14 Oct 2019 07:00
ABERDEEN NEW THAI INVESTMENT TRUST PLC
Legal Entity Identifier (LEI): 213800LUTHTZ8LS5UK85
11 October 2019
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2019
The following is the unaudited Interim Board Report for the six months ended 31 August 2019.
PERFORMANCE (TOTAL RETURN) | |||||
Net asset valueper Ordinary share {A} | Share priceper Ordinary share{A} | Stock Exchange of Thailand ("SET") Index (Sterling adjusted)
| |||
Six months ended31 August 2019 | +14.6% | Six months ended31 August 2019 | +14.5% | Six months ended31 August 2019 | +15.2% |
Year ended28 February 2019 | (5.1)% | Year ended28 February 2019 | (3.7)% | Year ended28 February 2019 | (3.9)% |
{A} Considered to be an Alternative Performance Measure. | |||||
Source: Standard Life Aberdeen Group, Morningstar & Lipper | |||||
A summary of the Alternative Performance Measures is provided below. | |||||
FINANCIAL HIGHLIGHTS
31 August 2019 | 28 February 2019 | % change | |
Total assets (£'000) | 125,375 | 112,021 | +11.9 |
Equity shareholders' funds (net assets) (£'000) | 119,725 | 106,371 | +12.6 |
Ordinary share price (mid-market) | 620.00p | 552.00p | +12.3 |
Net asset value per Ordinary share{A} | 723.37p | 641.45p | +12.8 |
Discount to net asset value{AB} | 14.3% | 13.9% | |
GBP/THB exchange rate | 37.233 | 41.915 | +11.2 |
Stock Exchange of Thailand ("SET") Index{C} | 44.45 | 39.45 | +12.7 |
Interim dividend per share{D} | 8.00p | 7.00p | |
Net gearing{B} | 3.5% | 2.8% | |
Ongoing charges ratio{B} | 1.26% | 1.26% | |
{A} Calculated including undistributed net revenue for the period. | |||
{B} Considered to be an Alternative Performance Measure. | |||
{C} Sterling adjusted, capital return basis | |||
{D} Interim dividend relating to the first six months of the financial year. | |||
INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT
Introduction
As we approach the Company's 30 year anniversary, the absolute long term performance of the Company remains strong. Our AIC 'ISA Millionaire' status (now in its second year of standing - see the AIC's press release of 25 February 2019) demonstrates the healthy returns which have been generated by equity investment in Thailand and which we hope to build on in the future. The capital and income growth that has been delivered by the Company underscores the effectiveness of its investment strategy: a long term focus on quality companies invested in a market that has demonstrated resilience through varying economic cycles. Many Thai companies have access to the varied regional opportunities that now exist and which continue to grow unabated including, but not limited to, those in Cambodia, Laos, Myanmar and Vietnam.
Performance
Thai equities and our portfolio enjoyed a positive half year to the end of August 2019 with particular gains for Sterling investors. The Stock Exchange of Thailand Index ("SET Index") rose by 15.2% on a sterling-adjusted total return basis as the Thai baht strengthened over 11% against the pound. In local currency terms the SET Index eventually gained some momentum through the period with a 5% increase by early July only to fall rapidly through August to settle at the period end slightly ahead.
By comparison, your Company's net asset value ("NAV") rose by 14.6%, while the Ordinary share price gained 14.5% in value, again on a sterling total return basis. This small NAV underperformance against the SET Index was partly due to the portfolio being underweight to the services and technology sectors and stock selection therein. Conversely, the Manager's stock selection in financials and food, together with gearing within the portfolio, added to relative performance. Further stock performance details can be found below.
Overview
While the US Federal Reserve's ("Fed") abrupt change towards a more dovish monetary policy stance since the beginning of the year played a key role in lifting sentiment, the escalation of the US-China trade war held markets back, and had a direct impact on company earnings. However, in the case of Thailand, it was mainly domestic politics that influenced the direction of the equity market.
In March, Thailand held its first general election in almost five years. The initial outcome was unclear, as neither of the two leading parties could secure a lower-house majority. The ensuing political gridlock unnerved investors and caused a net outflow of capital. Eventually, the junta-backed Palang Pracharat Party, led by incumbent Prime Minister General Prayuth Chan-ocha, managed to form a coalition government with support from the Democrat and Bhumjaithai Parties. General Chan-ocha was subsequently re-elected as Prime Minister by the 500 members of the House of Representatives and 250 senators. The stock market responded well to the formation of the government and rallied in June. The semblance of stability in the country wooed back investors who expected market-friendly policies to continue.
On the global front, the US-China trade dispute remained unresolved and Brexit continued to dominate headlines in Europe. Washington and Beijing exacted tit-for-tat tariffs on a widening range of goods, while the trade war that ensued had far reaching effects on economies linked to China via its supply chain. While at the time of writing, China and the US were taking steps to reduce trade tension, an effective solution is unlikely to be found soon. The prolonged nature of the dispute has taken its toll on a global scale - China's second-quarter 'official' growth, at 6.2%, was its slowest in almost three decades and the International Monetary Fund cut its global growth forecasts for the world economy for this year. In Thailand, GDP growth for 2019 was similarly downgraded after the economy logged its weakest figure in five years in the second quarter due to subdued demand at home and abroad. To counter this, the government approved a new stimulus package worth over 300 billion baht, which it hopes will boost household consumption.
On the policy front, low inflation and a healthy current account allowed the Bank of Thailand ("BoT") to hold its benchmark interest rate at 1.75%. It finally cut rates for the first time in over four years in August, driven in part by the inversion of the US-Treasury bond yield curve, usually a harbinger of recession, and the Fed's first rate cut in over a decade in July. The latter prompted major central banks to follow suit. The BoT signalled that its next cut would likely take place in early 2020.
Against this backdrop, volatility in the SET Index over the review period was benign compared to its Southeast Asian peers, as well as the broader emerging markets. This was helped by the robust fundamentals of the companies listed and their resilience in the face of external market pressures. Their good relative performance was also underscored by the baht's strength against the US dollar and sterling. The latter's weakness was due partly to ongoing Brexit concerns. In contrast, the baht has been the best performing currency in emerging Asia since 2018, reaching a six-year high this year. Foreign-exchange reserves stood at a record of over US$220 billion in August.
Portfolio
During the period your Manager's selection of holdings in the financials and food and beverage sectors performed well. In financials, Aeon Thana Sinsap ("AEONTS") is one of the largest non-bank issuers of credit cards and personal loans for household products, targeting low to mid-end clients. Non-bank financial institutions, such as AEONTS, have benefited from easier rates, as demand for consumer, credit card and personal loans has increased, supporting healthy profit growth.
In the food and beverage industry, leading beverage and personal care products manufacturer Osotspa saw robust sales across all segments and healthy margin expansion in its domestic operations, as well as abroad. Soft drink producer Haad Thip also helped boost your Company's performance thanks to the hot and dry weather driving up sales for its products. In addition, the lower price of sugar brought down some of its operating costs. In the services sector, Home Product Center, a home improvement retailer, lifted performance. Its profits grew as gross margins benefited from a good product mix and disciplined control of operating expenses.
The portfolio's underweight in the energy and utilities sector detracted during the period, mainly from Gulf Energy Development, a non-holding, as the utility surged on expectations that it would generate long term benefits from bids for new infrastructure projects. The drop in exports and weaker domestic consumption hampered the automotive sector, which plays a key role in revenue generation in Thailand. Interhides, which produces leather coverings for cars, along with automotive lighting equipment manufacturer Thai Stanley Electric, both dampened your Company's gains. Interhides embarked on expanding its capacity to capitalise on a shift in demand for leather tanning services from China. The related capital expenditure, coupled with the company cancelling a contract with a significant partner, caused a decline in revenues. However, your Manager believes that Interhides' earnings outlook remains positive in the long run as it is well placed in the region to fill the supply gap for car leatherware. With this in mind, the portfolio's exposure to the holding was increased. Your Company's overweight position to Thai Stanley detracted during the period, as its earnings were challenged by a slowdown in domestic automotive sales in the wake of the general election, as consumers held back in light of political uncertainties. In the context of the trade war pressuring trade and manufacturing in China, both holdings were also affected in the supply-chain disruption.
In line with the Company's new investment policy approved by shareholders in June 2018, your Manager introduced several small-cap holdings into the portfolio. During the period, your Manager initiated a position in Siam Global House, a retail chain that sells home-related products for construction, repair, decoration and renovation. This is a business that benefits from its exposure to wider Thai demand and the increasing interest in domestic DIY.
Over the period, the portfolio's exposure to recent introduction Krungthai Car Rental and Leasing was raised on an attractive valuation amidst expectations of a pick-up in the auto sector following the government's stimulus efforts. Your Manager also added to Tesco Lotus Retail because of the property giant's good performance and expectations that commercial rents will continue to increase.
Your Manager took profits from Banpu, Advanced Info Service, Eastern Water Resource Development and Electricity Generating on relative strength, and top sliced PTTEP that had done relatively well this year. The proceeds were used to continue to build your Company's existing holding in PTT, which recently announced plans to develop a gas pipeline in the Northeast to increase the group's existing capacity. Meanwhile, Siam Cement was pared due to anticipated headwinds for the chemicals sector as the spike in crude prices is expected to drive up energy costs.
Earnings and Interim Dividend
The Company's revenue return for the six months ended 31 August 2019 was 15.8p per share (2018 - 15.1p).
The Board is declaring an interim dividend of 8.00p per share (2018 - 7.00p) to be paid on 22 November 2019 to shareholders on the register as at 25 October 2019. The ex-dividend date will be 24 October 2019.
Share Buybacks
The Board continues to monitor the share price discount to NAV and will continue to pursue a policy of selective buybacks of shares where to do so would be in the best interests of shareholders.
During the six months ended 31 August 2019 the Company bought back and cancelled 31,971 Ordinary shares (2018 - 248,557). As at 31 August 2019, the Company's issued share capital consisted of 16,550,930 Ordinary shares with voting rights. Between 1 September 2019 and the date of approval of this Report, the Company bought back for cancellation a further 14,708 Ordinary shares resulting in 16,536,222 shares with voting rights in issue.
Board
Sarah McCarthy was appointed a Director on 1 March 2019 but resigned, for personal reasons, on 29 May 2019. At the AGM on 25 June 2019, I was pleased to advise that Clare Dobie, who had been due to retire following the AGM, had agreed to remain as a Director to provide continuity. The Board has commenced the search for a new Director and expects to make an announcement shortly.
Investment Team Changes
The Board is also taking this opportunity to update shareholders that Adithep Vanabriksha, CIO of Aberdeen Standard Investments ("ASI") Thailand is leaving ASI. Orsen Karnburisudthi remains as Head of Equities - Thailand and he continues to have primary responsibility for the Company's portfolio. The Board is confident that the Investment Manager's team approach together with its breadth and depth of experience means that the Company's portfolio remains in good hands. There will be no change to the ASI investment process and the team remains focused on delivering and improving performance. The Board is grateful for Mr Vanabriksha's contribution to the success of the Company over the period of his involvement.
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 Annual General Meeting that the Company be put into voluntary liquidation.
Electronic Communications for Registered Shareholders
The Board is proposing to move to more electronic-based forms of communication with its registered shareholders. Increased use of electronic communications should be a more cost effective, as well as faster and more environmentally friendly way of providing information to shareholders. Registered shareholders will therefore find enclosed with the posted Half Yearly Report a letter containing our electronic communications proposals and an opportunity to supply an email address to the Registrars, Equiniti Limited. Registered shareholders who wish to continue to receive hard copies of documents and communications by post are encouraged to send back their replies as soon as possible but in any event by 30 November 2019.
Shareholders who hold their shares through the Aberdeen Standard Investment Trust Share Plan, ISA and Children's Plan (Planholders) will continue to receive all documentation by post in hard copy form for the time being. Aberdeen Asset Managers Limited, the plan manager, is currently assessing how to adopt more electronically-based communications within these savings plans and planholders will be contacted directly with more detail in due course.
Outlook
Looking ahead, the escalation of US-China trade tensions is likely to cloud the outlook for Thai markets. The simmering trade war will also compound worries about the economy, with the central bank recently lowering its growth forecasts. This could dampen corporate earnings outlooks and compel companies to hold back on capital spending or shareholder returns. In addition, tourism, one of Thailand's twin economic pillars, has suffered from reduced visitor numbers. Given that a third of all foreign travellers hail from China, a sustained downturn on the mainland will impact Thailand's GDP growth.
That said, with post-election political uncertainty removed, your Manager believes the government's policies will remain broadly supportive of the economy, with a focus on consumption and public investment while the energy sector and tourism-related businesses should continue to fare well. Private investment should also benefit from the relocation of some manufacturing facilities to Thailand from China, and from renewed government spending on public-private infrastructure projects. At the same time, improving sentiment towards emerging markets, following the Fed's less hawkish stance, also bodes well.
As a long-term investor, your Manager is not distracted by sudden bouts of volatility. These can provide attractive opportunities to add to existing holdings, introduce new positions at more reasonable valuations, or to take profits from those investments which have performed well.
Ultimately, I remain confident that your Manager's diligent bottom up investment process and choice of resilient, well run companies with strong balance sheets and business models will continue to deliver good returns for shareholders over the long term. The Manager's investment process, recently focussed on adding smaller company names, allows the Manager to seek opportunities across the entire market capitalisation range. This investment in quality companies, with effective management teams which are used to operating through differing market cycles, should continue to benefit all investors in the Company.
Nicholas Smith
Chairman
11 October 2019
INTERIM BOARD REPORT - OTHER MATTERS
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:
- the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);
- the Half Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and
- the Half Yearly Board Report includes a fair review of the information required by 4.2.8R of the Disclosure Guidance and Transparency Rules (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).
The Half Yearly Financial Report for the six months ended 31 August 2019 comprises the Interim Board Report, including the Statement of Directors' Responsibilities, and a condensed set of Financial Statements.
Principal Risks and Uncertainties
The principal risks and uncertainties associated with the Company are set out in detail on pages 10 to 12 of the Annual Report for the year ended 28 February 2019, which is published on the Company's website, and which are applicable for the remaining six months of the Company's financial year ending 28 February 2020 as they have been for the period under review.
Going Concern
The Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist entirely of equity shares in companies listed on the Stock Exchange of Thailand which are, in most circumstances, realisable within a short timescale.
The Directors are mindful of the principal risks and uncertainties disclosed on pages 10 to 12 and in Note 15 to the financial statements of the Annual Report for the year ended 28 February 2019.
The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking covenants.
The Company has a £15m three-year multi-currency revolving credit facility (the "Facility") with Industrial and Commercial Bank of China Limited, London, of which £5.65m was drawn down as at 31 August 2019. 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.
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.
For and on behalf of the Board
Nicholas Smith
Chairman
11 October 2019
INVESTMENT PORTFOLIO | ||||
As at 31 August 2019 | ||||
Valuation | Total assets | |||
Company | Sector (Thai SET) | £'000 | % | |
Aeon Thana Sinsap | Finance & Securities | 6,858 | 5.5 | |
Advanced Info Service | Information & Communication Technology | 5,921 | 4.7 | |
Home Product Center | Commerce | 5,509 | 4.4 | |
PTT Public Company | Energy & Utilities | 5,065 | 4.0 | |
Bangkok Insurance | Insurance | 4,826 | 3.8 | |
Central Pattana | Property Development | 4,780 | 3.8 | |
Land & Houses{A} | Property Development | 4,444 | 3.5 | |
Toa Paint | Construction Materials | 4,363 | 3.5 | |
Siam Cement | Construction Materials | 4,332 | 3.5 | |
Tesco Lotus Retail Growth Freehold & Leasehold Property Fund (Local market shares) | Property Fund & REITS | 4,218 | 3.4 | |
Top ten investments | 50,316 | 40.1 | ||
Osotspa | Food & Beverage | 4,094 | 3.3 | |
Siam City Cement | Construction Materials | 4,027 | 3.2 | |
Thai Stanley Electric {A} | Automotive | 3,938 | 3.1 | |
Tisco Financial Group | Banking | 3,835 | 3.1 | |
Minor International {B} | Food & Beverage | 3,720 | 3.0 | |
PTT Exploration & Production | Energy & Utilities | 3,562 | 2.8 | |
Kasikornbank | Banking | 3,521 | 2.8 | |
Eastern Water Resources Development & Management | Energy & Utilities | 3,517 | 2.8 | |
Kiatnakin Bank | Banking | 3,264 | 2.6 | |
Mega Lifesciences | Commerce | 3,218 | 2.6 | |
Top twenty investments | 87,012 | 69.4 | ||
Bangkok Bank | Banking | 2,916 | 2.3 | |
Bangkok Dusit Medical Services | Health Care Services | 2,853 | 2.3 | |
Hana Microelectronics | Electronic Components | 2,824 | 2.2 | |
Electricity Generating | Energy & Utilities | 2,708 | 2.2 | |
Dynasty Ceramic {B} | Construction Materials | 2,407 | 1.9 | |
Banpu | Energy & Utilities | 2,234 | 1.8 | |
Banpu Power | Energy & Utilities | 2,134 | 1.7 | |
Siam Commercial Bank | Banking | 2,098 | 1.7 | |
LPN Development | Property Development | 1,977 | 1.6 | |
Haad Thip | Food & Beverage | 1,920 | 1.5 | |
Top thirty investments | 111,083 | 88.6 | ||
{A} Holding includes investment in both common stock and non-voting depositary receipts. | ||||
{B} Holding includes investment in both common stock and warrants. | ||||
Note: Unless otherwise stated, foreign stock is held. | ||||
Krungthai Car Rent & Lease | Finance & Securities | 1,914 | 1.5 | |
Bumrungrad Hospital | Health Care Services | 1,795 | 1.5 | |
Alucon | Packaging | 1,467 | 1.2 | |
Muang Thai Insurance | Insurance | 1,401 | 1.1 | |
Goodyear (Thailand) | Automotive | 1,310 | 1.0 | |
Interhides | Automotive | 1,230 | 1.0 | |
Siam Global House | Commerce | 1,151 | 0.9 | |
Sammakorn | Property Development | 1,005 | 0.8 | |
Thaire Life Assurance | Insurance | 808 | 0.6 | |
Thai Reinsurance | Insurance | 371 | 0.3 | |
Total investments | 123,535 | 98.5 | ||
Net current assets{C} | 1,840 | 1.5 | ||
Total assets | 125,375 | 100.0 | ||
{A} Holding includes investment in both common stock and non-voting depositary receipts. | ||||
{B} Holding includes investment in both common stock and warrants.
| ||||
{C} Excludes bank loans of £5,650,000. | ||||
Note: Unless otherwise stated, foreign stock is held. | ||||
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months ended | ||||
31 August 2019 | ||||
Revenue | Capital | Total | ||
Notes | £'000 | £'000 | £'000 | |
Gains/(losses) on investments | - | 13,186 | 13,186 | |
Income | 2 | 3,273 | - | 3,273 |
Management fee | (129) | (387) | (516) | |
Administrative expenses | (219) | - | (219) | |
Currency losses | - | (19) | (19) | |
_________ | _________ | _________ | ||
Net return before finance costs and taxation | 2,925 | 12,780 | 15,705 | |
Finance costs | (15) | (45) | (60) | |
_________ | _________ | _________ | ||
Net return before taxation | 2,910 | 12,735 | 15,645 | |
Taxation | 3 | (295) | - | (295) |
_________ | _________ | _________ | ||
Return after taxation | 2,615 | 12,735 | 15,350 | |
_________ | _________ | _________ | ||
Return per Ordinary share (pence) | 4 | 15.80 | 76.92 | 92.72 |
_________ | _________ | _________ | ||
The total column of the Condensed Statement of Comprehensive Income 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. | ||||
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months ended | ||||
31 August 2018 | ||||
Revenue | Capital | Total | ||
Notes | £'000 | £'000 | £'000 | |
Gains/(losses) on investments | - | (3,179) | (3,179) | |
Income | 2 | 3,167 | - | 3,167 |
Management fee | (124) | (371) | (495) | |
Administrative expenses | (212) | - | (212) | |
Currency losses | - | (9) | (9) | |
_________ | _________ | _________ | ||
Net return before finance costs and taxation | 2,831 | (3,559) | (728) | |
Finance costs | (13) | (39) | (52) | |
_________ | _________ | _________ | ||
Net return before taxation | 2,818 | (3,598) | (780) | |
Taxation | 3 | (293) | - | (293) |
_________ | _________ | _________ | ||
Return after taxation | 2,525 | (3,598) | (1,073) | |
_________ | _________ | _________ | ||
Return per Ordinary share (pence) | 4 | 15.11 | (21.53) | (6.42) |
_________ | _________ | _________ | ||
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at | As at | ||
31 August2019 | 28 February 2019 | ||
Notes | £'000 | £'000 | |
Non-current assets | |||
Investments at fair value through profit or loss | 123,535 | 109,309 | |
_________ | _________ | ||
Current assets | |||
Debtors and prepayments | 648 | 2,486 | |
Money market funds | 6 | 936 | 631 |
Cash at bank and in hand | 556 | 486 | |
_________ | _________ | ||
2,140 | 3,603 | ||
_________ | _________ | ||
Creditors: amounts falling due within one year | |||
Bank loans | (5,650) | (5,650) | |
Other creditors | (300) | (891) | |
_________ | _________ | ||
(5,950) | (6,541) | ||
_________ | _________ | ||
Net current liabilities | (3,810) | (2,938) | |
_________ | _________ | ||
Net assets | 119,725 | 106,371 | |
_________ | _________ | ||
Share capital and reserves | |||
Called-up share capital | 8 | 4,138 | 4,146 |
Share premium account | 19,391 | 19,391 | |
Capital redemption reserve | 1,397 | 1,389 | |
Capital reserve | 9 | 89,804 | 77,245 |
Revenue reserve | 4,995 | 4,200 | |
_________ | _________ | ||
Equity shareholders' funds | 119,725 | 106,371 | |
_________ | _________ | ||
Net asset value per Ordinary share (pence) | 10 | 723.37 | 641.45 |
_________ | _________ |
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Six months ended 31 August 2019 | |||||||
Share | Capital | ||||||
Share | premium | redemption | Capital | Revenue | |||
capital | account | reserve | reserve | reserve | Total | ||
Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 28 February 2019 | 4,146 | 19,391 | 1,389 | 77,245 | 4,200 | 106,371 | |
Purchase of own shares for cancellation | (8) | - | 8 | (176) | - | (176) | |
Return after taxation | - | - | - | 12,735 | 2,615 | 15,350 | |
Dividend paid | 5 | - | - | - | - | (1,820) | (1,820) |
_____ | ______ | ______ | ______ | ______ | ______ | ||
Balance at 31 August 2019 | 4,138 | 19,391 | 1,397 | 89,804 | 4,995 | 119,725 | |
_____ | ______ | ______ | ______ | ______ | ______ | ||
Six months ended 31 August 2018 | |||||||
Share | Capital | ||||||
Share | premium | redemption | Capital | Revenue | |||
capital | account | reserve | reserve | reserve | Total | ||
Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 28 February 2018 | 4,216 | 19,391 | 1,319 | 88,105 | 4,137 | 117,168 | |
Purchase of own shares for cancellation | (62) | - | 62 | (1,405) | - | (1,405) | |
Return after taxation | - | - | - | (3,598) | 2,525 | (1,073) | |
Dividend paid | 5 | - | - | - | - | (1,856) | (1,856) |
_____ | ______ | ______ | ______ | ______ | ______ | ||
Balance at 31 August 2018 | 4,154 | 19,391 | 1,381 | 83,102 | 4,806 | 112,834 | |
_____ | ______ | ______ | ______ | ______ | ______ |
CONDENSED STATEMENT OF CASHFLOWS (UNAUDITED)
Six months ended | Six months ended | |
31 August 2019 | 31 August 2018 | |
£'000 | £'000 | |
Operating activities | ||
Net return before finance costs and taxation | 15,705 | (728) |
Adjustment for: | ||
(Gains)/losses on investments | (13,186) | 3,179 |
Currency losses | 19 | 9 |
Increase in accrued dividend income | (358) | (333) |
Increase in other debtors excluding tax | (2) | (6) |
Increase/(decrease) in other creditors | 20 | (116) |
Overseas withholding tax | (261) | (260) |
_________ | _________ | |
Net cash flow from operating activities | 1,937 | 1,745 |
Investing activities | ||
Purchases of investments | (4,994) | (11,777) |
Sales of investments | 5,498 | 10,518 |
_________ | _________ | |
Net cash from/(used in) investing activities | 504 | (1,259) |
Financing activities | ||
Interest paid | (51) | (51) |
Equity dividend paid | (1,820) | (1,856) |
Buyback of Ordinary shares | (176) | (1,405) |
_________ | _________ | |
Net cash used in financing activities | (2,047) | (3,312) |
_________ | _________ | |
Increase/(decrease) in cash and cash equivalents | 394 | (2,826) |
_________ | _________ | |
Analysis of changes in cash during the period | ||
Opening balance | 1,117 | 3,864 |
Effect of exchange rate fluctuations on cash held | (19) | (9) |
Increase/(decrease) in cash and cash equivalents as above | 394 | (2,826) |
_________ | _________ | |
Closing balance | 1,492 | 1,029 |
_________ | _________ |
NOTES TO THE ACCOUNTS:
1. | Accounting policies |
Basis of preparation | |
The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. 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 Half Yearly financial statements have been prepared using the same accounting policies applied as the preceding Annual financial statements, which were prepared in accordance with Financial Reporting Standard 102. |
2. | Income | ||
Six months ended | Six months ended | ||
31 August 2019 | 31 August 2018 | ||
£'000 | £'000 | ||
Income from investments | |||
Overseas dividends | 3,266 | 3,164 | |
_________ | _________ | ||
Other income | |||
Interest from money market funds | 6 | 3 | |
Deposit interest | 1 | - | |
_________ | _________ | ||
7 | 3 | ||
_________ | _________ | ||
Total income | 3,273 | 3,167 | |
_________ | _________ |
3. | Taxation |
The taxation charge for the period represents withholding tax suffered on overseas dividend income. |
4. | Return per Ordinary share | ||
Six months ended | Six months ended | ||
31 August 2019 | 31 August 2018 | ||
p | p | ||
Revenue return | 15.80 | 15.11 | |
Capital return | 76.92 | (21.53) | |
_________ | _________ | ||
Total return | 92.72 | (6.42) | |
_________ | _________ | ||
The return per share is based on the following figures: | |||
£'000 | £'000 | ||
Revenue return | 2,615 | 2,525 | |
Capital return | 12,735 | (3,598) | |
_________ | _________ | ||
Total return | 15,350 | (1,073) | |
_________ | _________ | ||
Weighted average number of Ordinary shares in issue | 16,555,959 | 16,712,154 | |
_________ | _________ |
5. | Dividends | ||
Six months ended | Six months ended | ||
31 August 2019 | 31 August 2018 | ||
£'000 | £'000 | ||
2018 final dividend - 11.10p | - | 1,856 | |
2019 final dividend - 11.00p | 1,821 | - | |
2019 - return of unclaimed dividends | (1) | - | |
_________ | _________ | ||
1,820 | 1,856 | ||
_________ | _________ | ||
The Company has declared an interim dividend for the year ended 28 February 2020 of 8.00p (year ended 28 February 2019 - 7.00p). The interim dividend will be paid on 22 November 2019 to shareholders on the register on 25 October 2019. The ex-dividend date will be 24 October 2019. | |||
6. | Money market funds |
At the period end the Company had £936,000 (28 February 2019 - £631,000) invested in a zero-fee share class of the Aberdeen Liquidity Fund (Lux) - Sterling Fund. |
7. | Transaction costs | ||
During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows: | |||
Six months ended | Six months ended | ||
31 August 2019 | 31 August 2018 | ||
£'000 | £'000 | ||
Purchases | 7 | 12 | |
Sales | 3 | 13 | |
_________ | _________ | ||
10 | 25 | ||
_________ | _________ | ||
8. | Called-up share capital |
During the six months ended 31 August 2019 the Company purchased 31,971 Ordinary shares for cancellation at a cost of £176,000. During the six months ended 31 August 2018 the Company purchased 248,557 Ordinary shares for cancellation at a cost of £1,405,000. | |
Subsequent to the period end, the Company has bought back for cancellation a further 14,708 Ordinary shares at a cost of £90,000. |
9. | Capital reserve |
The capital reserve reflected in the Condensed Statement of Financial Position at 31 August 2019 includes gains of £49,859,000 (28 February 2019 - gains of £37,785,000) which relate to the revaluation of investments held at the reporting date. |
10. | Net asset value per Ordinary share | ||
As at | As at | ||
31 August 2019 | 28 February 2019 | ||
Net assets attributable (£'000) | 119,725 | 106,371 | |
Number of Ordinary shares in issue | 16,550,930 | 16,582,901 | |
Net asset value per Ordinary share (p) | 723.37 | 641.45 |
11. | 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 (i.e. developed using market data) for the asset or liability, either directly or indirectly. | |||||
Level 3: | inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. | |||||
The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows: | ||||||
Level 1 | Level 2 | Level 3 | Total | |||
As at 31 August 2019 | £'000 | £'000 | £'000 | £'000 | ||
Financial assets at fair value through profit or loss | ||||||
Quoted equities | 122,225 | 1,310 | - | 123,535 | ||
_________ | _________ | _________ | _________ | |||
Net fair value | 122,225 | 1,310 | - | 123,535 | ||
_________ | _________ | _________ | _________ | |||
Level 1 | Level 2 | Level 3 | Total | |||
As at 28 February 2019 | £'000 | £'000 | £'000 | £'000 | ||
Financial assets at fair value through profit or loss | ||||||
Quoted equities | 108,052 | 1,257 | - | 109,309 | ||
_________ | _________ | _________ | _________ | |||
Net fair value | 108,052 | 1,257 | - | 109,309 | ||
_________ | _________ | _________ | _________ | |||
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 £1,310,000 (28 February 2019 - £1,257,000) is classified as Level 2 due to the lack of active trading in the stock. | ||||||
12. | Related party and transactions with Manager |
The Company has an agreement with Aberdeen Standard Fund Managers Limited (the "Manager") for the provision of investment management, secretarial, accounting and administration and promotional activity services. | |
The management fee is payable monthly in arrears based on an annual amount of 0.9% of the net asset value of the Company valued monthly. The management agreement is terminable on no less than one year's notice. During the period investment management fees of £516,000 (31 August 2018 - £495,000) were payable to the Manager, with a balance of £182,000 (31 August 2018 - £85,000) being outstanding at the period end. | |
The promotional activities fee is based on an annual amount of £58,500 (2018 - £66,000), payable quarterly in arrears. During the period fees of £29,000 (31 August 2018 - £33,000) were payable, with a balance of £10,000 (31 August 2018 - £11,000) outstanding at the period end. | |
During the period, the Company has held an investment in a fund managed by the same Manager. Details of this holding are disclosed in note 6. |
13. | Segmental information |
The Company is engaged in a single segment of business, which is to invest in equity securities. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment. |
14. | The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 31 August 2019 and 31 August 2018 has not been reviewed or audited by the Company's external auditor. |
The financial information for the year ended 28 February 2019 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Independent Auditor on those accounts contained no qualification or statement under Section 498 (2), (3) or (4) of the Companies Act 2006. |
15. | This Half Yearly Financial Report was approved by the Board on 11 October 2019. |
ALTERNATIVE PERFORMANCE MEASURES ("APMS") | |||||
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 six months ended 31 August 2019 and the year ended 28 February 2019 and total return for the periods. | |||||
Dividend | Share | ||||
Six months ended 31 August 2019 | rate | NAV | price | ||
28 February 2019 | N/A | 641.45p | 552.00p | ||
30 May 2019 | 11.00p | 661.60p | 562.50p | ||
31 August 2019 | N/A | 723.37p | 620.00p | ||
_________ | _________ | ||||
Total return | +14.6% | +14.5% | |||
_________ | _________ | ||||
Dividend | Share | ||||
Year ended 28 February 2019 | rate | NAV | price | ||
28 February 2018 | N/A | 694.80p | 592.00p | ||
31 May 2018 | 11.10p | 659.94p | 565.00p | ||
25 October 2018 | 7.00p | 647.50p | 549.00p | ||
28 February 2019 | N/A | 641.45p | 552.00p | ||
_________ | _________ | ||||
Total return | -5.1% | -3.7% | |||
_________ | _________ | ||||
Discount to net asset value per share | |||||
The discount is the amount by which the share price of 620.00p (28 February 2019 - 552.00p) is lower than the net asset value per share of 723.37p (28 February 2019 - 641.45p), expressed as a percentage of the net asset value per share. | |||||
Net gearing | |||||
Net gearing measures the total borrowings of £5,650,000 (28 February 2019 - £5,650,000) less cash and cash equivalents of £1,518,000 (28 February 2019 - £2,687,000) divided by shareholders' funds of £119,725,000 (28 February 2019 - £106,371,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the year end, in addition to cash and money market funds. | |||||
Ongoing charges | |||||
Ongoing charges ratio is calculated in accordance with guidance issued by the AIC and represents the total of the investment management fee and administration expenses (annualised) divided by the average cum income net asset value throughout the period. The ratio for 31 August 2019 is based on forecast ongoing charges for the year ending 28 February 2020. The ratio for 28 February 2019 is based on ongoing charges for the year ended 28 February 2019. | |||||
31 August 2019 | 28 February 2019 | ||||
Investment management fees (£'000) | 1,055 | 982 | |||
Administrative expenses (£'000) | 431 | 420 | |||
Less: non-recurring charges (£'000) | (21) | (26) | |||
_________ | _________ | ||||
Ongoing charges (£'000) | 1,465 | 1,376 | |||
_________ | _________ | ||||
Average net assets{A} (£'000) | 116,613 | 109,519 | |||
_________ | _________ | ||||
Ongoing charges ratio | 1.26% | 1.26% | |||
_________ | _________ | ||||
{A} During both periods 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 which amongst other things, includes the cost of borrowings and transaction costs. | |||||
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.
For Aberdeen New Thai Investment Trust plc
Aberdeen Asset Management PLC, Secretaries
END