ANW.L Regulatory News (ANW)

ABERDEEN NEW THAI INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 28 FEBRUARY 2018

STRATEGIC REPORT

Financial Highlights

Overview

Launched in 1989, Aberdeen New Thai Investment Trust PLC (the "Company") is an investment trust, with its Ordinary shares listed on the premium segment of the London Stock Exchange, which aims to provide shareholders with a high level of long-term, above average capital growth through investment in Thailand.

The Company is governed by a board of directors, all of whom are independent, and has no employees. Like most other investment companies, it outsources its investment management and other administration to third party providers. The Company has appointed Aberdeen Fund Managers Limited ("AFML", the "Manager", or "AIFM") as its alternative investment fund manager, which has in turn delegated certain responsibilities, including investment management, to Aberdeen Asset Management Asia Limited ("AAMAL" or the "Investment Manager"). AFML and AAMAL are subsidiaries of Standard Life Aberdeen plc.

The Company does not have a fixed life but there is a discount monitoring period which operates annually during the last 12 weeks of the Company's financial year. In the 12 weeks ending 28 February 2018, the Ordinary shares traded at an average discount of 14.7% to the underlying net asset value per share (including income), therefore no special resolution to wind up the Company will be put to shareholders at the forthcoming AGM.

Financial Calendar

CHAIRMAN'S STATEMENT

Results

Once again, the Thai market performed well in the year ended 28 February 2018, with the Stock Exchange of Thailand index ("SET Index") providing a total return of 21.6% in Sterling terms, comfortably outperforming most of its regional peers for the second year running. Towards the year end, global markets exhibited heightened volatility amid concerns that rising inflation and faster-than-anticipated interest rate hikes from the Federal Reserve could derail the US economy, notwithstanding well-received US domestic tax reforms. Global confidence was also shaken by worsening trade tensions as President Donald Trump ratcheted up his protectionist rhetoric. Against this background, foreign investors were net sellers of Thai stocks but local investors, benefiting from a surfeit of domestic liquidity, drove the market higher.

However, while the value of your Company's portfolio rose substantially, it failed to keep up with the market as a whole. The net asset value per Ordinary share rose by 17.7% on a total return basis (in Sterling), some 3.9% behind the benchmark SET Index. Your Ordinary share price fared slightly better, rising by 18.4% on a total return basis to 592.0p, reflecting a small tightening of the discount to the net asset value from 15.0% to 14.8%. The underperformance partly reflects our Manager's highly selective style - it applies a bottom-up, stock-picking approach - at a time when the Thai market was buoyed by fairly indiscriminate speculative buying, boosting quality and non-quality stocks alike.

Over five years too, while there have been substantial absolute gains for investors, the Company's net asset value performance has lagged the benchmark. The Ordinary share price has continued to trade at a discount to net asset value, notwithstanding significant buybacks by the Company over the last two years.

Proposed Changes

Against this backdrop, the Board has consulted the Manager and together we have identified a number of changes designed to improve returns to shareholders over time. The Board and the Manager are optimistic about investing in Thailand, given its proven resilience in the face of political and other uncertainties, the quality of many of its companies and the access to excellent regional growth prospects that it provides. We believe the changes set out below will further enhance the attractions of your Company.

Investment Policy

A cornerstone of your Company's investment record over the last 28 years has been the detailed research undertaken by the Bangkok-based team, supported by offices across the Asia-Pacific region and beyond. Every quoted company in which the Company invests is subject to a rigorous vetting process before any investment decision is made. In the succeeding years, a process of constant monitoring and contact is implemented to ensure that expectations are fulfilled with progress reviewed and logged. This disciplined investment process has resulted in a portfolio where the turnover of stocks is low.

The search for new, and the retention of existing, investments is based on the criteria of good management, strong balance sheets and excellent prospects. The Board has recently carried out a strategic review with the Manager to establish if there are any opportunities in Thailand which would yield additional returns in the years ahead. The review revealed that the Manager does, from time to time, receive requests to invest in unquoted companies in the period leading up to a flotation on the SET Index that it cannot currently participate in due to the parameters of the Company's investment remit. While these opportunities only occur occasionally, they would give the Manager the ability to achieve good returns. As a result, your Board believes it would be beneficial to shareholders if the Company's investment policy was adjusted to allow a modest proportion of the portfolio to be invested in unquoted companies that are either at, or near, flotation. Accordingly, the Board is seeking shareholders' approval to a change to the investment policy designed to provide this flexibility by permitting investment in unquoted equities provided that such investment be limited to 10%, in aggregate, of the Company's net assets at the time an investment is made.

As well as the change described above, your Board is also taking the opportunity to update the investment policy so that it better reflects current market practice and clarify elements of the existing policy for shareholders including on diversification of risk and gearing.

While your Board is satisfied that the proposed changes described above do not represent a significant change in the way the Company's portfolio is managed, the changes are deemed material under the UKLA's Listing Rules and therefore may only be introduced with shareholder approval and the prior approval of the Financial Conduct Authority. Accordingly, an Ordinary Resolution to approve the change to the investment policy will be proposed at the AGM.

The proposed changes to the Investment Policy are highlighted in full below.

Increasing Small Cap exposure

Whilst our portfolio currently has a range of small to large cap holdings identified by the Manager to be valuable long term investment propositions, there is no doubt that some smaller capitalisation Thai stocks ("Smallcaps") (in our case those with a market capitalisation under THB 50 billion) make for extremely interesting investments and have the potential to perform exceedingly well. Our current exposure to Smallcaps is approximately 35% of the overall portfolio and with its deep knowledge of the Thai market the Manager will seek to increase this exposure to interesting companies but always with an eye to management of overall portfolio liquidity.

Gearing

The Company has available a £10 million loan facility provided at a competitive margin rate over Libor (the London Interbank Offered Rate) which will in future be used more proactively by the Manager. Where valuations are deemed by the Manager to be less stretched gearing levels may be raised making more use of one of a closed ended company's structural advantages over OEICs. Of course this may lead to some short-term relative underperformance if we encounter falling markets but, over the long term, low cost gearing of this nature should enhance returns to shareholders. In pursuit of this objective, the Company increased the drawn down loan from £2.65m to £5.65m during February 2018. Even if fully drawn the quantum of the existing loan facility means that gearing should, at current market levels, remain materially below the Board-imposed limit of 15%.

Charging certain revenue costs to capital and introduction of interim dividend

Your Company has historically charged 100% of its total expenses to revenue in the Statement of Comprehensive Income. One of the features of the Company's structure is that, in the pursuit of such growth, we are able to charge a percentage of investment management fees and loan interest costs incurred directly to capital. This follows guidance contained in the AIC SORP. In line with the expected returns of our investment portfolio, the Board has decided to charge 75% of such expenses to capital with effect from 1 March 2018. This, whilst impacting to an extent the capital return, will enhance net revenue and increase the net earnings available to pay out to shareholders. In this continuing low interest environment with investors seeking regular income, the Board believes that any increase in yield will be welcomed by shareholders. In order to smooth the distribution of income to shareholders, the Board will also include in its Half-Yearly Report, due to be published in October 2018, the declaration of an initial interim dividend covering the six months to 31 August 2018.

Reduction in Management Fee

Lastly, I am pleased to report that an amendment to the management fee has been agreed with the Manager which became effective, retrospectively, on 1 March 2018. From that date the Manager is entitled to a management fee payable monthly in arrears based on an annual amount of 0.9% (previously 1.0%) of the Company's assets less liabilities.

Dividend

The revenue earnings per Ordinary share were 11.12p for the year ended 28 February 2018 (2017 - 10.31p) and the Board is proposing to shareholders a final dividend per Ordinary share, increased by 7.8%, of 11.1p (2017 - 10.3p), paying out the majority of the Company's earnings in keeping with its dividend policy. If approved at the Annual General Meeting ("AGM") on 21 June 2018, the final dividend will be paid on 26 June 2018 to shareholders on the register as at 1 June 2018. The ex-dividend date will be 31 May 2018.

Overview

The domestic Thai economy remained on a relatively sound footing underpinning gains over the financial year. Notwithstanding private investment and consumption being hampered by excess industrial capacity, low farm prices and high household debt, exports and tourism were buoyant. Indeed, the global recovery helped overseas shipments rise nearly 10% in calendar 2017, the highest in six years, on the back of good demand from the US, EU, Southeast Asia and China. Full-year GDP accelerated to 3.9%, emboldening the finance ministry, as well as most analysts, to raise their 2018 GDP forecasts upwards of 4%.

A number of positive political developments also aided sentiment. The transition to King Vajiralongkorn after the passing of his father King Bhumibol was relatively smooth and earlier fears of worsening tensions proved to be unfounded. Investors were also hopeful that economic activity would pick up after the royal cremation in October, as it marked an end to the year-long mourning period during which businesses operated with some restraint. Their optimism was not misplaced as recent data has been encouraging.

Meanwhile, former premier Yingluck Shinawatra absconded to Dubai ahead of her criminal conviction which allayed worries about an escalation of hostilities between her supporters and those of the establishment. However, these worries resurfaced in February 2018 after the military government delayed general elections yet again, this time from November 2018 to February 2019.

While the domestic backdrop was relatively stable, the same could not be said about external events. In a decision that unsettled global markets, President Trump announced import tariffs on aluminium and steel products, another salvo in his ongoing attempts to punish America's partners for the ballooning US trade deficit. The US accounts for around 30% of Thai steel exports by volume. Furthermore, fears that interest rates would normalise faster than expected led to a spike in global government bond yields towards the period-end. In February 2018, this caused a sharp equity sell-off worldwide, given concerns that higher borrowing costs could dent consumption and corporate earnings.

Outlook

An escalation of retaliatory measures in response to President Trump's 'America First' policy could have global repercussions. However, it is worth remembering that intra-regional trade in Asia continues to make great strides, supported by growing populations and rising disposable incomes. Over 60% of Thailand's exports go to its regional neighbours. This should shield the kingdom to some extent from any deterioration in demand for its products from further afield.

Meanwhile, the Baht's strengthening to a four-year high against the US Dollar is causing some concern. But on a trade-weighted basis against other major currencies, the appreciation is less severe, so this has not affected Thailand's competitiveness. Indeed, a manufacturing sector recovery in Asia and globally, notwithstanding the potential for more US trade barriers, should provide greater impetus for Thai exports in 2018.

There is also scope for a more broad-based recovery in the new year. Private investment should increase, given the improving business sentiment. Public infrastructure spending should also pick up, as projects that were awarded in the previous year enter the construction phase. Aiding the process is the government's Eastern Economic Corridor ("EEC") plan, which is expected to benefit provinces in that region with much needed development. Foreign investment has been pouring into the EEC, notably from Japan, Singapore, China and Hong Kong. Over time, the influx of investment should translate into more jobs, better wage growth and higher consumer spending.

We should not, however, turn a blind eye to challenges that persist in the local economy. Besides having to digitalise operations, the banking sector is still struggling with non-performing loans, asset quality issues and pressures on fee income. Loan approvals remain strict and rejection rates elevated because of high household debt. On the positive side, local banks are not in distress and balance sheets remain healthy in general.

On the political front, the military government has allowed election-related activities, including the registration of new political parties, for the first time since it came into power in 2014. This boosts hopes that a general election will indeed take place by February 2019 and provides investors with a clearer timeline for the return to civilian rule. Yet, the military retains a lot of support and could remain a major player post-elections.

I remain confident about Thailand's prospects, and so does your Manager. The underlying holdings in your Company's portfolio are fundamentally sound, with robust business models, prudent management and healthy balance sheets that have underpinned dividends. This should allow them to tap the country's longer-term growth potential, as well as weather any challenges that may arise. Earnings are improving but with share prices appearing elevated, a market correction could help bring valuations to more sensible levels, while refocusing investors on the fundamentals. Amid this, the disciplined and meticulous stock-picking approach favoured by your Manager remains more valuable than ever. Periods of market turbulence provide rich opportunities for your Manager to increase its exposure to these kind of companies at attractive valuations.

In addition, many of our Thai companies have growing operations overseas and are expanding into other markets that offer exciting opportunities like Cambodia, Indonesia, Myanmar, Philippines and Vietnam. Whilst some of these markets may be at an early stage in their development and lack the necessary depth and liquidity required by many investors, the Board believes that investment in Aberdeen New Thai provides a growing exposure to such interesting markets and underscores the belief that many of our investee companies are set fair for fascinating growth stories. You will find reviews on two of these companies, together with further details about your portfolio, in the Investment Manager's Report.

Discount

The Board continues to actively monitor the discount of the Ordinary share price to the NAV per Ordinary share (including income) and will continue to pursue a policy of selective buybacks of shares where to do so would be in the best interests of shareholders. In pursuit of this objective, during the year ended 28 February 2018 the Company bought back and cancelled 1,665,119 Ordinary shares (2017 - 1,331,650 Ordinary shares) at a cost of £9.0 million, representing 9.0% of the Company's issued share capital at the start of the year.

Promotional Activities

Your Board continues to promote the Company through the Manager's promotional activities and the Company contributed £66,000 (excluding VAT) during the year ended 28 February 2018 (2017 - £63,000). The Board reviews regularly these promotional activities.

Regulatory Changes

Investors should be aware that the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation requires the Manager, as the Company's PRIIP "manufacturer," to prepare a key information document ("KID") in respect of the Company. This KID must be made available by the Manager to retail investors prior to them making any investment decision and is available via the Company's website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.

The Criminal Finances Act 2017 has introduced a new corporate criminal offence of "failing to take reasonable steps to prevent the facilitation of tax evasion". The Board has confirmed that it is the Company's policy to conduct all of its business in an honest and ethical manner. The Board takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country.

Data protection rights will shortly be harmonised across the European Union when the General Data Protection Regulation ("GDPR") - first adopted by the Parliament in April 2016 - applies in full from 25 May 2018. The Board will take the necessary steps and seek the appropriate assurances from its third party service providers to ensure compliance with the new regulations.

Aberdeen Standard Investments

The Directors have received regular updates from the Manager on the progress of integration following the merger between Aberdeen Asset Management PLC and Standard Life plc that became effective in August 2017. The Board is reassured to note that the existing management and client servicing teams are unaffected by the merger and the Board will remain vigilant to ensure that the excellent service received from the Manager hitherto continues in the future. Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.

AGM

The AGM, which will, as usual, be held at Bow Bells House, 1 Bread Street, London EC4M 9HH from 11.30am on 21 June 2018, provides shareholders with an annual opportunity to meet the Board and to ask any questions that they may have of either the non-executive directors or the Manager.

The Board is happy to take general questions on the Annual Report and financial statements at the meeting but would advise that questions of a technical nature should be addressed in writing to the Company Secretaries, in advance.

I look forward to meeting as many shareholders as possible at the AGM which will be followed by a buffet lunch.

Nicholas Smith

Chairman

2 May 2018

OVERVIEW OF STRATEGY

Business Model

The business of the Company is that of an investment company which qualifies as an investment trust for UK capital gains tax purposes. The Directors do not envisage any change in this activity in the foreseeable future.

Investment Objective

The Company aims to provide shareholders with a high level of long-term, above average capital growth through investment in Thailand.

Investment Policy

The Company's assets are invested in a diversified portfolio of securities (substantially in the form of equities or equity-related securities such as convertible securities and warrants) in companies, spread across a range of industries, which are quoted on the Stock Exchange of Thailand.

The Board is proposing to amend the Investment Policy and further details may be found in the Chairman's Statement and below.

Risk Diversification

Delivering the Investment Policy

The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers and, accordingly, stock selection is usually the major source of added value. No stock is bought without the fund managers having first met management. The Investment Manager estimates a company's worth in two stages, quality then price. Quality is defined by reference to, amongst other factors, management, business focus, balance sheet strength and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Manager's portfolio construction with diversification, rather than formal controls, guiding stock and sector weights. Investments are not limited as to market capitalisation or sector weightings within Thailand.

The Investment Manager is authorised to invest up to 10% of the Company's net assets in any single stock although circumstances may occasionally arise when it may be in shareholders' interests to make an investment that exceeds this level.

The Company complies with Section 1158 of the Corporation Tax Act 2010. The Company invests no more than 15% of its gross assets in other listed investment companies (including listed investment trusts).

Gearing

The Company's gearing policy is that borrowings are short-term in nature and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy. At the year end there was net gearing of 1.5% which compares with a maximum Board-imposed limit of 15%.

Benchmark

The Company's benchmark is the Stock Exchange of Thailand Index ("SET Index").

Key Performance Indicators ("KPIs")

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy. The main KPIs identified by the Board in relation to the Company, which are considered at each Board meeting, are as follows:

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial position, performance and prospects. The Board has carried out a robust assessment of these risks, which include those that would threaten its business model, future performance and solvency. The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet or they can be found in the pre-investment disclosure document ("PIDD") published by the AIFM, both of which are available from the Company's website: newthai-trust.co.uk.

The principal risks and uncertainties faced by the Company are reviewed annually by the Audit and Management Engagement Committee in the form of a detailed risk matrix and heat map and they are described in the table below, together with any mitigating actions.

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Standard Life Aberdeen Group on behalf of a number of investment companies under its management. The Company's financial contribution to the programme is matched by the Standard Life Aberdeen Group. Representatives of the Standard Life Aberdeen Group report quarterly to the Board with analysis of the promotional activities as well as updates on the shareholder register and any changes in the composition of that register.

The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key and therefore the Company also supports the Standard Life Aberdeen Group's investor relations programme which involves regional roadshows as well as promotional and public relations campaigns.

Board Diversity

The Board recognises the importance of having a range of skilled and experienced individuals with sufficient and appropriate knowledge to allow the Board to fulfill its obligations. As at 28 February 2018 there were two male Directors and two female Directors (2017: three male Directors and two female Directors).

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated day to day management and administrative functions to AFML. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined below.

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. Notwithstanding this, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Socially Responsible Investment Policy

The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner. The Board has noted the corporate stewardship and sustainability programme of the AIFM's parent company, Standard Life Aberdeen PLC, can be found at -

https://www.standardlifeaberdeen.com/corporate-stewardship-and-sustainability

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Viability Statement

The Company does not have a formal fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board considers the Company, with no fixed life, to be a long term investment vehicle, but for the purposes of this viability statement has decided that a period of three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.

Accordingly, taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this report. In making this assessment, the Board has considered that matters such as a large economic shock, a period of significant stock market volatility, a significant reduction in the liquidity of the portfolio or changes in regulations and investor sentiment, could have an impact on its assessment of the Company's prospects and viability in the future.

In particular the Board recognises that this assessment makes the assumption that the Company's average discount to the NAV per Ordinary share (including income) for the 12 weeks ended 28 February 2019 and 12 weeks ended 28 February 2020, individually, does not exceed 15% which negates the requirement to put to shareholders at the AGMs to be held in either 2019 or 2020, a special resolution to wind up the Company.

Future

The Board expects the Company to continue to pursue its investment objective and accepts that this may involve divergence from the SET Index. The companies which make up the investment portfolio are considered by the Investment Manager to demonstrate resilience in the context of the complicated Thai political situation and to offer opportunities for investors to benefit from the development of the broader Thai economy.

Further details on the package of changes proposed by the Board as well as the Directors' expectations regarding the future, may be found in the Chairman's Statement whilst the Investment Manager's views are included in its Report below.

On behalf of the Board

Nicholas Smith

Chairman

2 May 2018

Proposed Amendment to Investment Policy

The Company's current Investment Policy is disclosed above.

It is proposed to adopt the investment policy set out below as the Investment Policy of the Company and approval is sought from shareholders at the AGM. The proposed changes are marked up, separately, for ease of identification.

"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 Stock Exchange of Thailand 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 admitted to the Official List, 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."

Investment Policy (with proposed changes identified)

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 Stock Exchange of Thailand or (ii) that are unquoted 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

Delivering the Investment Policy

The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers and, accordingly, stock selection is usually the major source of added value. No stock is bought without the fund managers having first met management. The Investment Manager estimates a company's worth in two stages, quality then price. Quality is defined by reference to, amongst other factors, management, business focus, balance sheet strength and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Manager's portfolio construction with diversification, rather than formal controls, guiding stock and sector weights. Investments are not limited as to market capitalisation or sector weightings within Thailand.

The 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 stock 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 admitted to the Official List, 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 Company's gearing policy is that borrowings are short-term in nature and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy

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 short-term 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.

INVESTMENT MANAGER'S REPORT

Overview

Thai equities had a solid run over the year ended 28 February 2018 with larger capitalisation stocks rallying in the second half of the Company's year. Optimism about both global and domestic growth buoyed the market, as did a worldwide run-up in key stock market indices on the back of US President Donald Trump's implementation of tax reforms.

Annual GDP growth in Thailand accelerated to 3.9% in 2017, buttressed by the twin pillars of exports and tourism despite a strengthening Thai Baht. Domestic consumption and private investments continued to lag, although both showed signs of improvement towards the year-end. Stockmarket sentiment was also lifted by indications that the political backdrop was stabilising, in the wake of Yingluck Shinawatra absconding just prior to her criminal conviction. Her action alleviated fears of violence that might have ensued if she had not fled to Dubai, from where she cannot be extradited. Meanwhile Prime Minister Prayuth Chan-ocha expressed a commitment to returning the kingdom to democratic rule, albeit elections keep being delayed.

As part of its investment process, the Investment Manager applies a quality test which can exclude stocks quoted in the Stock Exchange of Thailand Index ("SET Index") based on the Manager's perception of a lack of transparency or poor corporate governance. Not holding these stocks, which may be subject to momentum-driven increases in value can hurt the Company's performance relative to the SET Index over certain reporting periods.

Not holding sufficient amounts of resources-sector companies proved costly for the portfolio, as they did well in tandem with the rising energy prices. In particular, the positive contribution from our holding in PTT Exploration and Production was overshadowed by the lack of exposure to its parent PTT which saw a share price hike of over 40%.

Also, within the energy sector, non-holding Energy Absolute hurt relative portfolio performance, largely on the back of speculative activity as its share price saw a massive 170% gain. Our convictions were validated somewhat as its shares fell after the year ended.

The portfolio's lack of exposure to Airports of Thailand also impacted relative performance as the company saw its shares buoyed by healthy tourism data. We do not hold the company in view of its stretched valuations, ongoing concerns over large investment budgets and transparency issues.

Finally, not holding CP All hurt the portfolio as the convenience-store operator posted good results on the back of a reasonable uptick in domestic consumption. On the flipside, not holding CP Foods helped, as the food business suffered from poor domestic sales. We remain wary of the CP Group of companies, because of its history of weak corporate governance.

Portfolio

Over the year ended 28 February 2018, the SET Index rose by 21.6% in Sterling, total return terms. Your portfolio also posted solid double-digit growth, returning 17.7% in net asset value Sterling total return terms.

Despite lagging the SET Index, which had another very strong year with the resources sector leading gains driven mainly by higher commodity prices, the portfolio performed well in several areas.

We saw positive performance in the financials sector from stock selection. Aeon Thana Sinsap more than recovered from a period of softness, reporting healthy earnings as loan growth picked up and asset quality improved. New regulations on credit cards proved beneficial, allowing Aeon Thana to select good clients with higher credit limits. Meanwhile, Tisco Financial's profits were similarly impressive, and investors were cheered at the potential for growth coming from its acquisition of Standard Chartered's local retail business. We remain overweight compared to the index as our research and conversations with management have shown that the bank is well-capitalised, benefits from a conservative provisioning policy, and is run well by a team that understands how to navigate uncertainties. We also maintain an overweight to the financials sector, as we anticipate improvements in loan demand, asset quality and the provisioning cycle.

The underweight exposure to the agricultural and food industry served the Company well, as this sector was one of the main laggards over the review period. Among our food industry holdings, soft drinks manufacturer Haad Thip lifted relative returns, as it rode the market rally in early 2018. Meanwhile, despite an overall underweight to the technology sector, Advanced Info Service contributed as revenue grew and telcos became more rational, competing less on subsidies and thus improving margins. Hana Microelectronics also had positive absolute returns, on optimism following the US elections and better utilisation at its semiconductor business. These stocks outperformed non-holdings Delta Electronics and KCE Electronics, which were hampered by challenging company-specific operating conditions, as well as the appreciating Baht and higher copper prices.

We participated in TOA Paint's initial public offering ("IPO") as a cornerstone investor. Thailand's leading paints manufacturer and distributor, TOA has significant operations throughout the region, including in Vietnam. The initiation has benefited the Company, with TOA not only adding a new dimension to the portfolio but also with its share price enjoying a good run following its October listing. The shares listed at 24 Baht per share and had risen to 34.5 Baht by the end of February, a very healthy 44% increase.

This type of investment is exactly the sort of opportunity that we hope to find in coming years through detailed research and due diligence by seeking to invest in unquoted companies in the period leading up to an IPO as explained in the Chairman's Statement.

Retail-property developer Central Pattana and home improvement retailer Home Product Center were also two steady businesses that continued to reward the patient shareholder. Both companies are good at following through with their strategies and maintaining operational efficiencies to turn a profit. Central Pattana was also boosted by capital reallocation, a successful one-off fire insurance claim, and robust tourism.

Elsewhere, the lack of exposure to Group Lease was beneficial, as the company was hurt by fraud allegations.

Another holding, BEC World, suffered from a tough operating environment and this was reflected in its earnings when its share price came under pressure after management said it expected softer advertising revenues. Elsewhere, Alucon was hurt by higher ingot prices, while Dynasty Ceramic was hampered by heavy competition in the tiles industry. We are encouraged by the low-cost producer's strategy to expand capacity through consolidation.

In portfolio activity, we accepted Berli Jucker's tender offer for all of Big C Supercenter's outstanding shares; Big C is now privatised. We felt the majority owner of the hypermarket operator offered a fair price for the asset.

Growing regional exposure - two examples

Here, we would like to highlight two holdings with regional exposure which we believe will contribute healthy returns to the portfolio over the long term.

Aeon Thana Sinsap

The first is Aeon Thana Sinsap, mentioned above. This consumer lender for household products is a subsidiary of Japan's Aeon Group, a well-respected parentage that allows the cross-sharing of capabilities among regional units. For example, Aeon Thana recently entered the domestic used-car market as it expects more consumers to buy second-hand vehicles due to favourable pricing and tax conditions. For the local business endeavour, the Thai company emulated Aeon Malaysia's model by targeting existing customers with low borrowing rates, and the strategy appears to be working well.

This cross-sharing of expertise has also allowed Aeon Thana to expand its retail financing network in the growing markets of Cambodia, Myanmar and Laos. The company entered these markets only in the last few years but they have contributed significant growth, particularly in terms of loans income.

Although there is some way to go for these countries to catch up with their more advanced peers, we think Aeon Thana is in a very good position to take advantage of still-low penetration rates in these countries for financial products and rising middle-class aspirations. The share of revenues from Cambodia, Myanmar and Laos, currently at under 5%, is not large but it is growing fast, and we expect the contribution to reach 10% of the company's total revenues by 2020.

Siam City Cement

Another holding we believe worth highlighting is Siam City Cement. This company had a tough year in 2017 due to oversupply challenges in the domestic Thai business but overseas expansion has helped to mitigate the drop in total earnings. This includes recently completed acquisitions in Vietnam, where it already has a sizeable 20% market share, as well as Sri Lanka where it is the market leader despite price controls implemented by the government. The company is also expanding capacity in Cambodia with a new plant and growing its small but nascent presence in Bangladesh.

As Siam City Cement benefits from its growing overseas operations, it has not neglected its domestic business. To maintain profitability, it plans to pare back its exposure to low-performing segments of the market and improve its product mix. It has also managed to lock in a large part of its fuel costs for 2018, which should remove the risks associated with raw material prices and help the bottom line.

We believe this combination of improving domestic efficiency whilst diversifying its sources of income beyond Thailand will help boost cash generation and sustainable growth over the long term.

Outlook

Thai equities continue to outpace their regional peers and remain resilient in the face of a renewed shake-up in global markets. With local capital driving the market, this could result in domestic stocks being even better protected from global volatility.

Recent upgrades to growth forecasts bode well for the country's near-term development. Although exports and tourism cannot be expected to prop up the entire economy in the long term, a positive outlook for these segments seems a good sign. Improvements to consumption and ongoing public investments, such as the US$45 billion Eastern Economic Corridor initiative, could also help sustain growth. As inflation remains at manageable levels, there is no pressure for the central bank to alter the direction of monetary policy.

On the corporate front, valuations appear fairly stretched relative to historical averages, which is something we are continually monitoring, but against the region, they remain competitive. We continue to manage the portfolio through a fundamentals-focused investment process, by seeking and holding businesses with experienced management and solid balance sheets that have the potential to retain profitability over the long term.

Aberdeen Asset Management Asia Limited

Manager

2 May 2018

FINANCIAL HIGHLIGHTS

DIVIDENDS

TEN YEAR FINANCIAL RECORD

INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS

As at 28 February 2018

INVESTMENT PORTFOLIO - OTHER INVESTMENTS

As at 28 February 2018

DIRECTORS' REPORT

The Directors present their Report and the audited financial statements of the Company for the year ended 28 February 2018, taking account of any events between the year end and the date of approval of this Report.

Results and Dividend

The Directors recommend that a final dividend per share of 11.1p (2017 - 10.3p per share) is paid on 26 June 2018 to shareholders on the register on 1 June 2018. The ex-dividend date is 31 May 2018. A resolution in respect of the final dividend will be proposed at the forthcoming AGM.

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.

Individual Savings Account

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 2018. 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 2018 the Company bought back and cancelled 1,665,119 Ordinary shares (2017 - 1,331,650 Ordinary shares). As at 28 February 2018, the Company's issued share capital consisted of 16,863,513 Ordinary shares (2017 - 18,528,632 Ordinary shares) with each share holding one voting right in the event of a poll. An additional 106,111 Ordinary shares were bought back between 1 March 2018 and the date of approval of this Annual Report resulting in 16,757,402 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 Fund Managers Limited ("AFML"), a member of the Standard Life Aberdeen Group, as its alternative investment fund manager ("AIFM"). AFML has been appointed to provide the Company with investment management, risk management, administration and company secretarial services as well as promotional activities. The Company's portfolio is managed by Aberdeen Asset Management Asia Limited ("AAMAL") by way of a group delegation agreement in place between AFML and AAMAL.

Until 28 February 2018, the management fee was charged to the Company on the following basis: a monthly fee, payable in arrears, calculated at an annual rate of 1.0% of total assets less current liabilities, with a rebate to the Company for any fees received in respect of any investments by the Company in investment vehicles managed by the Standard Life Aberdeen Group (see note 4 to the financial statements). With effect from 1 March 2018, the management fee has been reduced to 0.9% of total assets less current liabilities and is otherwise calculated on the same basis as previously.

The fees payable to the Standard Life Aberdeen Group during the year ended 28 February 2018 are disclosed in Notes 4 and 5 to the financial statements. The investment management fees and bank loan interest costs were charged 100% to revenue during the year ended 28 February 2018 but will be charged 25% to revenue and 75% to capital with effect from 1 March 2018.

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, as reduced from 1 March 2018, 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.

In addition, AFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited ("AAM") and administrative and secretarial services to Aberdeen Asset Management PLC.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, this statement describes how the Company applies the principles identified in the UK Corporate Governance Code published in April 2016 (the "UK Code") for the year ended 28 February 2018. The UK Code is available on the Financial Reporting Council's ("the FRC") website: frc.org.uk.

The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance as published in July 2016 ("the AIC Code") by reference to the AIC Corporate Governance Guide for investment Companies ("the AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The AIC Code and AIC Guide are available on the AIC's website: theaic.co.uk

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to shareholders.

The Board confirms that, during the year, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

- the role of the chief executive (A.1.2);

- executive directors' remuneration (D.1.1 and D.1.2); and

- the need for an internal audit function (C.3.6).

For the reasons set out in the AIC Guide and UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The full text of the Company's Statement of Corporate Governance can be found on its website: newthai-trust.co.uk

Directors

The current Board consists of a non-executive Chairman and three non-executive Directors, all of whom held office throughout the year under review. Hugh Young retired as a Director on 28 June 2017. The Senior Independent Director is Clare Dobie.

The names and biographies of each of the Directors are shown in the 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 to provide clear and effective leadership and proper stewardship of the Company.

The Directors attended Board and Committee meetings during the year ended 28 February 2018 as follows (with their eligibility to attend the relevant meeting in brackets):

(A) Hugh Young retired as a Director on 28 June 2017

Three of the seven Board meetings held during the year were devoted to 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 AFML.

All of the Directors will retire at the AGM in accordance with corporate governance best practice. Nicholas Smith, Clare Dobie, Andy Pomfret and Sarah MacAulay, 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 AIFM and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, each Director's individual performance continues to be effective and demonstrates commitment to the role. The Board therefore has no hesitation in recommending at the AGM the re-election as Directors of Nicholas Smith, Clare Dobie, Andy Pomfret and Sarah MacAulay.

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.

Substantial Interests

As at 28 February 2018 the following were registered, or had notified the Company, as being interested in 3% or more of the Company's Ordinary share capital:

The above share interests were unchanged as at the date of approval of this Report other than notifications to the Company by Lazard Asset Management on 2 March 2018 of a holding of 3,000,050 shares, equivalent to 17.8% of the Company's issued share capital, and by City of London on 5 March 2018 of a holding of 3,754,168 shares, equivalent to 22.3% of the Company's issued share capital.

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 other than as set out in note 17 to the financial statements relating to Hugh Young.

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 may be found 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 2016.

The Directors have reviewed the level of non-audit services provided by the Auditor during the year, together with the Auditor's procedures in connection with the provision of such services, and remain satisfied that the Auditor's objectivity and independence is being safeguarded.

Going Concern

The Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's 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. On 28 October 2015, the Company entered into a three-year multi-currency revolving loan facility ("the Facility") with Scotiabank (Ireland) Limited for £10m. As at 28 February 2018, £5.65m (2017: £2.65m) had been drawn down under the Facility.

The Directors have also considered the maturity of the Company's Facility in October 2018. The Company will enter into negotiations with its bankers in advance of renewal in October 2018. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access a bank loan facility. However, should suitable 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 disclosed in Overview of Strategy and in note 15 to the financial statements. After making enquiries, including a review of forecasts detailing revenue and liabilities, the Directors have a reasonable expectation that the Company possesses adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Continuance of the Company

The Company does not have a fixed life. However, under Article 156 of the Articles of Association, if, in the 12 weeks preceding the Company's financial year-end (28 February), the Ordinary shares have been trading, on average, at a discount in excess of 15% to the underlying NAV per share over the same period, notice will be given of a special resolution to be proposed to wind up the Company. In the 12 weeks ended 28 February 2018, the Ordinary shares traded at an average discount of 14.7% to the underlying NAV per share (including income), therefore no such resolution will be put to the Company's shareholders at the forthcoming AGM. In October 2016 the Directors announced that the relevant NAV for these purposes would be calculated including undistributed net revenue for the period.

Independent Auditor

As explained in the Audit and Management Engagement Committee's Report, the Directors will place resolutions before the AGM to re-appoint Deloitte LLP as auditor for the year to 28 February 2019 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, information relating to the Company's greenhouse gas emissions, and in the Strategic Report and in note 15 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 AIFM which has sub-delegated that authority to the Investment Manager. The full text of the Company's response to the Stewardship Code may be found on the Company's website.

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 Standard Life Aberdeen Group'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 the Standard Life Aberdeen Group in situations where direct communication is required and representatives from the Board offer to meet with major shareholders on an annual basis in order to gauge their views.

In addition, members of the Board accompany the Manager when undertaking a series of meetings with institutional shareholders.

The Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds, as appropriate, on behalf of the Board.

The Notice of AGM included within the Annual Report is normally sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Investment Manager at the Company's AGM.

Special Business at the AGM

The AGM will be held on 21 June 2018 and the AGM Notice, related notes and Appendix may be found in the published Annual Report. Resolutions relating to the following items of special business will be proposed at the forthcoming AGM:-

Amendment to Investment Policy

Resolution 10 is an Ordinary Resolution proposing an amendment to the Company's investment policy. Further details of the proposed changes are contained in the Chairman's Statement and may be found above.

Authority to Allot Relevant Securities

Ordinary Resolution No. 11 in the Notice of AGM will renew the authority to allot the unissued share capital up to 10% of the Company's issued share capital as at the date of the passing of the resolution (equivalent to approximately 1.6m Ordinary shares). Such authority will expire on the date of the next AGM or on 27 August 2019, whichever is earlier. This means that the authority will have to be renewed at the next AGM.

Limited Disapplication of Pre-emption Provisions

Resolution 12, which is a Special Resolution, will, if passed, renew the Directors' existing authority to make limited allotments of shares for cash other than according to the statutory pre-emption rights which require all shares issued for cash to be offered first to all existing shareholders provided such allotments are made at a price per Ordinary share above the prevailing NAV per Ordinary share. This authority includes shares that the Company sells or transfers out of Treasury which have been previously bought back into Treasury (if any) pursuant to the authority conferred by Resolution 13 below. The Board will only consider buying in Ordinary shares for cancellation, or for holding in Treasury, at a price which represents a discount to their prevailing NAV. In line with the authority sought under Resolution 11, Resolution 12 will, if passed, give the Directors power to allot, for cash, securities up to 10% of the total issued share capital at the date of the passing of the resolution (equivalent to approximately 1.6m Ordinary shares) other than according to the statutory pre-emption rights.

The authorities being sought under Resolutions 11 and 12, which will expire on the date of the earlier of the AGM in 2019 or 27 August 2019, will give the Board flexibility to take advantage of any opportunities to issue new Ordinary shares within a shorter period than would otherwise be the case.

Directors' Authority to Purchase the Company's Ordinary Shares

Resolution 13, a Special Resolution, will be proposed to renew the Directors' authority to make market purchases of the Company's Ordinary shares, in accordance with the provisions contained in the Companies Act and the Listing Rules of the UK Listing Authority.

Accordingly, the Company is seeking authority, under Resolution 13, to purchase up to a maximum of approximately 2.5m Ordinary shares, or if less, that number of Ordinary shares equivalent to 14.99% of the issued Ordinary share capital at the date of the passing of the Resolution at a minimum price of not less than 25p per Ordinary share (being the nominal value) and a maximum price of not more than the higher of (i) an amount equal to 5% above the average of the middle market quotation for an Ordinary share taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary share is purchased; and (ii) the higher of the price of the last independent trade and the current highest independent bid on the stock market where the purchase is carried out.

If passed, Resolution 13 will permit the Company to purchase Ordinary shares under the guidelines described above. Any Ordinary shares purchased in this way will either be cancelled, and the number of Ordinary shares in issue reduced accordingly or, under the power granted by Resolution 13, may be held in Treasury. The authority sought under Resolution 13 will expire on the earlier of date of the AGM in 2019 and 27 August 2019, whichever is earlier, unless renewed prior to such time.

Recommendation

The Board considers each of Resolutions 10,11,12 and 13 under Special Business at the AGM to be in the best interests of the Company and its members as a whole and is likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Board unanimously recommends that shareholders should vote in favour of the resolutions to be proposed under Special Business at the AGM, as they intend to do in respect of their own shareholdings, amounting to 16,264 Ordinary shares.

On behalf of the Board

Nicholas Smith

Chairman

2 May 2018

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

2 May 2018

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF FINANCIAL POSITION

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CASHFLOWS

NOTES TO THE FINANCIAL STATEMENTS: