 2021 at Bow Bells House, 1 Bread Street, London
EC4M 9HH. Shareholders' attention is drawn to the section in the Chairman's
Statement regarding the limitation on attendance at the AGM.
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
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END
FR FLFLASRITFIL
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