Financial Statement -6months

Siam Investment Fund 15 November 2004 SIAM INVESTMENT FUND STATEMENTS OF OPERATIONS FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER 2004 AND 2003 US$ Note 2004 2003 Income Interest income 3,484 9,636 Dividend income 20,116 88,145 Gains (loss) on foreign exchange (18,427) 667,034 Net unrealized gain on valuation of investments - 7,129,074 Net unrealized gain on foreign exchange relating to carrying value of investments - 1,300,639 Net realized gain on sales of investments 4,077,841 6,414,651 Total income 4,083,014 15,609,179 Expenses Advisory fees 8.1 249,996 250,000 Administrative expenses 9 194,310 116,996 Net unrealized loss on valuation of investments 7,672,602 - Net unrealized loss on foreign exchange relating to carrying value of investments 962,934 - Net unrealized loss on sales of investments - - Interest expenses 944 - Total expenses 9,080,786 366,996 Net income (loss) for the periods (4,997,772) 15,242,183 Earning (loss) per share (2.00) 6.10 The accounting policies and the notes on page 5 to 18 form an integral part of these financial statements. SIAM INVESTMENT FUND BALANCE SHEETS AS AT 30 SEPTEMBER 2004 AND 2003 US$ Notes 2004 2003 Investments - net 4 14,654,200 17,266,029 Current assets Cash at financial institutions 4,329,989 15,031,903 Receivable from sales of investments - 1,009 Other current assets 18,949 11,301 Total current assets 4,348,938 15,044,213 Current liabilities Dividend payable - (2,500,000) Payable from purchase of investments (101,287) - Shareholder payable (1,062,289) - Accrued expenses (42,048) (31,547) Total current liabilities (1,205,624) (2,531,547) Net current assets 3,143,315 12,512,666 Net assets 17,797,515 29,778,695 Net assets financed by: Share capital 5 12,500 12,500 Share premium 6 9,987,500 17,487,500 Capital reserve 7,530,078 11,858,224 Revenue reserve 267,437 420,471 Total shareholders' funds 17,797,515 29,778,695 Net asset value per share 7.12 11.91 For and on behalf of Siam Investment Fund: Director The accounting policies and the notes on page 5 to 18 form an integral part of these financial statements. SIAM INVESTMENT FUND STATEMENTS OF CHANGES IN NET ASSETS FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER 2004 AND 2003 Share Share Capital Revenue capital premium reserve reserve Total Balance at 1 April 2003 12,500 22,487,500 (3,653,174) 689,686 19,536,512 Net gain for the period - - - 15,242,183 15,242,183 Appropriated for: Net unrealized gain on valuation - - 7,129,074 (7,129,074) - of investments Net realized gain on foreign - - 667,034 (667,034) - exchange Net unrealized gain on foreign - - 1,300,639 (1,300,639) - exchange relating to carrying value of investments Net realized gain on sales of - - 6,414,651 (6,414,651) - investments Dividend for the period - (5,000,000) - - (5,000,000) Balance at 30 September 2003 12,500 17,487,500 11,858,224 420,471 29,778,695 Balance at 1 April 2004 12,500 12,487,500 12,106,200 689,087 25,295,287 Net loss from operations - - - (4,997,772) (4,997,772) Appropriated for: Net unrealized loss on valuation - - (7,672,602) 7,672,602 - of investments Net realized loss on foreign - - (18,427) 18,427 - exchange Net unrealized loss on foreign exchange Net unrealized loss on foreign - - (962,934) 962,934 - exchange relating to carrying value of investments Net realized gain on sales of - - 4,077,842 (4,077,842) - investments Dividend for the period - (2,500,000) - - (2,500,000) Balance at 30 September 2004 12,500 9,987,500 7,530,078 267,437 17,797,515 The accounting policies and the notes on page 5 to 18 form an integral part of these financial statements. SIAM INVESTMENT FUND STATEMENTS OF CASH FLOWS FOR THE 6-MONTH PERIOD ENDED 30 SEPTEMBER 2004 AND 2003 US$ 2004 2003 Cash flows from operating activities: Net income (loss) for the period (4,997,772) 15,242,183 Unrealized (gain) loss on valuation of investments 7,672,602 (7,129,074) Unrealized (gain) loss on foreign exchange relating to 962,934 (1,300,639) carrying value of investments Cash provided from operating activities before changes in operating assets and liabilities 3,637,765 6,812,470 Changes in operating assets and liabilities: Accounts receivable - 2,207,482 Dividend receivable - 354,501 Receivable from sales of investments 1,009 - Other current assets (7,648) 4,031 Investment (10,507,116) 9,731,352 Dividend payable (2,500,000) - Payable from purchase of investments 101,287 - Shareholder payable 1,062,289 - Accrued expenses 10,502 12,356 Total cash provided from operating activities (8,201,914) 19,122,192 Cash flow from financing activity: Dividend (2,500,000) (5,000,000) Total cash used in operating activities (2,500,000) (5,000,000) Increase in cash and cash equivalents for period (10,701,914) 14,122,192 Cash and cash equivalents at beginning of the period 15,031,903 909,711 Cash and cash equivalents at end of the period 4,329,989 15,031,903 The accounting policies and the notes on page 5 to 18 form an integral part of these financial statements. SIAM INVESTMENT FUND NOTES TO THE FINANCIAL STATEMENTS AS AT 30 SEPTEMBER 2004 AND 2003 1 Business activities Siam Investment Fund ('the Fund') is a closed-end investment fund and was incorporated as an exempted company with limited liability in the Cayman Islands on 22 February 1996. The Fund obtained a listing for its shares on the London Stock Exchange on 25 April 1996. The Fund's investment objective is to achieve long-term capital appreciation through investments primarily in unlisted companies, joint ventures and projects. Previously, such investments were in the Southeast Asian region; however, following a change in mandate, approved at the shareholders' meeting held on 6 March 1998, the Fund may now invest up to 100% of its capital in listed and unlisted companies in Thailand. 2 Duration The Fund may be dissolved on 31 March 2006. However, with the approval from the holders of at least two-third of the shares of the Fund, at or prior to the annual general meeting in 2006, the term of the Fund may be extended for an additional two years to 31 March 2008. 3 Significant accounting policies a) Basis of preparation The financial statements have been prepared in accordance with and are generally consistent with International Accounting Standards. These require the Fund's Directors to make estimates and assumptions that affect the reported amounts and disclosure in the financial statements. Actual results could differ from these estimates. The financial statements are prepared under the historical cost convention as modified by the revaluation of certain marketable securities and investment properties. b) Cash equivalents The Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. c) Investments All securities for which market quotations are readily available are valued at the closing market prices. Securities for which market quotations are not readily available are valued by the Directors at costs or at a valuation based on third-party transactions in the same or in similar investments or at fair market value taking into consideration the cost of the investments, the quoted prices of investments of comparable publicly traded companies, market conditions, the underlying collateral, financial data and projections of the issuer of any relevant securities, and such other factors as the Directors may deem relevant. Investment transactions are accounted for on the trade date. Realized gains and losses from securities transactions are reported on an identified cost basis. Dividend and interest income is accounted for on an accrual basis. Discounts on securities purchased are amortised over the life of the respective securities. Realized and unrealized gains and losses on investments, including those relating to foreign exchange translation of the original cost of investment into US Dollars at the balance sheet date, are appropriated as capital reserve. d) Foreign currency transactions Transactions denominated in foreign currencies are translated into United States dollars at the rates of exchange ruling on the transaction dates. All assets and liabilities expressed in foreign currencies at the balance sheet date are translated into United States dollars at the rate of exchange ruling at that date. Realized and unrealized gains and losses on translation of foreign currencies relating to the carrying value of investments are charged directly to income statements before being appropriated as the capital reserves. All other realized and unrealized gains and losses on translation of foreign currencies are included in the income and expenditure account. e) Interest income Interest income is recognised under the accrual basis. For the periods ended 30 September 2004 and 2003, interest income arising from cash and cash equivalents were US$ 3,484 and US$9,636, respectively, with no interest income arising from investments. 4 Investments - net US$ 2004 2003 Listed securities, at market value 9,973,159 17,266,029 Unlisted securities, at valuation given by Directors 4,681,041 - Investments - net 14,654,200 17,266,029 Cost of investments 20,531,602 14,107,604 The costs of investments shown above and in 4.1 and 4.2 below reflect the costs at the date of acquisition and do not include any subsequent foreign exchange adjustments. An analysis of the Company's investments is as follows: 2004 2003 Industry % Cost Market % Cost Market %of net assets holding US$ value holding value of the Fund US$ US$ US$ 2004 2003 4.1 Listed investments Charoen Pokphand Food Public Co., Ltd. Agribusiness 0.12% 709,072 575,857 0.05% 357,038 368,448 3.24 1.24 Finansa - Warrants Public Co., Ltd. Finance 2.40% 609,017 590,024 - - - 3.32 - Kim Eng Securities (Thailand) Finance 0.02% 162,113 103,573 - - - 0.58 - Public Co., Ltd. TISCO Finance Public Co., Ltd. Finance 0.27% 1,116,929 821,680 - - - 4.62 - Tycoons Worldwide Building & Group (Thailand) Furnishing Public Co., Ltd. Materials 0.26% 477,008 502,173 - - - 2.82 - The Aromatics (Thailand) Chemicals & Public Co., Ltd. Plastics 0.05% 800,131 772,574 - - - 4.34 - Siam Makro Public Co., Ltd. Commerce 0.21% 545,710 549,252 0.49% 1,058,836 1,004,416 3.37 3.09 2004 2003 % Industry holding Cost Market % holding Cost Market % of net value value assets of the Fund US$ US$ US$ US$ 2004 2003 4.1 Listed investments (continued) Hana Microelectronics Electronics Public Co., Ltd. Components 0.03% 95,194 98,020 19.00% 708,531 700,425 0.55 2.35 KCE Electronics Electronics Public Co., Ltd. Components - - - 1.56% 703,572 896,091 - 3.01 Pranda Jewelry Public Co., Ltd. Jewelry 0.62% 254,204 262,343 2.73% 849,009 1,093,694 1.47 3.67 Pranda Jewelry - Warrant Public Co., Ltd. Jewelry 3.76% 583,465 451,473 - - - 2.54 - BOA Apartment Porperty Fund1 Property 0.01% 1,545 1,238 - - - 0.01 - Charn Issara Development Public Co., Ltd. Property - - - 0.09% 46,250 50,524 - 0.17 CK. Karnchang Public Co., Ltd. Property 0.09% 326,906 335,587 - - - 1.89 - 2004 2003 Industry % Cost Market % Cost Market % of net assets holding value holding value of the Fund US$ US$ US$ US$ 2004 2003 4.1 Listed investments (continued) Golden Land Property development Public Co., Ltd. Property 0.16% 327,588 220,908 0.16% 331,928 339,151 1.24 1.14 Krisda Mahanakorn Public Co., Ltd.* Property 0.72% 1,260,186 712,219* - - - 4.00 - Natural Park Public Co., Ltd. Property 1.27% 3,112,023 3,225,978 1.74% 2,500,598 12,581,128 18.13 42.25 Sansiri Public Co., Ltd. Property 0.03% 79,291 40,169 - - - 0.23 - Siam Syntech Construction Public Co., Ltd. Property 0.33% 533,838 227,233 0.28% 266,312 232,152 1.28 0.78 Thoresen Thai Agencies Public Co., Ltd. Transportation 0.08% 426,876 482,858 - - - 2.71 - Asia Pacific Resources Potash Ltd. (d) Fertilizer - - - 5.19% 2,822,961 - - - Total-listed investments 11,421,096 9,973,159 9,645,035 17,266,029 56.06 57.98 4.2 Unlisted investments 4.2.1 Equity investments 2004 2003 Industry % Cost Directors' % Cost Directors' % of net holding valuation holding valuation assets of the Fund US$ US$ US$ US$ 2004 2003 Northbridge International Communities Ltd. School 6.25% 2,462,569 - 6.25% 2,462,569 - - - G Steel Public Ltd. Steel 68.18% 1,520,144 1,448,578 - - - 8.14 - (c) Industrials JP-One Asset Ltd.(b)Resources & Energy 18.33% 2,786,927 2,655,722 - - - 14.92 - Krisda Mahanakorn - Warrant Public Co., Ltd. Property 1.19% - - - - - - - PAE (Thailand) Property Public Co., Ltd. Developer 6.96% 404,350 386,289 - - - 2.17 - (a) Total-unlisted equity investments 7,173,990 4,490,589 2,462,569 - 25.23 - 4.2.2 Debt investments 2004 2003 Industry % Cost Directors' % Cost Directors' % of net assets holding valuation holding valuation of the Fund US$ US$ US$ US$ 2004 2003 Convertible term loan to Monterey Pizza Co., Ltd.(d) Foods - 1,936,516 190,452 - 2,000,000 - - - Total-unlisted debt investments 1,936,516 - 2,000,000 - - - Total-unlisted investments 9,110,506 4,681,041 4,462,569 - 25.23 - Investment - net 20,531,602 14,654,200 14,107,604 17,266,029 81.29 57.98 *Directors'valuation (a) PAE (Thailand) Public Company Limited PAE (Thailand) Public Company Limited (PAE) is a construction company which was listed in the Stock Exchange of Thailand. The company was founded in 1964 as a subsidiary of an American company carrying out engineering projects in Thailand. PAE expanded its construction and engineering operations rapidly during 1994-1997. To keep up with the growth, PAE entered into significant foreign currencies loan contracts. As a result of the Baht devaluation in July 1997, liabilities grew substantially from Baht 761 million to Baht 3,249 million while the company was unable to secure any new sizable contract after the Baht crisis. The company, therefore, was unable to service its debts. The management had no choice but to enter the Bank of Thailand CDRAC process in an effort to reach an arrangement with its creditors to restructure its debt. At the end of CDRAC process, PAE decided to file for business reorganization with the Central Bankruptcy Court. The Court granted an order for rehabilitation of PAE on 22 February 2000 and appointed GTT Planners Co., Ltd as the Plan Administrator. The Rehabilitation Plan has been approved and amended several times. The final Rehabilitation Plan was approved by the Central Bankruptcy Court on 15 November 2002. Under this plan, the existing capital of PAE was to be decreased and Free Internet Co Ltd and a group of new investors were to inject a capital funds of Baht 210 million through subscribing to 35 million newly issued shares of PAE at a price of Baht 6 per share on a Baht 10 par value. These funds were to be used as a payment to the priority creditors. On 26 January 2004, a group of new investors including Siam Investment Fund injected capital totaling Baht 210 million by subscribing to 35 million shares. On 28th April 2004 the Central Bankruptcy Court issued their acceptance of the completion of the Rehabilitation Plan of PAE. PAE is now seeking approval from the Securities and Exchange Commission for its shares to resume trading. In terms of operation, PAE is starting to bid for new contracts. With the help from its major shareholders, the company is expected to win some significant contracts in 2004. Siam Investment Fund owns 2.6 million shares of PAE which represents 6.8% of the total company. The remaining balance is held by Free Internet and other minority investors. Siam Investment Fund also has an option to purchase another 2.6 million existing shares of PAE from Free Internet at the same price of Baht 6 within the next 6 months. This option has not yet been exercised. (b) JP-One Assets Co., Ltd. JP-One Assets Co., Ltd. was incorporated under the laws of Thailand in November 2003 by Bangkok Aviation Fuel Services Public Company Limited (BAFS). The Company will be engaged in a pipeline transportation system for aircraft fuel from Makkasan to the Second Bangkok International Airport (Suvarnabhumi Airport). Suvarnabhumi Airport, which will be a new international airport of Thailand, is under construction. The government has a policy to begin moving the operations at Donmuang Airport to Suvarnabhumi in September 2005. (c) G Steel Public Company Limited (Previously Siam Strip Mill Public Company Limited) G Steel founded in 1995 by Dr. Samsak Leeswadtrakul, is a leading hot-rolled coil (HRC) producer in Thailand with a total capacity of 1.5 million tons per annum. G Steel has one plant located in Rayong Province. Its plant is a compact mill equipped with the most advanced integrated technology starting from liquid steel making, slab casting to hot rolling. Currently, G Steel is the only HRC producer in Thailand operating liquid steel making through Electronic Arc Furnace (EAF). This process results in the overall quality of G Steel's finished HRC being higher than its local competitors. G Steel commercialized in November 1999 and now operates at an approximately 80% utilization rate. In March 2004, G Steel raised Baht 4.3 billion through a private placement of 2.7 billion new shares at Baht 1 par value. The proceeds from this private placement will be used for reducing debt obligations and capital spending for de-bottlenecking and further upstream expansion. Siam Investment Fund subscribed to 37.5 million shares (representing 0.46%) of the enlarged capital) at a price of Baht 1.6 per share through this placement. G Steel submitted its listing filing to the Securities Exchange Commission (SEC) at the beginning of November 2004. The Company expects to list in December 2004 (or first quarter of 2005 at the latest). The plan is to raise Baht 6 billion from its Initial Public Offering. The funds will be used to expand the production capacity from 3.4 million tons to 4.7 million tons by 2007. (d) Monterey Pizza Co., Ltd. The convertible term loan to Monterey Pizza Co., Ltd. ('Monterey') is denominated in US$ and carries interest at six month US$ LIBOR, payable every six months. The loan is secured by the major shareholders of Monterey and was repayable in full prior to 20 December 1998. As part of the loan agreement, the Fund has the right to convert a portion of the term loan into Monterey Shares equivalent to 250,000 Monterey shares (with par value of Baht 100 per share) which have been placed in escrow. Monterey has experienced financial difficulties since 1997. Interest has not been paid when due. The Fund has stopped accruing interest since December 1997. A legal demand for payment of principal and accrued interest has been made to Monterey as well as to 2 directors who have guaranteed the loan. The court ruled in favor of the Fund's demand for Baht 108 million. The defendants have been asked by the court to settle with the Fund. The loan has already been written down to zero in 2003. During the year 2004, the case has been finalized by the Thai Appeals Court ruling that the Fund will get payment of Baht 2.5 million (approximately US$63,484) each year for 7 years, totalling Baht 17.5 million (approximately US$444,388). In the light of the extended repayment period and the history of the investment, the Directors decided that the valuation of this investment reflect a portion of the total amount recoverable. Credit risk The Fund may have significant investments in Thailand which may involve greater risk than investments in more developed markets. The prices of such investments may be volatile. The yields of emerging market debt obligations reflect, amongst other matters, perceived credit risk. The consequences of political, social or economic changes in Thailand may have disruptive effects on the market prices of the Fund's investments and the income they generate. Currency risk All of the Fund's equity investments where the investee company is incorporated in Thailand are subject to currency risk as the investee shares are denominated in Thai Baht. The Fund's debt investments are denominated in US$ and is thus not exposed to currency risk. Fair values Listed and unlisted investments are stated at market values and Directors' valuations respectively. At 30 September 2004, in the opinion of the Directors, the carrying values of the listed and unlisted investments approximate their fair values. Additional information related to all investments of the Group which account for more than 5% of net assets as at 30 September 2004 is as follows: EPS per Market value/ Cost of latest audited Directors' % of issued investment accounts valuation Investment Industry share capital US$ US$ US$ Equity investments N-Park Property 1.27% 3,112,023 0.00893 3,225,978 G Steel Steel 68.18% 1,520,144 0.02076 1,448,578 JP-One Energy 18.33% 2,786,927 -Nil- 2,655,722 The Group received dividends from the above investments during the period totaling US$ 20,115 (2003: US$ 88,145). 5 Share capital US$ 2004 2003 Authorised: 10,000,000 ordinary shares of US$ 0.005 each 50,000 50,000 Issued and fully paid 2,500,000 ordinary shares of US$ 0.005 each 12,500 12,500 6 Share premium US$ 2004 2003 Arising on the issue of 2,500,000 ordinary shares at a premium of US$ 10.295 per share, fully paid 25,737,500 25,737,500 Less: Placement fee (750,000) (750,000) Dividend payment (15,000,000) (7,500,000) 9,987,500 17,487,500 According to the Fund's Memorandum and Articles, no dividend shall be declared or paid other than from the profits or gains resulting from the Fund's business or from the share premium account of the Fund or such other amount as maybe lawfully available for dividend. 7 Net asset value per share The calculation of the net asset value per share is based on the net assets of US$ 17,607,063 (2003: US$ 29,778,695) divided by the number of shares, being 2,500,000. 8 Related party transactions 8.1 Advisory and performance fees Finansa Fund Management Ltd, a related company incorporated in the Cayman Islands, serves as the investment adviser to the Fund and receives the following: (i) a monthly advisory fee in an amount equal to 2% per annum of the contributed capital (defined as the aggregate paid-up share capital of the Fund, inclusive of share premium) of the Fund; and (ii) a performance fee of 20% of the amounts by which distributions to shareholders exceed a cumulative compound rate of return on the Fund's contributed capital of 12% per annum. Advisory fees totaling US$ 249,996 (2003: US$ 250,000) were charged for the period. 8.2 Directors' fees and reimbursements The Fund's Articles of Association provide that the Fund may pay up to an aggregate of US$ 100,000 per year to its Directors. For the period ended 30 September 2004, an amount of US$ 30,000 (2003: US$ 30,000) was approved for payment to the Directors. In addition, the Fund reimburses Directors for travel and out-of-pocket expenses incurred in connection with Board of Directors meetings and meetings of committees of the Board of Directors. 8.3 Directors' interest in contracts of significance Mr. James Marshall is a shareholder of Finansa Public Company Limited, a shareholder in Finansa Fund Management Ltd., ('FFM'), the investment advisor to the Fund. Mr. Marshall is also a director of FFM. 9 Custodial and administrative fees Under a custodial agreement with Citibank, N.A. (Hong Kong Branch) ('Citibank ')., Citibank acts as custodian for the Fund, and is entitled to receive a fee from the Fund, computed and paid monthly in arrears, comprising the following: (i) a fee calculated at a 3.5 - 7.0 basis points per annum of the value of the portion held by the custodian; and (ii) a transaction fee of US$ 35 - US$ 90 per transaction. Under an administrative agreement with Bank of Butterfield International (Cayman) Ltd. ('Butterfield')., Butterfield acts as administrator of the Fund, and is entitled to receive a fee from the Fund calculated and payable quarterly in arrears at a rate of US$ 100 per hour on a time spent basis, subject to a minimum of US$ 7,500 per year. Custodial and administrative fees totaling US$ 3,169 and US$ 4,385, respectively (2003: US$ 9,993 and US$ 3,750, respectively) were charged for the period. 10 Directors The non-executive directors during the period ended 30 September 2004 were as follows: James Marshall (Appointed on 3 November 2003) M.L. Plaichumpol Kitiyakara Van Huong Nguyen David Roberts Enghug Nontikarn Mungkorn Kriengwatana 11 Interest in shares Shareholders who held an interest of 3% or more in the Fund as of 30 September 2004 were as follows: Shareholder Number of shares Percentage Citivic Nominees Limited 2,500,000 100% (Formerly MGTB Nominees Limited) 12 Taxation The Fund is exempt from Cayman Islands income tax and accordingly its only liability is the payment of an annual registration fee to the government of the Cayman Islands, amounting to US$ 500 per annum. It is possible that the Fund could be assessed for income tax in other jurisdictions. No assessments have been raised and the Directors consider the likelihood of a significant tax liability arising to be remote. This information is provided by RNS The company news service from the London Stock Exchange FBDKKDD

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