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Thai Dev.Cap.Fund (THD)

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Thursday 28 September, 2000

Thai Dev.Cap.Fund

Results to 31st March 2000

Thai Development Capital Fund Ld
26 September 2000


                   The Thai Development Capital Fund Limited
                   -----------------------------------------
                                      
                   Announcement of Results for the 18 month
                         Period Ending 31st March 2000
                   ----------------------------------------
    
    
   The directors of the Thai Development Capital Fund Limited announce the
   results of the company for the eighteen month period to, and as at, 31st
   March 2000.
   
   The Net Asset Value at 31st March 2000 was US$2.184 million or US$1.24
   per share.
   
   In January 2000 a further return of original capital of US$1.20 was made
   to shareholders, taking the total amount of capital returned to US$5.20
   to date. During the period, the portfolio was reduced by the sale of
   several investments, while a small amount of additional support was given
   to a portfolio company.
   
   The loss over the period was US$1.106 million, or US$0.63 per share,
   largely on account of further provisions that were made against the
   carrying values of certain investments in what has been an uncertain
   economic environment in Thailand.
   
   At 31st March 2000, the company's assets comprised the following:
   
        Net cash and liquid assets                   US$0.246m
        Investments, net of provisions               US$1.938m
        Total net assets                             US$2.184m
   
        Issued, paid up shares                       1,754,500
   
        Net Assets per share                         US$1.24
   
   The directors are recommending that the company's investments be
   liquidated, and that capital thus released be returned to shareholders.
   The Annual General Meeting to be held later in the year will include a
   proposal to that effect to be voted on by the shareholders.
   
   The disposal process is continuing under the control of the directors,
   and is expected to be largely completed by the end of 2000.
   
   Christopher S. Forbes
   25   September 2000
   
   
   
   
                                Directors' Review
                                -----------------
   
    Performance
    -----------
    
    The  past  18 month period has been one of prolonged recession which  has
    been  followed  by a return to positive GNP growth for the Thai  economy,
    during  which  the  Company has divested a number  of  its  holdings  and
    returned surplus capital to shareholders. After the return of capital  to
    shareholders  of  US$4.00  per share in October  1998  new  activity  and
    interest earning capability was much reduced. A further return of capital
    of  US$1.20 per share was made in January 2000. Total net assets at  31st
    March 2000 were US$2.184 million or US$1.24 per share.
    
    During  the  18  month  period to 31st March 2000  the  loss  was  US$1.1
    million  or  US$  0.69  per share. This compared to  a  loss  of  US$6.26
    million  or  US$3.57  per share for the 12 months period  ended  on  30th
    September  1999.  Operating costs of the Company  were  further  reduced.
    Additional   provisions   were  necessary   against   certain   portfolio
    investments  in  the  light  of  economic  conditions  and  the  lack  of
    certainty  in  realisable values. On a positive note, a  contribution  to
    the  Company's  net assets was made from investment in a  listed  country
    fund,  Beta  Viet Nam Fund Ltd., acquired and disposed of during  the  18
    month period under review.
    
    Incentive arrangements
    ----------------------
    
    A  long-term  incentive  scheme has been put into  place  for  the  Chief
    Executive.  Under this, after the shareholders have received a  total  of
    US$6.50  of returned capital (i.e. a further US$1.30 in addition  to  the
    US$5.20 already returned), he would be entitled to an incentive fee based
    on 20% of realised investments, net of any service fees paid to him after
    30  June 2000. Any incentive fee would be subject to Board approval.  The
    net  asset  value at 31st March 2000 was US$1.24 per share so before  any
    incentive  payments can be made under this plan, disposals in  excess  of
    carried values at that date will need to be achieved.
    
    Subsequent events
    -----------------
    
    Since 31st March and up to 22nd September 2000, the following has
    occurred:
    * The investment in Ekarat Engineering pcl was sold to an individual
      investor associated with the company's management.
    * Negotiations have been held with a co-investor in Rajthanee Hospital to
      buy TDCF's shares, but a sale is unlikely to be closed before November.
    * Discussions are underway with interested parties to acquire all of the
      shares held by TDCF in Thai Universal Office Products, but the process is
      unlikely to be completed until the end of 2000.
    * An offer has been received for the company's investment in EML, and an
      early sale is anticipated.
    * At 25th September 2000 the company's net asset value was still US$1.24
      per share.
    
    
    The Directors' recommendation under Article 76.
    -----------------------------------------------
    
    The Directors recommend that the company's investments be liquidated
    as soon as possible without damaging their realisable value, that the
    proceeds from the sale be returned to shareholders, and that the
    company be wound up thereafter. The timing and amounts recovered from
    disposals of the remaining unlisted investments, including the
    amount, if any, that might be gained from the non-performing
    investments, is difficult to predict. The most likely exit route for
    the Company's investments remains either their sale to other
    financial investors, or to companies in the relevant sectors.
    
    On the agenda for the company's Annual General Meeting therefore, is
    the Directors' proposal seeking approval from shareholders for the
    orderly wind down of its business under the control of the current
    Directors and for the cash from liquidated investments to be returned
    to shareholders.
    
    25 September 2000
    
    Christopher S. Forbes         D. Graham Lean      Paul H. Smith
    
    
   
                            CHIEF EXECUTIVE'S REPORT
                            ------------------------
    
    Overview
 
    TDCF undertook only one new, short-term investment during the period,
    while a few restructuring and follow-up investments into existing
    portfolio companies were completed. These are detailed below.
    
    The Representative Office in Thailand employed three staff from the
    beginning of 1999 with operating costs kept to the minimum, and reduced
    by over 22% from the previous year. On 31st March 2000 the local staff
    were laid off, and the Bangkok Representative Office was formally closed
    on 19 September 2000.
    
    Thailand's Economy
    
    The past 18-month period has seen a gradual improvement in the Thai
    economy, although the reform of the banking sector has been slower than
    had been hoped for. While there have been a limited number of higher-
    profile cases of large companies being rehabilitated, the situation with
    small and medium sized companies has remained grave, and banks have
    continued to be reluctant to provide new credits.
    
    Thailand's struggle to overcome its problems has aroused only sporadic
    media interest,  with analysts searching for clear indicators that reform
    is taking place. The real estate sector has continued to weigh down the
    economy, and the persistent over-capacity in all sectors of the market
    continues to keep rental rates low. The banks have had to make huge
    provisions against bad loans over the past year, and while the level of
    non performing loans in the system has declined, considerable scepticism
    lingers about the extent to which there has been any genuine
    restructuring of bad debt, as opposed to just its rescheduling. The sale
    of nationalised banks to overseas interests has continued, although the
    process remains fraught with political sensitivity.

    Macro-economic indicators suggest that the Thai economy has begun to
    recover. Consumer spending is growing, interest rates have been
    relatively low, industrial capacity rates have improved, exports are
    healthy, bank liquidity has been high, the country's foreign exchange
    reserves have been rebuilt, and the exchange rate stabilised, which
    allowed Thailand to turn down the final loans that had been made
    available under the IMF emergency package.
    
    The period under review saw significant inroads being made by foreign
    strategic investors into certain sectors of the economy, notably in
    cement, banking, manufacturing, retailing and wholesaling. Despite
    occasional political criticism of the sale of assets to foreign
    investors, the process has been largely undisturbed, and is likely to
    continue. This can only be good for the health of the country's corporate
    sector, even if the cost is the loss of control by local interests.
    Despite domestic criticism, the Government has held steady to its IMF-
    inspired policies and while the measures have brought about returned
    stability, weaknesses in the economy and the regulatory and political
    system remain, and the scepticism referred to last year about the
    thoroughness of the reforms being undertaken is still warranted.
    
    The potential for direct investment in Thailand is now relatively
    encouraging and the need for further corporate restructuring should
    provide opportunities for foreign investors. There appears to be no
    shortage of investment capital available from foreign and domestic
    sources for worthwhile investments, but these latter are, as always, hard
    to come by, and usually have to be created.
    
    Investments
    
    The only new investment made during the 18 month period to 31st March
    2000 was a short-term purchase of about 6% of the share capital of the
    Beta Viet Nam Fund Limited, a closed end investment fund listed on the
    Dublin Stock Exchange. Its shares had traded at a large discount to
    reported net asset value and, in TDCF's judgement, at a substantial
    discount to its cash reserves, which was subsequently proven to be the
    case. TDCF made contact with several of the fund's institutional
    shareholders, and having discovered widespread dissatisfaction at the way
    in which the fund was being run, arranged for an extraordinary general
    meeting of shareholders to be held to try to change sufficient numbers of
    the directors of the fund to make the board more independent of the
    manager. While the attempt to change the board was unsuccessful, it
    ultimately agreed to returnUS$3.00 per share of unused capital to
    shareholders.  TDCF sold its shares in the fund in October, at a profit
    of over 60% over the seven month holding period. The gain arose as a
    direct consequence of TDCF's actions.
    
    Several other realisations were achieved during 1999/2000, including two-
    thirds of the Company's holding in The Pizza Company at what proved to be
    a very strong price of Baht 135. The investments in 600,000 shares of
    Noble Development pcl, and the 300,000 unsecured debentures were also
    realised as a result of a negotiated sale with the company's owners. The
    company also disposed of its 160,000 shares in Thai Precision
    Manufacturing, 100,000 shares of Phatra Leasing Pcl., and 1,025,000
    shares in Ekarat Engineering pcl (post Balance Sheet date). Listed
    investments in PAE (Thailand) plc, and Sinsubnakorn plc, (both of which
    went into rehabilitation), and unlisted investments in Media Plus and
    Chico Thai Plantations were written off.
    
    
    D.G. Lean
    25 September 2000



  
                              INVESTMENT PORTFOLIO
                               At 31st March 2000
                                      
                                    Type of                            % of Net
UNLISTED SHARES                     Investment      Holding      US$     Assets
---------------                     ----------      -------      ---     ------
Economic Management Ltd.       Equity                98,000     98,000     4.49
                               Convertible Loan     540,000    540,000    24.72
Rajthanee Hospital PCL         Equity             2,040,000    606,181    27.76
Thai Universal Office
Products Ltd.                  Equity             1,875,000    272,385    12.47
                               Convertible Loan     175,000    175,000     8.01
                                                             ---------    -----
                                                             1,691,566    77.45
                                                             ---------    -----

OTHERS

Investments written off/
Fully provided against (see below)                                   3     0.00
                                                             ---------    -----
                                                                     3     0.00
                                                             ---------    -----

LISTED SHARES

The Pizza Public Co. Ltd.                           160,000    246,171    11.27
                                                             ---------    -----
                                                               246,171    11.27
                                                             ---------    -----

TOTAL INVESTMENTS                                            1,937,740    88.72
                                                             =========    =====

Securities at cost or market value                           1,937,740    88.72
Bank deposits and cash                                         322,465    14.76
Interest due and other receivables                             151,769     6.94
Accrued expenses                                              (227,802)  -10.43
                                                             ---------   ------
                                                             2,184,172   100.00
                                                             =========   ======

                    Net Asset Value per share                    $1.24

INVESTMENT PORTFOLIO - NON PERFORMING

Ekarat Engineering PCL                 Equity         1,025,000      1
Hideaway Group Interntional Ltd.       Equity         1,048,000      0
                                       Convertible
                                       Loan             976,000      1
(Credit to Subsidiary company PCI)     Con. Loan        425,000      0
SDS (Thailand) Ltd.                    Equity           490,000      0
                                       Con. Loan      1,281,088      1
                                                                ------
                                                                     3
                                                                ------




                          STATEMENT OF TOTAL RETURN
                      For the period ended 31 March 2000
                                      
                                    
                          18 months to             12 months to
                          31 March 2000            30 September 1998
                          (Unaudited)              (Audited)
 
                          Revenue Capital Total    Revenue Capital Total
 
LOSSES ON INVESTMENTS

Realised losses                  (1,170)(1,170)                -      -
Unrealised loss                  (1,062)(1,062)           (5,827)(5,827)
                                ------- ------             -----  -----
                                 (2,232)(2,232)           (5,827)(5,827)

Exchange differences              1,442  1,442              (540)  (540)

INCOME
Dividend income             253       -    253         23      -     23
Interest income             312       -    312        620      -    620
Other income                 30       -     30         42      -     42
                          -----   -----  -----      -----  -----  -----
                            595       -    595        685      -    685

LESS EXPENSES
Bank charges                  2       -      2          2      -      2
Director's salary           158       -    158        105      -    105
Directors fees               45       -     45         24      -     24
Directors' travel &
 meeting expenses            21       -     21         31      -     31
Auditors' remuneration
-fees for audit services     23       -     23         27      -     27
-other services               -       -      -          5      -      5
Legal fees                   31       -     31          5      -      5
Advisory fees                28       -     28          -      -      -
Administration fees          47       -     47         50      -     50
Representative office
 expenses                   415       -    415        316      -    316
General & administrative
 expenses                   137       -    137          7      -      7
                          -----   -----  -----      -----  -----  -----
                            908       -    908        572      -    572
                          -----   -----  -----      -----  -----  -----

(LOSS)/RETURN BEFORE
TAXATION                   (313)   (790)(1,103)       113 (6,367)(6,254)
Taxation                     (2)      -     (2)        (7)     -     (7)

(LOSS)/RETURN ON ORDINARY
ACTIVITIES AFTER TAXATION  (315)   (790)(1,105)       106 (6,367)(6,261)


(LOSS)/RETURN PER ORDINARY
SHARE (US$)               (0.18)  (0.45) (1.63)      0.06  (3.63) (3.57)



                                BALANCE SHEET
                             As at 31 March 2000
                                      
                                                         
                                      Unaudited at            Audited at
US$'000                              31 March 2000     30 September 1998

ASSETS
Investments                                  1,938                 3,537
Receivables                                    152                    43
Cash at bank                                   322                 8,935
                                             -----                ------
                                             2,412                12,515

LIABILITIES
Return of capital                                 -               (7,018)
Accrued expenses & provisions                  (228)                (102)
                                              -----                -----
                                              2,184                5,395
                                              =====                =====
CAPITAL & RESERVES
Share capital                                   175                  175
Share premium                                 8,246               10,352
Reserves                                     (6,237)              (5,132)
                                             ------               ------
SAHREHOLDERS' FUNDS                           2,184                5,395
                                             ======               ======

NET ASSET VALUE PER ORDINARY SHARE            $1.24                $3.07


NOTES

1.   The results for the year ended 30 September 1998 are abridged and are
     taken from the audited accounts for that year which were distributed to
     shareholders in March 1999.

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 four companies of greater than 20% of
     those companies' issued share capital, which are associated undertakings   
    for which it does not equity account. 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
  ---------
  Christopher S. Forbes
  D. Graham Lean
  Paul H. Smith
  
  Secretary and Registered Office
  -------------------------------
  
  Bermuda Trust (Cayman) Limited
  3rd Floor, 36c Bermuda House,
  Dr. Roy's Drive, George Town,
  Grand Cayman
  British West Indies
  
  Administrator and Share Registrar
  ---------------------------------
  
  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
  -------------------------------------

  Bermuda International Securities (UK) Limited
  Austin Friars House
  2-6 Austin Friars
  London EC2N 2HE
  United Kingdom
  
  Auditors
  --------
  
  KPMG, Chartered Accountants
  P.O. Box 493, Grand Cayman, Cayman Islands
  British West Indies



                                                                                
                                                                                
                              

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