Thai Development Capital Fund Ld
28 June 2001
The Thai Development Capital Fund Limited
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Announcement of Results for the 12 month
Period Ending 31st March 2001
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The directors of the Thai Development Capital Fund Limited announce the
results of the company for the twelve month period to, and as at, 31st March
2001.
The Net Asset Value at 31st March 2001 was US$1.889 million or US$1.08 per
share. During the period, the portfolio lost value as a result of the
weakening of the Thai Baht, which fell against the US Dollar by 21.3% from
Baht 37.86 at 31 March 2000 to Baht 45.915 at 31st March 2001. The negative
movement in the Thai currency was partially offset by an increase in the
portfolio's value over the period.
At 31st March 2001, the company's assets comprised the following:
Net cash and liquid assets US$0.15m
Investments, net of provisions US$1.74m
Total net assets US$1.89m
Issued, paid up shares 1,754,500
Net Assets per share US$1.08 per share
Further to resolutions passed at the company's Annual General Meeting held in
October 2000, the company's investments are being liquidated so that the
capital thus released can be returned to shareholders. The disposal process
is continuing under the control of the directors, but more slowly than
anticipated on account of continuing difficulties in the investment
environment. The process continues.
Further information is contained in the attached unaudited report at 31st
March 2001.
Christopher S. Forbes
28 June 2001
Directors' Review
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The Report and Accounts of the Thai Development Capital Fund Limited, for the
twelve month period to 31st March 2001 are set out below.
Overview
The process of divestment over the past 12 months has been slower than had
been anticipated, largely on account of the continuing generally unfavourable
climate for investment in Thailand. The remaining companies in the portfolio
have performed well, but the market for smaller cap unlisted stakes is
limited, and negotiations held with prospective buyers have been
inconclusive, either because the terms of the purchase offered were thought
to be unreasonable, or the potential buyers wanted to wait longer. For
investments of US$5 million and up, there is a large potential pool of
venture capital investors, and for investments of less than US$500,000, there
are a number of private investors. Unfortunately the company's investments
fall between these two levels, and so identifying likely investors has not
been straightforward.
This has been set against the backdrop of a Thai economy that has seen only a
slow and gradual improvement. A general election produced a new government
and the consequent changes of ministerial portfolio. The banking sector is
still burdened with non-performing loans, and banks have been reluctant to
provide new credits to the corporate sector since most companies are in
default on earlier loans. The anticipated sale to foreign owners of banks
that the State had taken over did not occur, so the sector has not been
recapitalised to the extent forseen, and has stagnated as a result.
Institutional reform appears to have all but ground to a halt, and the
environment for small and medium sized companies remains difficult.
During the year, the value of the Baht weakened against the US dollar by 19%,
from 37.86 to 44.915 Baht/US$, while the index of the Stock Exchange of
Thailand fell from a level of 400 to 292, or 27%. The combination of these
two factors resulted in little interest in Thailand from foreign investors,
who were further unsettled by the lack of tangible progress in several
corporate restructuring cases.
The company's Representative Office in Thailand was formally closed on 19
September 2000. Since then working space was retained in the office of one of
the portfolio companies in Bangkok, and the former Chief Executive has
continued to monitor the investments and to explore opportunities for
disposing of them at prices that reflect their value.
Performance
Total net assets at 31st March 2001 were US$1.889 million or US$1.08 per
share. During the 12-month period to 31st March 2001 as the Thai Baht fell in
value against the US Dollar from 37.86 to 44.915, the Company's portfolio
suffered from the weakening of the local currency, although in overall terms
net assets fell by only 13.5%, from US$2.184 million (US$1.24 per share), to
US$1.889 million (US$1.08 per share). Operating costs of the Company were
kept to a minimum. Provisions against the portfolio investments continue to
be held in the light of economic conditions and the illiquidity of the
holdings.
Investments
A summary of the main investments is as follows.
Economic Management Ltd. The company has had a successful year despite the
occasional pond loss due to rapid temperature fluctuations. It has expanded
production, and developed a management software programme launched in June.
TDCF has held negotiations with parties interested in buying its stake, and
these are anticipated to conclude before the end of the year.
Rajthanee Hospital plc. The hospital continues to operate profitably, and the
company again paid dividends during the year. Revenues were helped by the
increased spending of the Government's Social Health Plan. Despite the
company's performance, TDCF has maintained its valuation at a discount to
book value due to the relative illiquidity of the shares.
Thai Universal Office Products Ltd. The company has continued to make
progress over the past 12 months, with sales increasing in the year to 31
December 2000 by 32.5% over the year to end 1999, after a gain of nearly 30%
over the preceding year. Average margins improved by 10% over the year to
20.7%, while operating costs fell from 22.1% to 18.8% over the year. Since
manufacturing capacity is now full, the company is planing to expand into a
new facility. Discussions continue to be held with potential investors.
Non-performing investments, which have been fully provided against and for
which some value may be recovered for shareholders in the long term, have
been grouped together pending ultimate divestment.
A summary of the portfolio is as follows:
Main investments Valuation % of assets
Economic Management Co., Ltd. US$ 690,540 36.55%
Rajthanee Hospital (Public) Co. Ltd US$ 510,965 27.04%
Thai Universal Office Products Ltd. US$ 404,600 21.41%
Others US$ 131,045 6.94%
Total investments US$ 1,737,150 91.94%
Bank deposits and cash US$ 149,216 7.90%
Interest due & other receivables US$ 126,967 6.72%
Accrued expenses US$ -123,938 - 6.56%
Total net assets US$ 1,889,395 100.00%
The Directors
28 June 2001
Christopher S. Forbes D. Graham Lean Paul H. Smith
STATEMENT OF TOTAL RETURN
For the period ended 31st March 2001
12 months to 18 months to
31st March 2001 31 March 2000
(Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total
$000 $000 $000 $000 $000 $000
LOSSES ON INVESTMENTS
Realised losses (2,241) (2,241) (1,170) (1,170)
Unrealised gain (loss) 2,513 2,513 (1,062) (1,062)
------ ------ ------- ------
272 272 (2,232) (2,232)
Exchange differences (518) (518) 1,442 1,442
INCOME
Dividend income 57 - 57 253 - 253
Interest income 8 - 8 312 - 312
Other income 47 - 47 30 - 30
----- ----- ----- ----- ----- -----
112 - 112 595 - 595
LESS EXPENSES
Director's salary 86 - 86 158 - 158
Directors fees 8 - 8 45 - 45
Directors' travel &
meeting expenses 7 - 7 21 - 21
Auditors' fees 15 - 15 23 - 23
Legal fees 19 - 19 31 - 31
Advisory fees - - - 28 - 28
Administration fees 10 - 10 47 - 47
Representative office expenses 65 - 65 415 - 415
General & administrative
expenses 19 - 19 139 - 139
----- ----- ----- ----- ----- -----
229 - 229 908 - 908
----- ----- ----- ----- ----- -----
(Less earlier provisions) (70) - (70) - - -
(LOSS)/RETURN BEFORE
TAXATION (47) (246) (293) (313) (790) (1,103)
Taxation (2) - (2) (2) - (2)
(LOSS)/RETURN ON ORDINARY
ACTIVITIES AFTER TAXATION (49) (246) (295) (315) (790) (1,105)
(LOSS)/RETURN PER ORDINARY
SHARE (US$) (0.03) (0.14) (0.17) (0.18) (0.45) (0.63)
BALANCE SHEET
Unaudited at Audited at
US$'000 31st March 2001 31 March 2000
ASSETS
Investments 1,737 1,938
Receivables 127 152
Cash at bank 149 322
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2,013 2,412
LIABILITIES
Accrued expenses & provisions 124 228
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1,889 2,184
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CAPITAL & RESERVES
Share capital 175 175
Share premium 8,246 8,246
Reserves (6,532) (6,237)
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SHAREHOLDERS' FUNDS 1,889 2,184
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NET ASSET VALUE PER ORDINARY SHARE US$1.08 US$1.24
NOTES
1. The results for the period ended 31 March 2000 are abridged and are
taken from the audited accounts for that year which were distributed to
shareholders in September 2000.
2. The net asset value per ordinary share and the return/loss per share
is calculated based on 1,754,500 shares in issue at each period end and
throughout each period.
3. The company has investments in three companies of greater than 20% of
those companies issued share capital. These are associated undertakings for
which it does not equity account, and of which two have been fully provided
against. Dividends from these undertakings are taken to income when declared.
Interest on convertible loans made by the company is recognised on an
accruals basis, net of provisions.
4. No interim dividends were declared out of earnings during the period.
A partial return of original capital was made to shareholders in January
2000.
5. The taxation represents Thai withholding tax. The company is resident
in the Cayman Islands for taxation purposes, and is exempt from Cayman Island
tax until the year 2010.
6. Copies of the report and accounts are available for inspection at the
company's registered address and at the registration agent, Bermuda
International Securities (UK) Ltd., at Austin Friars House, 2-6 Austin
Friars, London E2N 2HE, United Kingdom.
COMPANY INFORMATION
Directors
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Christopher S. Forbes
D. Graham Lean
Paul H. Smith
Secretary and Registered Office
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Bermuda Trust (Cayman) Limited
3rd Floor, 36c Bermuda House,
Dr. Roy's Drive, George Town,
Grand Cayman
British West Indies
Administrator and Share Registrar
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Bank of Bermuda (Cayman) Limited
3rd Floor, 36c Bermuda House,
Dr. Roy's Drive, George Town,
Grand Cayman
British West Indies
Share Registrar in the United Kingdom
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Bermuda International Securities (UK) Limited
Austin Friars House
2-6 Austin Friars
London EC2N 2HE
United Kingdom
Auditors
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KPMG, Chartered Accountants
P.O. Box 493, Grand Cayman, Cayman Islands
British West Indies