Review report of Independent Auditor To the Unitholders of Samui Airport Property Fund (Leasehold)

Transcription

1 Samui Airport Property Fund (Leasehold) Review report and interim financial statements For the three-month and six-month periods ended 30 June 2011 and 2010

2 Review report of Independent Auditor To the Unitholders of Samui Airport Property Fund (Leasehold) I have reviewed the accompanying balance sheet, including the details of investments of Samui Airport Property Fund (Leasehold) as at 30 June 2011, the related statements of income for the three-month and six-month periods ended 30 June 2011, the statements of changes in net assets, cash flows and significant financial information for the six-month period ended 30 June These financial statements and financial information are the responsibility of the Fund s management as to their correctness and the completeness of the presentation. My responsibility is to issue a report on these financial statements based on my review. I conducted my review in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of the fund personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit and, accordingly, I do not express an audit opinion. Based on my review, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. The financial statements of Samui Airport Property Fund (Leasehold) for the year ended 31 December 2010, were audited in accordance with generally accepted auditing standards by another auditor of our firm who expressed an unqualified opinion on those statements, under her report dated 8 February The balance sheet including the details of investments as at 31 December 2010, as presented herein for comparative purposes, formed an integral part of the financial statements which that auditor audited and reported on.

3 Statements of income for the three-month and six-month periods ended 30 June 2010, the statements of changes in net assets, cash flows and significant financial information for the six-month period then ended of Samui Airport Property Fund (Leasehold), as presented herein for comparative purposes, formed an integral part of the interim financial statements which were reviewed by the aforementioned auditor who reported, under her report dated 5 August 2010, that nothing had come to her attention that caused her to believe that those financial statements were not presented fairly, in all material respects, in accordance with generally accepted accounting principles. Chayapol Suppasedtanon Certified Public Accountant (Thailand) No Ernst & Young Office Limited Bangkok: 2 August

4 Samui Airport Property Fund (Leasehold) Balance sheets Assets Investments in leasehold rights to properties at fair value Note 30 June December 2010 (Unaudited but reviewed) (Audited) (at cost: Baht 9, million) 6 10,193,000 10,249,000 Investments in securities at fair value (at cost: Baht million at 30 June 2011, Baht million at 31 December 2010) 220, ,727 Cash at bank 7 10,285 65,144 Accounts receivable from return on leasehold rights to properties 8, 11 68,420 83,454 from interest Prepaid expenses Total assets 10,492,344 10,588,413 Liabilities Account payable from purchase of investments - 59,930 Accrued expenses 11 3,022 3,044 Deposits received from customer 6, 11 47,500 47,500 Other liabilities 9,567 8,162 Total liabilities 60, ,636 Net assets 10,432,255 10,469,777 Net assets Fund registered 1,050 million units of Baht each 10,177,335 10,177,335 Paid-in capital from unitholders 950 million units of Baht each 9,208,065 9,208,065 Retained earnings 9 1,224,190 1,261,712 Net assets 10,432,255 10,469, Net asset value per unit Number of units issued - end of period/year (units) 950,000, ,000, ,000, ,000,000 The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

5 Samui Airport Property Fund (Leasehold) Statements of income For the three-month periods ended 30 June 2011 and 2010 (Unaudited but reviewed) Note Investment income Income from investments in leasehold rights to properties , ,627 Interest income 1, Total income 222, ,014 Expenses Management fee 11 7,024 7,028 Trustee's fee Registrar fee Professional fees Other expenses Total expenses 9,175 9,047 Net investment income 213, ,967 Unrealised losses on investments Net unrealised losses on investments 6 (34,000) (25,830) Total unrealised losses on investments (34,000) (25,830) Increase in net assets resulting from operations 179, ,137 The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

6 Samui Airport Property Fund (Leasehold) Statements of income For the six-month periods ended 30 June 2011 and 2010 (Unaudited but reviewed) Note Investment income Income from investments in leasehold rights to properties , ,549 Interest income 2, Total income 492, ,416 Expenses Management fee 11 14,002 14,219 Trustee's fee 1,288 1,308 Registrar fee 11 1,288 1,308 Professional fees 652 1,154 Other expenses Total expenses 18,001 18,717 Net investment income 474, ,699 Unrealised losses on investments Net unrealised losses on investments 6 (56,000) (445,517) Total unrealised losses on investments (56,000) (445,517) Increase in net assets resulting from operations 418,478 12,182 The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

7 Samui Airport Property Fund (Leasehold) Statements of changes in net assets For the six-month periods ended 30 June 2011 and 2010 (Unaudited but reviewed) Note Increase in net assets resulting from operations during period Net investment income 474, ,699 Net unrealised losses on investments (56,000) (445,517) Increase in net assets resulting from operations 418,478 12,182 Distributions to unitholders during period 10 (456,000) (190,000) Decrease in capital from unitholders - (266,000) Decrease in net assets during period (37,522) (443,818) Net assets - beginning of period 10,469,777 10,935,539 Net assets - end of period 10,432,255 10,491,721 The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

8 Samui Airport Property Fund (Leasehold) Statements of cash flows For the six-month periods ended 30 June 2011 and 2010 (Unaudited but reviewed) Cash flows from operating activities Increase in net assets resulting from operations 418,478 12,182 Adjustments to reconcile the increase in net assets resulting from operations to net cash provided by (paid from) operating activities Purchases of investments in securities (2,273,184) (797,403) Sales of investments in securities 2,246, ,992 Net sales (purchases) of investments in securities (27,184) 589 Decrease in account receivable from return on leasehold rights to properties 15,034 22,178 Decrease (increase) in accounts receivable from interest (12) 69 Increase in prepaid expenses (121) (144) Decrease in account payable from purchase of investments (59,930) - Decrease in accrued expenses (22) (138) Increase (decrease) in other liabilities 1,405 (8,828) Amortisation of discounts on investments (2,507) (530) Net unrealised losses on investments 56, ,517 Net cash from operating activities 401, ,895 Cash flows from financing activities Distributions to unitholders (456,000) (190,000) Decrease in capital from unitholders - (266,000) Net cash used in financing activities (456,000) (456,000) Net increase (decrease) in cash at bank (54,859) 14,895 Cash at bank at beginning of period 65,144 11,087 Cash at bank at end of period 10,285 25,982 - The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

9 (Unaudited but reviewed) Samui Airport Property Fund (Leasehold) Significant financial information (Unit: Baht) For the six-month periods ended 30 June Operating performance (per unit) Net asset value - beginning of period Income from investment operations Net investment income Net realised gains on investments Net unrealised gains (losses) on investments (0.0589) (0.4689) (0.0954) (0.0595) Total income from investment operations Less: Distributions to unitholders (0.4800) (0.2000) (0.4184) (0.4357) (0.3124) Decrease in paid-in capital from unitholders - (0.2800) Net asset value - end of period Ratio of the increase in net assets resulting from operations to average net assets during the period (%) Significant financial ratios and additional information Net assets - end of period (Thousand Baht) 10,432,255 10,491,721 11,016,706 11,195,726 11,351,314 Ratio of total expenses to average net assets during period (%) Ratio of total investment income to average net assets during period (%) Ratio of weighted average investment turnover to average net assets during period (%)* Average net assets during period (Thousand Baht) 10,522,181 10,716,332 11,107,918 11,260,096 10,858,651 * Investment trading transactions exclude cash at banks and investments in promissory notes, and must be real purchases or sales of investments which exclude purchases under resale agreements or sales under repurchase agreements. The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

10 Samui Airport Property Fund (Leasehold) Details of investments Details of investments classified by asset classes 30 June December 2010 (Unaudited but reviewed) (Audited) Percentage Percentage Type of investments Cost Fair value of investment Cost Fair value of investment (Thousand Baht) (Thousand Baht) (Percent) (Thousand Baht) (Thousand Baht) (Percent) Investments in leasehold rights to properties Leasehold rights on land, runway, parking apron and 9,301,359 10,193, ,301,359 10,249, constructions on leased land of Samui Airport. Such land is located in Tambon BorPhud, Amphoe Koh Samui, Surat Thani Province with area of rai, and comprises of land under 29 title deeds and 19 Nor.Sor. 3 Gor. papers and related acquisition costs. Total investments in leasehold rights to properties 9,301,359 10,193, ,301,359 10,249, The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

11 Samui Airport Property Fund (Leasehold) Details of investments (continued) Details of investments classified by asset classes 30 June December 2010 (Unaudited but reviewed) (Audited) Percentage Percentage Type of investment Maturity date Interest rate Quantity Par value Cost Fair value of investment Quantity Interest rate Par value Cost Fair value of investment (Percent) (Unit) (Thousand Baht) (Thousand Baht) (Thousand Baht) (Percent) (Unit) (Percent) (Thousand Baht) (Thousand Baht) (Thousand Baht) (Percent) Investments in securities Cash at bank-current account TISCO Bank Plc. At call Bond CB11106A 6 Jan , , , CB11127C 27 Jan ,000 59,921 59, CB11707D 7 July ,000 79,964 79, CB11818B 18 August ,000 19,925 19, CB11804A 4 August , , , Total investments in securities 220, , , , Total investments 9,521,777 10,413, ,492,086 10,439, The accompanying notes are an integral part of the financial statements. (Ms. Yodploy Anantachai) Fund Manager

12 (Unaudited but reviewed) Samui Airport Property Fund (Leasehold) Notes to interim financial statements For the three-month and six-month periods ended 30 June 2011 and Description of Samui Airport Property Fund (Leasehold) Samui Airport Property Fund (Leasehold) ( the Fund ) is a closed-end property fund and a specified property fund with the properties to be bought and/or sold detailed in the Fund s prospectus. The Fund was established and registered as a fund on 22 November 2006 with capital of Baht 10,500 million with no project life stipulated. The Fund had received Baht 9,500 million from sales of investment units as of the registration date of the Fund. The project mobilises funds from the public and general investors, with the main objective of utilising the proceeds from such mobilisation to purchase, lease and/or sublease immovable properties, and for seeking benefits from the immovable properties it invested in or possesses by way of letting, subletting transfer and/or disposal. The Fund also engages in the improvement, modification, construction and development of the capacity of those immovable properties by obtaining or accepting transfers of construction permits and/or applying for other permits and/or by any other pertinent or necessary acts for the benefit of the immovable properties within the scope that the Fund may act under the regulations of the Office of the Securities and Exchange Commission and other relevant notifications, and with a view to generate income and returns for the Fund and the unitholders. This may include investment in other properties and/or other securities and/or deriving of benefit by other means as prescribed by the Securities Law and/or other relevant laws. On 24 November 2006, the Stock Exchange of Thailand approved the listing of the Fund s units and permitted their trading in the Stock Exchange of Thailand on 24 November The Fund is managed by Siam City Asset Management Co., Ltd. ( the Management Company ), which has been changed to Kiatnakin Fund Management Co., Ltd. on 12 July 2011, and its trustee is Citibank, N.A. Bangkok Branch. As at 30 June 2011 and 31 December 2010, the Fund s major unitholder is Bangkok Airways Co., Ltd. holding 25% of the Fund units issued. 1

13 (Unaudited but reviewed) On 5 November 2009, the Office of the Securities and Exchange Commission ( SEC ) issued letter No. Nor (Vor) 14/2552 concerning the delivery of notice and clarification of criteria regarding the establishment and management of property funds. The letter stipulates that a management company must pay dividends to the unitholders of not less than 90% of the annual net profit, excluding only non-cash gains, and including non-cash expenses. If a management company intends to distribute dividends from non-cash expenses, it has to be done through a reduction of the registered capital of the fund. Any fund that stipulates dividend payment conditions in its prospectus that do not comply with this new notification needs to amend its prospectus accordingly within 6 months from the effective date of the Notification (within 16 May 2010). The Management Company amended the project details in line with the above letter. The Office of the SEC approved the amendments on 23 July The significant amendments are summarised below. a) The amendment of the Fund s name to "Samui Airport Property Fund (Leasehold)". b) The amendment of the criteria for dividend payment. c) Capital reduction in the event that the Fund has excess liquidity. 2. Basis of preparation of interim financial statements These interim financial statements are prepared in accordance with Accounting Standard No. 34 (revised 2009) Interim Financial Reporting, with the Fund choosing to present condensed interim financial statements. However, the Fund has presented the balance sheets, the details of investments, the statements of income, changes in net assets, cash flows and significant financial information in the same format as that used for the annual financial statements. The interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. The interim financial statements in Thai language are the official statutory financial statements of the Fund. The interim financial statements in English language have been translated from the Thai language financial statements. 2

14 (Unaudited but reviewed) 3. New accounting standards are effective during the period The Federation of Accounting Professions issued twenty-nine revised accounting standards, new accounting standards and accounting standard interpretations which are effective for fiscal years beginning on or after 1 January The Fund s management has assessed the effect of these accounting standards and believes that most of them are not relevant to the business of the Fund and that they do not have any significant impact on the financial statements for the current period because the financial statements of the Fund are prepared in accordance with the regulations and format specified in Accounting Standard No. 106 Accounting for Investment Business. 4. Significant accounting policies These interim financial statements are prepared in accordance with the same accounting policies and methods of computation as were used for the financial statements for the year ended 31 December New accounting standards issued during the period not yet effective During the current period, the Federation of Accounting Professions issued three accounting standard interpretations which are effective for fiscal years beginning on or after 1 January The Fund s management has assessed the effect of these accounting standards and believes that for the most part they are not relevant to the business of the Fund and will not have any significant impact on the financial statements for the period in which they are initially applied because the financial statements of the Fund are prepared in accordance with the regulations and format specified in Accounting Standard No. 106 Accounting for Investment Business. 6. Investments in leasehold rights to properties The Fund invested in long-term leasehold rights in assets, which include the land, runway, parking apron and constructions on leased land which are currently being used for Samui Airport, by entering into a long-term lease agreement with Bangkok Airways Co., Ltd. This long-term lease agreement has a term of 30 years terminating on 23 November 2036 and the Fund paid the lease costs for the entire lease period, totaling Baht 9,300 million (the price stated in the agreement, which is lower than the value appraised by independent appraisers), on the registration date of the lease. In addition, Bangkok Airways Co., Ltd. arranged for registration of the mortgage of leased assets totaling Baht 20,900 million to guarantee its performance under the aforesaid long-term lease agreement, in accordance with conditions specified in the long-term lease agreement. 3

15 (Unaudited but reviewed) The Fund intends to seek benefits from such investments by entering into a Sub-Lease Agreement with Bangkok Airways Co., Ltd. to sublease the aforesaid leased assets for a term of 3 years, with an option to require Bangkok Airways Co., Ltd. to renew for a further 9 periods of 3 years each. Simultaneously, the Fund entered into Utilities System Service Agreement with Bangkok Airways Co., Ltd., which has a term of 30 years. In addition, Bangkok Airways Co., Ltd. has to either, or both arrange for a bank guarantee issued by a commercial bank in Thailand and/or deposit cash as security in the bank account of the Fund and/or pledge of listed securities and/or other securities of which the aggregate value is equal to 12 months of sub-lease fee as specified in Sub-Lease Agreement plus the fixed service fee specified in Utilities System Service Agreement or totaling Baht 570 million. If listed securities and/or other securities are pledged, collateral value is not to be less than 120% of the pledge facility throughout the pledge period. In accordance with the Sub-Lease Agreement and Utilities System Service Agreement, Bangkok Airways Co., Ltd. placed a bank guarantee of Baht 100 million, issued by Bangkok Bank Plc., and pledged 12.8 million common shares of Bangkok Dusit Medical Services Plc. with fair value of Baht 675 million as at 30 June 2011 (144% of the pledge facility), as collateral (31 December 2010: a bank guarantee of Baht 100 million and 23.3 million common shares of Bangkok Dusit Medical Services Plc. with fair value of Baht 1,083 million). In addition, Bangkok Airways Co., Ltd. paid the rental deposit amounting to Baht 26,125,000 to the Fund in accordance with Sub-Lease Agreement and paid the service deposit amounting to Baht 21,375,000 to the Fund in accordance with Utilities System Service Agreement, totaling Baht 47,500,000. During the year 2011, the Fund hired an independent appraiser to appraise the fair value of the leasehold rights to properties of each quarter-end, using the income approach. The independent appraiser assessed the fair value as of 30 June 2011 to be Baht 10,193 million, under the report dated 5 April 2011, with the assessment taking into account the benefits derived from the properties in accordance with the terms of the Sub-Lease Agreement and Utilities System Service Agreement in determining the assumptions applied, such as the stipulation fixed rental rate and income sharing ratio. The Fund has adjusted the investments in leasehold rights to properties to their fair value, and recognised net unrealised losses on investments amounting to Baht 34 million and Baht 56 million in the statement of income for the three-month and sixmonth periods ended 30 June

16 (Unaudited but reviewed) Movement of the investments in leasehold rights to properties account during the six-month period ended 30 June 2011 is summarised below. Investments in leasehold rights to properties - beginning of period 10,249,000 Less: Unrealised losses during period (56,000) Investments in leasehold rights to properties - end of period 10,193, Cash at bank As at 30 June 2011 and 31 December 2010, the Fund has the following cash at bank. Principal (Thousand Baht) Interest rate per annum (Percent) 30 June 31 December 30 June 31 December Bank Citibank, N.A. Bangkok Branch Savings account 10,285 65, Total 10,285 65, Account receivable from return on leasehold rights to properties The outstanding balances of account receivable from return on leasehold rights to properties are aged, based on due date, as follows: 30 June December 2010 Not yet due 68,420 83,454 Total 68,420 83,454 5

17 (Unaudited but reviewed) 9. Retained earnings 30 June December 2010 Accumulated net investment income 3,240,787 2,356,929 Accumulated realised gains on investments 9,544 9,507 Accumulated unrealised gains on investments 947,641 1,428,048 Accumulated distributions to unitholders (2,936,260) (2,358,945) Retained earnings - beginning of period / year 1,261,712 1,435,539 Increase in net assets resulting from operations during period / year 418, ,488 Distributions to unitholders during period / year (456,000) (577,315) Retained earnings - end of period / year 1,224,190 1,261, Distributions to unitholders Dividend declared during the six-month period ended 30 June 2011 consisted of the following. Declared date For the operations period Per unit Total (Baht) (Thousand Baht) 17 February October December 2010 and retained earnings , May January March 2011 and retained earnings ,500 Total dividends for , Related party transactions During the periods, the Fund had significant business transactions with related parties which have been concluded on commercial terms and bases agreed upon in the ordinary course of business between the Fund and those companies. Below is a summary of those transactions. 6

18 (Unaudited but reviewed) For the three-month For the six-month periods ended periods ended 30 June 30 June Pricing policy Siam City Asset Management Co., Ltd. (which has been changed to Kiatnakin Fund Management Co., Ltd. on 12 July 2011) Management fee 7,024 7,028 14,002 14,219 The basis stated in the prospectus Registrar fee ,288 1,308 The basis stated in the prospectus Bangkok Airways Co., Ltd. Income from investments in leasehold The basis stated in the rights to properties 221, , , ,549 agreement Dividend paid 64, ,000 47,500 As declared Decrease in capital from unitholders - 66,500-66,500 As declared As at 30 June 2011 and 31 December 2010, the Fund has the following significant outstanding balance with its related companies. 30 June December 2010 Siam City Asset Management Co., Ltd. (which has been changed to Kiatnakin Fund Management Co., Ltd. on 12 July 2011) Accrued management fee 2,294 2,379 Accrued registrar fee Bangkok Airways Co., Ltd. Account receivable from return on leasehold rights to properties 68,420 83,454 Deposits received from customer 47,500 47, Investment trading information The Fund s investment trading transactions during the six-month period ended 30 June 2011, excluding bank deposits and investments in promissory notes, amounted to Baht 4,519 million (2010: Baht 1,535 million) which is 42.95% (2010: 14.33%) of the average net assets during the period. 7

19 (Unaudited but reviewed) 13. Commitments The Fund is committed to pay management fee, trustee s fee and registrar fee to counterparties under the terms and conditions specified in the agreements and the prospectus. 14. Segment information The operations of the Fund are in a single business segment of sublease of property investments and are carried on in the single geographical area of Thailand. As a result, all revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned business segment and geographic area. 15. Approval of interim financial statements These interim financial statements were authorised for issue by the Fund Manager on 2 August