BTS Rail Mass Transit Growth Infrastructure Fund Report and interim financial statements For the three-month and nine-month periods ended 31 December

Transcription

1 BTS Rail Mass Transit Growth Infrastructure Fund Report and interim financial statements For the three-month and nine-month periods ended 31 December 2014

2 Independent Auditor s Report on Review of Interim Financial Information To the Unitholders of BTS Rail Mass Transit Growth Infrastructure Fund I have reviewed the accompanying balance sheet, including the details of investments of BTS Rail Mass Transit Growth Infrastructure Fund as at 31 December 2014, the related statement of income for the three-month and nine-month periods ended 31 December 2014, and the related statements of changes in net assets, cash flows and significant financial information for the nine-month period then ended, as well as the condensed notes to the financial statements. Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34 Interim Financial Reporting. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of Review I conducted my review in accordance with Thai Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34 Interim Financial Reporting. Siraporn Ouaanunkun Certified Public Accountant (Thailand) No EY Office Limited Bangkok: 9 February 2015

3 BTS Rail Mass Transit Growth Infrastructure Fund Balance sheet As at As at Note 31 December March 2014 (Unaudited (Audited) but reviewed) Assets Investment in the net revenue purchase and transfer agreement at fair value (at cost: Baht 61,399 million) 5 63,703,000 63,100,000 Investments in securities at fair value (at cost: 31 December 2014: Baht 1,030 million and 31 March 2014: Baht 1,242 million) 1,032,008 1,245,438 Cash at bank 7 15,498 77,558 Account receivable from the net revenue purchase and transfer agreement 8, ,540 - Accounts receivable from interest Deferred units issuance costs 9 478, ,288 Other assets 1,957 4,057 Total assets 65,349,382 65,184,403 Liabilities Account payable from the net revenue purchase and transfer agreement 13-47,127 Other payables and accrued expenses 31,387 27,826 Specific business tax payable 2,163 4,623 Other liabilities Total liabilities 34,261 79,897 Net assets 65,315,121 65,104,506 Net assets Registered capital 5,788,000,000 units of Baht each (31 March 2014: 5,788,000,000 units of Baht each) 10 62,064,724 62,510,400 Paid-in capital from unitholders 62,064,724 62,510,400 Retained earnings 11 3,250,397 2,594,106 Net assets 65,315,121 65,104, Net asset value per unit Number of units issued - end of period/year (units) 5,788,000,000 5,788,000,000 The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

4 BTS Rail Mass Transit Growth Infrastructure Fund Details of investments Details of investments classified by asset classes Type of investment Investment in the infrastructure business (Note 5) As at 31 December 2014 As at 31 March 2014 (Unaudited but reviewed) (Audited) Percentage Percentage Cost Fair value of investment Cost Fair value of investment (Thousand Baht) (Thousand Baht) (Percent) (Thousand Baht) (Thousand Baht) (Percent) Investment in the net revenue purchase and transfer agreement to acquire the net revenue to be generated from the operations of the Core BTS SkyTrain System pursuant to the concession agreement dated 9 April 1992 and its amendments entered into between the Bangkok Metropolitan Administration and Bangkok Mass Transit System Public Company Limited from 17 April 2013 until the expiration of the Concession Agreement (4 December 2029) 61,399,000 63,703, ,399,000 63,100, Total investment in the infrastructure business 61,399,000 63,703, ,399,000 63,100, Percentage Percentage Type of investment Maturity date Yield rate Par value Fair value of investment Par value Fair value of investment (Percent per annum) (Thousand Baht) (Thousand Baht) (Percent) (Thousand Baht) (Thousand Baht) (Percent) Investments in securities Bond Bank of Thailand CB14508A 8 May ,000 44, Bank of Thailand CB14515A 15 May ,000 19, Bank of Thailand CB14529B 29 May , , Bank of Thailand CB14605A 5 June , , Bank of Thailand CB14605B 5 June , , Bank of Thailand BOT152A 24 February ,000 70, Bank of Thailand CB15219B 19 February , , Bank of Thailand CB15226A 26 February , , Bank of Thailand CB15305A 5 March , , Bank of Thailand CB15305B 5 March , , Bank of Thailand CB15312B 12 March ,000 64, Total investments in securities 1,035,000 1,032, ,250,000 1,245, Total investments 62,434,000 64,735, ,649,000 64,345, The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

5 BTS Rail Mass Transit Growth Infrastructure Fund Income statement For the three-month period ended 31 December 2014 Note Investment income Income from the investment in the net revenue purchase and transfer agreement 6, 13 1,053, ,094 Interest income 5,894 7,841 Total income 1,058, ,935 Expenses Management fee 13, 14 13,176 13,041 Trustee fee 14 3,514 3,477 Registrar fee 14 1,349 1,520 Professional fees 1, Amortisation of deferred unit issuance costs 93,267 93,267 Other expenses 9,749 6,935 Total expenses 122, ,060 Net investment income 936, ,875 Unrealised gains on investments Net unrealised gains on investments 301, ,197 Total unrealised gains on investments 301, ,197 Increase in net assets resulting from operations 1,237,417 1,266,072 The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

6 BTS Rail Mass Transit Growth Infrastructure Fund Income statement For the period For the nine-month from 17 April 2013 period ended (date of registration) Note 31 December 2014 to 31 December 2013 Investment income Income from the investment in the net revenue purchase and transfer agreement 6, 13 3,076,760 2,781,036 Interest income 20,019 26,864 Total income 3,096,779 2,807,900 Expenses Management fee 13, 14 39,335 36,450 Trustee fee 14 10,490 9,719 Registrar fee 14 4,031 4,280 Professional fees 10,187 5,338 Amortisation of deferred unit issuance costs 9 278, ,568 Other expenses 32,417 27,121 Total expenses 375, ,476 Net investment income 2,721,532 2,462,424 Unrealised gains on investments Net unrealised gains on investments 603,027 1,301,190 Total unrealised gains on investments 603,027 1,301,190 Increase in net assets resulting from operations 3,324,559 3,763,614 The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

7 BTS Rail Mass Transit Growth Infrastructure Fund Statement of changes in net assets For the period For the nine-month from 17 April 2013 period ended (date of registration) Note 31 December 2014 to 31 December 2013 Increase in net assets resulting from operations during period Net investment income 2,721,532 2,462,424 Net unrealised gains on investments 603,027 1,301,190 Increase in net assets resulting from operations 3,324,559 3,763,614 Increase in paid-in capital from unitholders - 62,510,400 Decrease in paid-in capital during period 10 (445,676) - Distributions to unitholders during period 12 (2,668,268) (1,591,700) Increase in net assets during period 210,615 64,682,314 Net assets - beginning of period 65,104,506 - Net assets - end of period 65,315,121 64,682,314 The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

8 BTS Rail Mass Transit Growth Infrastructure Fund Statement of cash flows For the period For the nine-month from 17 April 2013 period ended (date of registration) 31 December 2014 to 31 December 2013 Cash flows from operating activities Increase in net assets resulting from operations 3,324,559 3,763,614 Adjustments to reconcile the increase in net assets resulting from operations to net cash provided by (paid from) operating activities Purchases of investment in the net revenue purchase and transfer agreement - (61,399,000) Purchases of investments in securities (3,928,313) (3,223,974) Sales of investments in securities 4,160,000 2,188,000 Net (purchases) sales of investments in securities 231,687 (1,035,974) Increase in account receivable from the net revenue purchase and transfer agreement (117,540) (80,579) Increase in account receivable from interest (816) (5) (Increase) decrease in other assets 2,100 (53) Decrease in account payable from the net revenue purchase and transfer agreement (47,127) - Increase in accounts payable and accrued expenses 3,561 29,135 Increase (decrease) in specific business tax payable (2,460) 2,529 Increase in other liabilities Amortisation of deferred units issuance cost 278, ,568 Amortisation of discounts on investments (18,230) (14,951) Net unrealised gains on investments (603,027) (1,301,190) Net cash from (used in) operating activities 3,051,884 (59,773,500) Cash flows from financing activities Proceed from paid-in capital from unitholders - 62,510,400 Payment of the issuance costs - (1,111,095) Decrease in paid-un capital from unitholders (445,676) - Distributions to unitholders (2,668,268) (1,591,700) Net cash from (used in) financing activities (3,113,944) 59,807,605 Net increase (decrease) in cash at bank (62,060) 34,105 Cash at bank at beginning of period 77,558 - Cash at bank at end of period 15,498 34,105 - The accompanying notes are an integral part of the interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

9 BTS Rail Mass Transit Growth Infrastructure Fund Significant financial information Operating performance (per unit) (Unaudited but reviewed) (Unit: Baht) For the period For the nine-month from 17 April 2013 period ended (date of registration) 31 December 2014 to 31 December 2013 Net asset value - beginning of period Add: Paid-in capital from unitholders Income from investment operations Net investment income Net unrealised gains on investments Total income from investment operations Less: Decrease in paid-in capital from unitholders (0.0770) - Less: Distributions to unitholders during period (0.4610) (0.2750) 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) 65,315,121 64,682,314 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 purchases and sales to average net assets during period (%)* Average net assets during period (Thousand Baht) 65,051,616 64,004,237 * Investment purchases and sales 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 interim financial statements. (Mr. Winai Hirunpinyopard) Deputy Managing Director

10 BTS Rail Mass Transit Growth Infrastructure Fund Notes to interim financial statements For the three-month and nine-month periods ended 31 December Description of BTS Rail Mass Transit Growth Infrastructure Fund BTS Rail Mass Transit Growth Infrastructure Fund ( the Fund ) is a specified infrastructure business fund with the specific investment project to invest detailed in the Fund s prospectus. The Fund was established and registered as a closed-end infrastructure fund on 17 April 2013 with no project life stipulated. The Fund raised funds from the public and general investors, with the main objective of utilising the proceeds from such fund raising to invest in infrastructure businesses. The Fund initially invested in acquiring the net revenue to be generated from the operations of the Core BTS SkyTrain System from Bangkok Mass Transit System Public Company Limited ( BTSC ), covering the 23.5 kilometer original lines of the BTS SkyTrain System, consisting of the 17.0 kilometer Sukhumvit line from Mo-Chit to On-Nut, and the 6.5 kilometre Silom line from National Stadium to Taksin Bridge ( the Core BTS Skytrain System ). The Fund may also engage in activities within the scope allowed under the regulations of the Office of the Securities and Exchange Commission and other relevant notifications, with a view to generate income and returns for the Fund and the unitholders. This may include investment in other securities and/or deriving benefits from other means as prescribed by securities laws and/or other relevant laws. On 17 April 2013, the Stock Exchange of Thailand approved the listing of the Fund s units and permitted their trading in the Stock Exchange of Thailand on 19 April The Fund is managed by BBL Asset Management Company Limited ( the Management Company ) and its trustee is Standard Chartered Bank (Thai) Public Company Limited. As at 31 December 2014, the Fund s major unitholder is BTS Group Holdings Public Company Limited holding 33.33% of the Fund units issued. 2. Basis of preparation of interim financial statements These interim financial statements are prepared in accordance with Thai Accounting Standard No. 34 (revised 2012) Interim Financial Reporting, with the Fund choosing to present condensed interim financial statements. However, the Fund has presented the balance sheet, the details of investments, the statements of income, changes in net assets and cash flows and significant financial information in the full format as that will be used for the annual financial statements, which is in accordance with the basis and formats as required by Thai Accounting Standard No. 106 Accounting for Investment Business. 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. 1

11 3. New accounting standards 3.1 Accounting standards that became effective in the current accounting year The Fund disclosed the accounting standards, financial reporting standard, accounting standard interpretations and financial reporting standard interpretations that are effective for fiscal years beginning on or after 1 January 2014 (beginning on or after 1 April 2014 for the Fund), in the notes to financial statements for the period from 17 April 2013 to 31 March In addition, during the current period, Conceptual Framework for Financial Reporting (revised 2014) and Accounting Treatment Guidance for Stock Dividend are effective in the current accounting year. The Fund's management has assessed the effect of the above conceptual framework for financial reporting, accounting standards, financial reporting standard, accounting standard interpretations, financial reporting standard interpretations and accounting treatment guidance and believes that they are not relevant to the business of the Fund or do not have any significant impact. 3.2 Accounting standards that will become effective in the future The Federation of Accounting Professions has issued a number of revised and new accounting standards that become effective for fiscal years beginning on or after 1 January 2015 (beginning on or after 1 April 2014 for the Fund). These accounting standards were aimed at alignment with the corresponding International Financial Reporting Standards, which most of the changes directed towards revision of wording and terminology, and provision of interpretations and accounting guidance to users of accounting standards. The Fund s management believes they will not have any significant impact on the financial statements in the year in which they are adopted. However, some of these accounting standards involve changes to key principles. The Fund s management is evaluating the impact of these to the financial statements in the year in which they are adopted. 4. Significant accounting policies The interim financial statements are prepared using the same accounting policies and methods of computation as were used for the financial statement for the period from 17 April 2013 to 31 March

12 5. Investment in the net revenue purchase and transfer agreement The Fund entered into a net revenue purchase and transfer agreement with BTSC to acquire the net revenue to be generated from the operations of the Core BTS SkyTrain System pursuant to the concession agreement dated 9 April 1992 and its amendments entered into between the Bangkok Metropolitan Administration ( BMA ) and BTSC ( the Concession Agreement ), starting from the effectiveness of the net revenue purchase and transfer agreement (17 April 2013) until the expiration of the Concession Agreement (4 December 2029). The net revenue purchased by the Fund includes, without limitation, fare box revenues, and any rights and claims under or in connection with or pursuant to the Concession Agreement, after deducting all costs, expenses, capital expenditures, and fees incurred by BTSC in connection with the operating and maintenance of the Core BTS SkyTrain System (other than any financing costs and expenses with respect to working capital facilities or any other financing requirements of BTSC) and selling and administrative expenses. All net revenue and other rights and claims to be purchased by the Fund pursuant to the net revenue purchase and transfer agreement does not include revenues generated from BTSC s other business operations, including revenues from the operation of the Extension BTS SkyTrain System, and the Bus Rapid Transit System under agreements with the BMA, and revenues from advertising and merchandising space on the BTS SkyTrain stations and on the trains. As stipulated in the net revenue purchase and transfer agreement, BTSC agreed to fully reimburse the Fund for any specific business tax in connection with the net revenue purchase and transfer agreement. Under the terms of the net revenue purchase and transfer agreement, the Fund will pay BTSC the incentive fees on annual basis if the net revenues for any year are more than the annual net revenue target for that year, at the following rates. (a) 10% in respect of the net revenue amount exceeding the 100% but not exceeding 125% of the annual net revenue target. (b) 15% of the net revenue in respect of the amount exceeding the 125% of the annual net revenue target. 3

13 Under the sponsor support and guarantee agreement, BTS Group Holdings Public Company Limited (BTSG) who is the major shareholder of BTSC, has agreed to provide a limited guarantee for the performance of BTSC under the terms of the net revenue purchase and transfer agreement. (However, there is no guarantee provided on the net revenue to be received by the Fund). In addition, BTSG agreed to maintain the shareholding interest in BTSC at 97.46% as a minimum and to secure such sponsor support and guarantee agreement BTSG pledged its aforementioned shares in BTSC and also entered into an agreement to sell, and the Fund to buy, BTSG s shares in BTSC upon the occurrence of an event of default in accordance with the terms and conditions of the net revenue purchase and transfer agreement at the price determined in the agreement to sell, and to buy shares. Movement of the investment in the net revenue purchase and transfer agreement during the nine-month period ended 31 December 2014 is summarised below. Investment in the net revenue purchase and transfer agreement - beginning of period 63,100,000 Add: Unrealised gain during period 603,000 Investment in the net revenue purchase and transfer agreement - end of period 63,703, Revenue from the investment in the net revenue purchase and transfer agreement For the three-month period ended 31 December Farebox revenue 1,517,338 1,443,246 Less: Operating expenses (345,408) (363,430) Repair and maintenance expenses (97,696) (95,193) Capital expenditures (21,163) (7,529) Net revenue from investment 1,053, ,094 For the nine-month period ended 31 December 2014 For the period from 17 April 2013 to 31 December 2013 Farebox revenue 4,359,428 3,925,671 Less: Operating expenses (915,110) (849,554) Repair and maintenance expenses (296,578) (264,420) Capital expenditures (70,980) (30,661) Net revenue from investment 3,076,760 2,781,036 4

14 7. Cash at bank Bank/account type Principal (Thousand Baht) Interest rate (% per annum) 31 December March December March 2014 Bangkok Bank Public Company Limited Saving account 10,619 67, Standard Chartered Bank (Thai) Public Company Limited Saving account 4,879 9, Total 15,498 77, Account receivable from the net revenue purchase and transfer agreement The outstanding balances as at 31 December 2014 of account receivable from the net revenue purchase and transfer agreement are not yet due. 9. Deferred units issuance costs Balance - beginning of period 757,288 Amortised during period (278,787) Balance - end of period 478, Unitholders equity Movements of capital account are as follows: Number of units Value per unit Registered capital (Thousand unit) (Baht) (Thousand Baht) Beginning balance as at 31 March ,788, ,510,400 Reduction of investment unit value - (0.0770) (445,676) Ending balance as at 31 December ,788, ,064,724 During the period, the Management Company declared a reduction in the value of the investment units of Baht per unit, or totaling Baht 446 million, without any change in the number of units, in order to decrease excess liquidity from amortisation of issuance costs which was non-cash expense during the period from 17 April 2013 to 30 June As a result, the Fund has paid-in capital from unitholders of Baht 62,065 million. This procedure is in accordance with the Fund scheme and the Notification of the Office of the SEC No. Tor Nor 22/2557 Re: Rules, Conditions, and Procedures for Establishment and Management of Infrastructure Funds, the fourth issue. 5

15 11. Retained earnings For the nine-month period ended 31 December 2014 For the period from 17 April 2013 to 31 December 2013 Retained earnings - beginning of period 2,594,106 - Add: Net investment income 2,721,532 2,462,424 Unrealised gains on investments 603,027 1,301,190 Less: Disbtibutions to unitholders during period (2,668,268) (1,591,700) Retained earnings - end of period 3,250,397 2,171, Distributions to unitholders Dividend declared during the nine-month period ended 31 December 2014 and for the period from 17 April 2013 to 31 December 2013 consisted of the following. Declared date For the operations period Per unit Total (Baht) (Thousand Baht) 23 May January 2014 to 31 March , August April 2014 to 30 June , November July 2014 to 30 September ,928 Total dividends for the nine-month period ended 31 December ,668, August April 2013 to 30 June , November July 2013 to 30 September ,504 Total dividend for the period from 17 April 2013 to 31 December ,591,700 6

16 13. Related party transactions During the period, 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. For the three-month period ended 31 December Pricing policy BBL Asset Management Company Limited (the Management Company) Management fee 13,176 13,041 The basis stated in the prospectus Bangkok Mass Transit System Public Company Limited (a subsidiary of the major unitholder) Income from investment in the net revenue purchase and transfer agreement 1,053, ,094 The basis stated in the agreement Reserve for incentive fee expense 7,043 3,446 The basis stated in the agreement Reimbursement of the specific business tax 13,669 11,881 The basis stated in the agreement, as incurred For the nine-month period ended 31 December 2014 For the period from 17 April 2013 to 31 December 2013 Pricing policy BBL Asset Management Company Limited (the Management Company) Management fee 39,335 36,450 The basis stated in the prospectus Bangkok Mass Transit System Public Company Limited (a subsidiary of the major unitholder) Acquire the investment in the net revenue purchase and transfer agreement Income from investment in the net revenue purchase and transfer agreement - 61,399,000 The basis stated in the agreement 3,076,760 2,781,036 The basis stated in the agreement Reserve for incentive fee expense 24,162 21,118 The basis stated in the agreement Reimbursement of the specific business tax 36,628 33,205 The basis stated in the agreement, as incurred 7

17 As at 31 December 2014 and 31 March 2014, the Fund has the following significant outstanding balance with its related companies. 31 December March 2014 (Audited) BBL Asset Management Company Limited Accrued management fee 4,452 4,438 Bangkok Mass Transit System Public Company Limited Account receivable from the net revenue purchase 117,540 - and transfer agreement Account payable from the net revenue purchase - 47,127 and transfer agreement Accrued incentive fee 24,162 20, Commitments 14.1 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 The Fund is committed to pay the incentive fee as described in the note 5 to the interim financial statements The Fund has commitments with contingent expenses as stipulated in the net revenue purchase and transfer agreement on behalf of BTSC as follows. (a) Capital commitments The Fund had capital commitments in respect of changes and improvements to the signaling system for the elevated train operation and traction power supply system and the acquisition of equipment for the Automatic Fare Collection System and spare parts. (b) Lease and service commitments The Fund has commitments to pay fees in respect of lease, service and concession agreements. (c) Commitments under maintenance contracts The Fund has commitments in respect of the cost of maintenance and spares supply service fees in relation to the project. 8

18 (d) Guarantees The Fund had outstanding bank guarantees amounting to Baht 42 million issued on behalf of BTSC by a bank to the Metropolitan Electricity Authority, in order to guarantee electricity use under the net revenue purchase and transfer agreement The Fund had commitments which respect to service contracts. Minimum fees required under service contracts were as follows. (Unit: Million Baht) 31 December March 2014 (Audited) Payable: In up to 1 year 4 9 In over 1 and up to 5 years Segment information The Fund operates in a single business segment that is the investment in the net revenue purchase and transfer from the Core BTS SkyTrain System and they were carried on in the single geographical area of Bangkok, Thailand. As a result, all revenues, operating profits, assets, and liabilities as reflected in these financial statements are assumed to pertain to the aforementioned business segment and geographic area. 16. Approval of interim financial statements These interim financial statements were authorised for issue by an authorised person of the Management Company on 9 February