Interim Results
Siam Investment Fund
16 December 1999
President's Report
Siam Investment Fund, Sept. 30, 1999 unaudited financial report
Most shareholders will be aware that, in the period under review, the Fund
invested in 10,000,000 convertible preferred shares with free warrants issued by
TISCO Finance Pcl. There was a powerful rally in financial shares soon after the
placement and the share/warrant package for which the fund paid 10 Baht traded
to a peak of 90 Baht in June. The Fund sold 10% of its investment into the
rally. The balance of the position is being held with a medium term view, though
the Board of the Fund has authorised the gradual sale of the warrants as market
sentiment improves.
The TISCO Finance investment, in conjunction with a rally in the overall market,
pushed the Fund's net asset value as high as $16 per share before correcting
back to $9.71 at the close of the half year. Turnover in the Fund's shares
increased dramatically as the rally brought in a broad range of new
shareholders.
As you can see from the accompanying financial statements, the Fund retains
relatively large positions in a few companies which we believe will perform well
as Thailand emerges from the financial crisis in which it has been embroiled for
the past two years. TISCO Finance, for example, is fully recapitalised and is
actively growing its retail mortgage and consumer loan portfolio. Corporate
loans have been deemphasised and restructuring of all troubled loans has either
been completed or is well underway. Brokerage revenues remain strong and the
investment banking and fee revenues are also at record levels.
With regard to the other companies in which the fund has significant exposure,
Nation Multimedia has seen a steady increase in its revenues from advertising,
and continues to improve its financial position quarter to quarter. It remains,
in our view, the most interesting play on the media business in Thailand and we
expect a substantial change in value once its restructuring efforts are seen to
be successful by the broader market. SE-ED also continues to shine quietly as
its expansion strategy during the downturn begins to bear fruit. Singer remains
the only established nationwide network for the delivery of consumer goods in
Thailand and its business is improving each quarter.
Progress at APR, the potash mine project in Udon Thani, continues apace. All
approvals are currently in place to commence mining, with the exception of the
environmental impact statement, which is expected to be accepted in early 2000.
The structured financing package is being assembled, so far without incident, so
it is still anticipated that production will commence at the end of the year
2002. PATO Chemical remains solid and paid a 1.5 Baht dividend this year. On the
unlisted side of the portfolio, Acron has doubled the capacity of its existing
acrylic sheet production facility and its revenues should reach 520 million Baht
in 1999, up from 370 million Baht in 1998. Northbridge has recommenced expansion
of its community in Phnom Penh and has announced the signing of an MOU with the
NASDAQ listed Asia Properties Ltd. whereby API would acquire Northbridge for
cash and shares.
It has been a busy half year, and there are clear signals that the Thailand
economy has begun to move up and off the bottom. The rate of recovery is
expected to be slower than some of the other regional economies as Thailand has
still not fully recapitalised its financial system and the real economy is
hampered by a lack of true restructuring in the corporate sector. However the
direction is clear and the SIF portfolio is well positioned to increase in value
as the economic recovery takes hold.
Gene Davis
Bangkok
SLAM INVESTMENT FUND
(FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND')
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER
1999 1998
Note US$ US$
Income
Gain on foreign exchange forward
contracts - 311,144
Interest income 36,317 159,219
Dividend income 69,698 71,872
Total income 106,015 542,235
Expenses
Advisory, fees 11 (250,685) (250,685)
Administrative expenses (85,904) (90,395)
Total expenses (336,589) (341,080)
Net(loss) profit for the period (230,574) 201,155
(Loss) Earnings per share (0.09) 0.08
The accounting policies and the notes on pages 1 to 14 form an integral part of
these financial statements.
SIAM INVESTMENT FUND
(FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND')
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER
1999 1998
Notes US$ US$
Investments 4 22,048,197 10,821,673
Pre-operating expenses-net 5 73,285 122,185
Current assets
Cash and cash equivalents 2,132,077 5,832,168
Accounts receivable 21,419 503,744
Other assets 3,092 20,703
Total current assets 2,156,588 6,356,615
Current liabilities
Amount due to brokers - (28,111)
Accrued expenses (8,500) (8,000)
Total current liabilities (8,500) (36,111)
Net current assets 2,148,088 6,320,504
Net assets 24,269,570 17,264,362
Net assets financed by:
Share capital 6 12,500 12,500
Share premium 7 24,987,500 24,987,500
Capital reserves 8 (561,312) (9,355,731)
Revenue reserves 9 (169,118) 1,620,093
Total shareholders' funds 24,269,570 17,264,362
Net asset value per share 10 9.71 6.91
For and on behalf of Siam Investment Fund:
............................. Director
The accounting policies and the notes on pages 1 to 14 form an integral part of
these financial statements.
SIAM INVESTMENT FUND
(FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND')
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER
Share Share Capital Revenue
capital Premium reserve reserve Total
Balance at 1 April 1998 12,500 24,987,500 (5,309,019) 1,418,938 21,109,919
Profit for the period - - - 201,155 201,155
Net unrealised loss
on valuation of
investments - - (3,944,449) - (3,944,449)
Net unrealised gain (loss)
on foreign exchange
relating to carrying
value of investments - - 31,709 - 31,709
Net realised loss on sale
of investments - - (133,972) - (133,972)
Balance at 30 Sept.1998 12,500 24,987,500 (9,355,731) 1,620,093 17,264,362
Balance at 1 April 1999 12,500 24,987,500 (8,349,083) 61,456 16,712,373
Loss for the period - - - (230,574) (230,574)
Net unrealised gain
on valuation - - 7,713,008 - 7,713,008
of investments
Net loss on value of
investment-other
than temporary decline
in value - - (500,000) - (500,000)
Net realised gain on
foreign exchange - - 27,839 - 27,839
Net unrealised gain (loss)
on foreign exchange
relating to carrying
value of investments - - (1,403,713) - (1,403,713)
Net realised gain on sale
of investments - - 1,950,637 - 1,950,637
Balance at 30 Sept.1999 12,500 24,987,500 (561,312) (169,118) 24,269,570
The accounting policies and the notes on pages 1 to 14 form an integral part of
these financial statements.
SIAM INVESTMENT FUND
(FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND')
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER
1999 1998
US$ US$
Cash flows from operating activities:
(Loss) profit for the period (230,574) 201,155
Amortisation of pre-operating expenses 24,518 24,518
Net realised gain on sale of investments 1,950,637 (133,972)
Net realised gain on foreign exchange 27,839 -
1,772,420 91,701
Changes in assets and liabilities:
Other assets 62,423 42,905
Accounts receivable (19,703) (422,582)
Amount due to brokers - (356,882)
Total cash (used by) provided
from operating activities 42,720 (736,559)
Cash flows from investing activities:
Investment in listed and
unlisted investments (3,642,043) (3,953,054)
Total cash used in investing
activities (3,642,043) (3,953,054)
(Decrease) increase in cash and
cash equivalents for period (1,826,903) (4,597,912)
Cash and cash equivalents at
beginning of the period 3,958,980 10,430,080
Cash and cash equivalents at
end of the period 2,132,077 5,832,168
The accounting policies and the notes on pages 1 to 14 form an integral
part of these financial statements.
SIAM INVESTMENT FUND
(FORMERLY 'THE SOUTHEAST ASIA FRONTIER FUND')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 SEPTEMBER 1999 AND 1998
1 Business activities
Siam Investment Fund ('the Company') is a closed-end investment company and
was incorporated as an exempted company with limited liability in the Cayman
Islands on 22 February 1996. The Company obtained a listing for its shares on
the London Stock Exchange on 25 April 1996. The Company'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 a shareholders meeting held on 6 March 1998, the Company may now
invest up to 100% of its capital in companies in Thailand, either listed or
unlisted.
On 3 February 1997, the Company set up a wholly owned subsidiary operating in
Thailand, SEAFF (Thailand) Limited, to serve as an investment vehicle for the
Company's investment in Energy and Power Technology Company (refer Note 4).
2 Duration
The Company may be dissolved on 31 March 2006. However, with the approval
from the holders of at least two-thirds of the shares of the Company,
approved at or prior to the annual general meeting in 2006, the term of the
Company may be extended for an additional two years to 31 March 2008.
3 Significant accounting policies
a) Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, SEAFF (Thailand) Limited
collectively referred to as the Group. All significant intercompany
accounts and transactions have been eliminated.
b) Cash equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c) Investments
The company's income, which will be derived from investments and interest
on deposits (excluding capital gains) after paying fees and other expenses
of the company, may be distributed to Shareholders in the form of
dividend. It is the intention of the Directors that dividends will not be
paid out of unrealised gains. Realised gains (net of any realised losses or
unrealised provisions for losses) may be distributed, if approved by
the Board, provided that the company generally expects that it will
reinvest the original cost of each realised investment. As a result of
this dividend policy, realised and unrealised 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 taken directly to the capital reserves account.
Any distributions to shareholders are recorded on the ex-dividend date.
All securities for which market quotations are readily available are
valued at the closing market price. Securities for which market quotations
are not readily available are valued by the Directors at cost to the Fund
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. Realised
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.
d) Pre-operating expenses
Expenses relating to the organisation of the Company have been deferred and
are being amortised on a straight line basis over five years.
e) 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.
Realised and unrealised gains and losses on translation of foreign
currencies relating to the carrying value of investments are taken directly
to the capital reserves account. All other realised and unrealised gains
and losses on translation of foreign currencies are included in the income
and expenditure account.
f) Interest income
Interest income is recognised under the accrual basis. For the period
ended 30 September 1999, interest income arising from cash and cash
equivalents was US$ 36,317 (1998: US$ 159,219) and no interest income
arising from investments.
4 Investments
1999 1998
US$ US$
Listed securities, at market value 15,965,133 3,871,248
Unlisted securities, at Directors valuation 6,083,064 6,950,425
Investments - net 22,048,197 10,821,673
Cost of investments 22,012,842 18,645,492
Certain investments are held in the name of related parties.
An analysis of the Company's investments is as follows:
1999
Market
Cost Value
Industry % holding US$ US$
4.1 Listed investments
Pato Chemical Industry
Public Co., Ltd (a) Chemicals 8.10% 2,134,161 1,073,072
Nation Multimedia
Group Public
Co.Ltd. (b) Publishing 12.50% 4,600,715 3,760,952
SE-Education
Public Co. Ltd. Publishing 19.50% 2,091,339 1,404,374
TISCO Finance
Public Co. Ltd. Finance 1.56% 2,466,916 5,265,163
Singer (Thailand) Electrical
Public Co.Ltd. products 1.31% 262,927 491,355
Asia Pacific
Resources Ltd. Mining 0.60% 438,361 422,839
TISCO Finance
Public Co. Ltd. Warrants 1.56% - 3,034,915
Miscellaneous
Investments - Nil - - 569,047 512,463
12,563,466 15,965,133
1998
Market % of net assets
Cost Value of the Fund
% holding US$ US$ 1999 1998
4.1 Listed investments
Pato Chemical Industry
Public Co., Ltd (a) 8.10% 2,134,161 1,101,105 4.42 6.38
Nation Multimedia
Group Public
Co.Ltd. (b) 11.34% 3,110,811 1,597,932 15.50 9.26
SE-Education
Public Co. Ltd. 21.07% 2,077,060 816,005 5.79 4.73
TISCO Finance
Public Co. Ltd. - - - 21.69 -
Singer (Thailand)
Public Co.Ltd. 1.31% 262,927 178,058 2.02 1.03
Asia Pacific
Resources Ltd. - - - 1.74 -
TISCO Finance
Public Co. Ltd. - - - 12.51 -
Miscellaneous
Investments - 467,181 178,148 2.12 1.03
8,052,140 3,871,248 65.79 22.43
4.2 Unlisted investments
4.2.1 Equity investments
1999
Directors'
Cost valuation
Industry % holding US$ US$
Northbridge Communities Intl.
Ltd. (c) School 6.25% 2,462,569 1,526,252
Acron Plastic Industry
Co.Ltd. (a) Chemical 35.9% 1,506,183 756,174
Energy and Power
Technologies Ltd. (d) Energy 44.0% 369,259 250,000
Manager Media Group
Public Co.Ltd Publishing 9.7% 59,815 59,596
Samakkhisan (Dokya)
Co.Ltd. Publishing - 51,550 51,587
4,449,376 2,643,609
1998
Directors' % of net assets
Cost valuation of the Fund
% holding US$ US$ 1999 1998
Northbridge Communities
Ltd. (c) 6.25% 2,462,569 1,576,293 6.29 9.13
Acron Plastic Industry
Co.Ltd. (a) 35.9% 1,506,183 775,853 3.12 4.49
Energy and Power
Technologies Ltd. (d) 44.0% 500,000 250,000 1.03 1.45
Manager Media Group
Public Co.Ltd - - - 0.25 -
Samakkhisan (Dokya)
Co.Ltd. - 51,550 53,279 0.21 0.31
4,520,302 2,655,425 10.90 15.38
4.2.2 Debt investments
1999
Directors'
Cost valuation
Industry % holding US$ US$
Convertible term loan to
Monterey Pizza Co.Ltd.(e) Foods - 2,000,000 500,000
Convertible term debenture
to Asia Pacific Resources Potash
Ltd. (f) Fertiliser - 2,000,000 2,000,000
Variable Rate Note
Bank Thai Plc Banking 1,000,000 939,455
Units in the Emerging
Markets Liquid Investment
Portfolio; at market value - - - -
5,000,000 3,439,455
Investments - net 22,012,842 22,048,197
1998
Directors' % of net assets
Cost valuation of the Fund
% holding US$ US$ 1999 1998
Convertible term loan to
Monterey Pizza Co.Ltd.(e) - 2,000,000 1,000,000 2.06 5.79
Convertible term debenture
to Asia Pacific Resources
Ltd. (f) - 2,000,000 2,000,000 8.24 11.58
Variable Rate Note
Bank Thai Plc - - 3.87 -
Units in the Emerging
Markets Liquid Investment
Portfolio; at market value - 2,073,050 1,295,000 - 7.50
6,073,050 4,295,000 14.17 24.87
Investments - net 18,645,492 10,821,673 90.86 62.68
(a) Pato Chemical Industry, Public Co.. Ltd. and Acron Plastic Industry Co..
Ltd.
The Company's Investment in 1,133,995 shares of Pato has been split into two
Investments for disclosure purposes on the basis that the Company has the
right to convert 799,105 Pato shares into 2,370,000 Acron shares at any time
up to and including the date of an initial public offering, of the Acron
shares. Pato is currently the majority shareholder of Acron. As it is the
intention of the Company to exercise the right of conversion and the
associated Pato shares are being held in escrow prior to being converted
into Acron shares, the appropriate portion of the cost of the Pato shares that
is convertible into Acron shares has been disclosed as an investment in Acron.
(b) Nation Multimedia Group Public Co., Ltd.
At a meeting of the Board of Directors of the Company held on 4 March 1999,
the Board approved Subscription to 1 for 1 rights issue offered to all
shareholders in the Nation Multimedia Group ('Nation'). As a result, the
company currently holds 14,001,000 Nation foreign registered shares or 12.5%
of the capital of Nation. Nation is currently in negotiations with a foreign
direct investment firm to acquire substantially all of the authorized but not
issued shares of Nation. After taking up the rights issue, the Company had
approximately 25% of its assets invested in Nation. This is acceptable under
the Company's articles as the limit per investment (being 20% of the
Company's net assets) is not restricted by rights issues of an existing
investment.
(c) Northbridge Communities Ltd.
Northbridge has spent the last four years establishing two world class
international Schools, acquiring a land bank of over 400 acres in three sites
and securing regulatory, and other approvals to develop these sites. The
founding of the schools, the acquisition of the land banks and the permits to
operate were the first steps in the Northbridge concept of developing
school-based international communities.
The Investment climate for real estate related projects continues to be
difficult. The company continues to operate using a minimum of personnel to
continue to operate the schools and manage the existing real estate, while not
moving, forward on any other planned developments. Northbridge should be well
placed when the situation changes and foreign investment begins to return to
Asian region. Since Northbridge provides the infrastructure support primarily to
foreign investors in the form of schools, housing, clubs, etc. it must wait
until that investment returns.
Northbridge has signed a Memorandum of Understanding with an American company
listed on the NASDAQ ('ASPZ')in June 1999 agreeing to further consider the merit
of swapping shares in Northbridge for shares in the American company.
Northbridge's management have met with potential investors, brokers and market
makers in the United States. Discussions and due diligence on both sides
continue.
Thailand
The International School Eastern Seaboard (ISE) opened the 1998/99 academic year
with 306 students. The enrollment has grown to 340 students in late January
1999. Demand is steady as the number of expatriate employees in the immediate
area has leveled off. The school anticipates a modest surplus of funds at the
end of this fiscal year, for the first time. The staffing plan and budget
expenditures are being held at the present levels for the 1999/00 school year.
There continues to be a demand for housing at the Burapha Golf Club. One
international company is leasing 10 homes built by Northbridge at Burapha.
Northbridge is involved in discussions with mortgage brokers in the United
States with an aim to purchase some of the other existing units at Burapha and
refinance the school debt. Two lenders have expressed interest in this
project. Northbridge does not see a demand for additional housing units at this
time.
Cambodia
The Northbridge International School Cambodia (NISC) opened in September 1997
with 14 students. It completed its first school year in June 1998 with 34
students. The second school year opened in August 1998 with 42 students and the
school currently enrolls 66 (January 1999) students. In its year and one-half of
operation, NISC has established itself as an excellent international school and
has seen a marked increase in interest from expatriate and Khmer families living
in Phnom Penh. With the formation of the government in November 1998, many of
the NGO projects previously put on hold have been restarted. New families
are slowly beginning to come back to Phnom Penn. The school continues to run
a small operational deficit, but looks likely to be able to pay its own expenses
in the second half of 1999.
Northbridge Communities Ltd. has entered into negotiations with the Department
of State of the United States of America to sell a portion of Northbridge's
assets in Phnom Penh to provide a more secure embassy site, and these
discussions are ongoing in both Phnom Penh and in Washington.
Northbridge has signed a Memorandum of Understanding with an American company
listed on the NASDAQ ('ASPZ') in June 1999 agreeing to further consider the
merit of swapping shares in Northbridge for shares in the American company.
Northbridge's management have met with potential investors, brokers and market
makers in the United States. Discussions and due diligence on both sides
continue.
Hanoi, Vietnam
The investment license, received on January 21, 1997, allows Northbridge to
develop the first phase of 86 hectares within a total project allocation of 273
hectares. The master plan containing 300 housing units, a commercial area, golf
and an international school has been revised to represent the declining demand
anticipated in the greater Hanoi area.
In its negotiations with the Vietnamese government on a restructuring of the
agreement the company has received de-facto permission to delay the start of
the project. Additionally, the requested changes which would significantly
reduce the cost of the project and enhance its overall feasibility have been
well-received by the government. Discussions are on-going at this time. Some
of the requested changes include; 100% foreign ownership of the project (vs. 60%
today), ability to sub-lease the land to other projects within the development,
reduced land rent, lower land compensation paid to farmers and enhanced tax
incentives. The Vietnamese are very concerned about the slowdown in foreign
investment and cancellation of prior foreign commitments and are moving quickly
to change the regulations inhibiting foreign investment.
(d) Energy and Power Technologies Ltd.
Energy and Power Technologies Ltd. (EPT) has not commenced operations.
Currently negotiations are underway to sell some of the equipment. The
investment has been valued at 50% of original cost.
(e) 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 the company and
was repayable in full prior to 20 December 1998. As part of the loan agreement,
the Company 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 in 1997 and 1998. Interest has
not been paid when due. The Company 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. Based on the current financial position of Monterey, the investment has
been valued at 25% of original cost.
(f) Asia Pacific Resources Ltd.
The convertible term debenture to Asia Pacific Resources Ltd. ('APQ') is
denominated in US$ and secured by Pacific Corporate Trust Company, as Trustee.
The debenture matures on 13 August 2000 and carries interest at 10%. As part
of the debenture agreement, the Company has the right to convert the term
debenture into 736,214 APQ shares. APQ shares are listed on the Toronto Stock
Exchange. The market value of APQ common share as at 30 September 1999 was
US$ 1.458 per share.
Credit risk
The Company has significant investments in Thailand, Cambodia and Vietnam with
limited or developing capital markets and 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 these markets may have disruptive effects on the market
prices of the Company's investments and the income they generate.
Interest rate-risk
The debenture to Asia Pacific Resources Ltd. carry interest at 13%. The
investment is, therefore, exposed to interest rate risk.
The loan to Monterey Pizza Co., Ltd. carries interest at six month LIBOR and
the investment is accordingly not exposed to interest rate risk.
The Company does not have any other assets or liabilities which expose the
Company to interest rate risk.
Currency risk
All of the Company'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 Company's debt investments are mostly 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 1999, 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 1999 is as follows:
EPS per Market Value/
latest Directors
Cost of audited Valuation
% of issued investment accounts
Investment Industry share capital US$ US$ US$
PATO Chemicals 8.1% 2,134,161 0.08889 1,073,072
NATION Publishing 12.5% 4,600,716 0.00611 3,760,952
SE - ED Publishing 19.5% 2,091,339 0.01074 1,404,374
Northbridge International
School 6.25% 2,462,569 0.23369 1,526,252
Acron* Plastics 35.9% 1,506,183 0.05909 756,174
TISCO Finance 1.56% 2,466,916 0.60488 5,265,163
*Following conversion (refer to Note 4(a)), at 30 September 1999, Acron
has not been classified as an associated company and equity accounting
has not been adopted.
The Group received dividends from the above investments during the period from
1 April 1999 to 30 September 1999 totalling US$69,698 (1998 : US$71,872).
5 Unamortised pre-operating expenses
Pre-operating expenses comprise legal and other professional charges incurred
in setting up the Company.
1999 1998
US$ US$
Pre-operating expenses at beginning of the period 97,803 146,703
Less: Amortisation charge for the period 24,518 24,518
Pre-operating, expenses at end of the period 73,285 122,185
6 Share capital
1999 1998
US$ US$
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
7 Share Premium
1999 1998
US$ US$
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)
24,987,500 24,987,500
8 Capital reserves
1999 1998
US$ US$
Balance brought forward (8,349,083) (5,309,019)
Net realised gain(loss) on sale of investments 1,950,637 (133,972)
Net unrealised gain(loss) on valuation of
investments 7,713,008 (3,944,449)
Net loss on value of investment - other than
temporary decline in value (500,000) -
Net realised gain on foreign exchange 27,839 -
Net unrealised (loss) gain on foreign exchange relating
to carrying value of investments (1,403,713) 31,709
Balance carried forward (561,312) (5,309,019)
9 Revenue reserves
1999 1998
US$ US$
Balance brought forward 61,456 1,418,938
(Loss) profit for the year (230,574) 201,155
Balance carried forward (169,118) 1,620,093
10 Net asset value per share
The calculation of the net asset value per share is based on the net assets of
US$ 24,269,570 (1998 : US$ 17,264,362) divided by the number of shares, being
2,500,000.
11 Advisory and performance fees
Frontier Fund Management Co., a company incorporated in the Cayman Islands
serves as the investment adviser to the Company 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
Company, 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 Company's contributed capital of 12% per annum.
Advisory fees totalling US$ 250,685 (1998 : US$ 250,685) were charged for the
period. No performance fees (1998 : Nil) were charged for the period.
12 Custodial and administrative fees
Under a custodial agreement with Citibank, N.A. (Hong Kong Branch)('Citibank'),
Citibank acts as custodian for the Company, and is entitled to receive a fee
from the Company, computed and paid monthly in arrears, comprising the
following: (i) a fee calculated at a maximum rate of 0.12% per annum of the
value of the portion held by the custodian, and (ii) a transaction fee of US$
120 per transaction.
Under an administrative agreement with Bank of Butterfield International
(Cayman) Ltd. ('Butterfield'), Butterfield acts as administrator of the
Company, and is entitled to receive a fee from the Company 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 totalling US$ 727 and US$ 3,750 respectively
(1998 US$ 1,470 and US$ 3,750) were charged for the period.
13 Directors' fees and reimbursements
The Company's Articles of Association provide that the Company may pay up to
an aggregate of US$ 100,000 per year to its Directors. In addition, the Company
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.
14 Directors
The non-executive directors during the period ended 30 September 1999 were
as follows:
Eugene S. Davis
M.L. Plaichumpol Kitiyakara
Van Huong, Nguyen
David Roberts
Kiatchai Sophastienphong (Resigned on 14 October 1998)
Vanchai Ariyabuddhiphongs (Appointed on 19 November 1998)
15 Directors' interest in contracts of significance
Mr. Eugene S. Davis is a director and shareholder of Finansa Investment
Advisors Limited, a shareholder in Finansa Fund Management Ltd., ('FFM'), the
investment advisor to the Company. Mr. Davis is also a director of FFM.
16 Interest in shares
Shareholders who held an interest of 3% or more in the Company as of 30
September 1999 were as follows:
Shareholder Number of shares Percentage
MGTB Nominees Limited 2,500,000 100%
17 Taxation
The Company 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 Company 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.
18 Change of name
Following an Extraordinary General Meeting of the Company held on 30 October
1998 the name of the Company was changed from 'The Southeast Asia Frontier Fund'
to 'Siam Investment Fund'.
19 Approval of financial statements
The financial statements were approved by the authorised directors on 28
October 1999.