TIDMSIHL
RNS Number : 1286Y
Symphony International Holdings Ltd
01 March 2017
Not for Distribution, directly or indirectly, in or into the
United States or any jurisdiction in which such distribution would
be unlawful.
1 March 2017
Symphony International Holdings Limited
Financial Results for the year ended 31 December 2016
Symphony International Holdings Limited ("Symphony" or the
"Company") announces results for the year ended 31 December 2016.
The condensed financial statements of the Company has not been
audited or reviewed by the auditors of the Company.
Introduction
The Company is an investment company initially incorporated as a
limited liability company under the laws of the British Virgin
Islands on 5 January 2004. The Company voluntarily re-registered
itself as a BVI Business Company on 17 November 2006. The Company's
investment objectives are to increase the aggregate net asset value
of the Company ("NAV") calculated in accordance with the Company's
policies through strategic longer-term investments in
consumer-related businesses, primarily in the healthcare,
hospitality and lifestyle ("HH&L") sectors (including education
and branded real estate developments) and through investments in
special situations and structured transactions, which have the
potential to generate attractive returns and to enhance the
NAV.
The Company was admitted to the Official List of the UK Listing
Authority on 3 August 2007 under Chapter 14 of the UK Listing Rules
and its securities were admitted to trading on the London Stock
Exchange's main market for listed securities on the same date.
As at 31 December 2016, the issued share capital of the Company
was US$414.08 million (31 December 2015: US$413.36 million)
consisting of 528,838,811 (31 December 2015: 528,096,195) ordinary
shares.
Symphony's Investment Manager is Symphony Asia Holdings Pte.
Ltd. ("SAHPL"), which replaced Symphony Investment Managers Limited
("SIMgL") on 15 October 2015, (with SAHPL and SIMgL, as the case
maybe, hereinafter referred to as the "Investment Manager"). The
Company entered into an Investment Management Agreement (with SAHPL
as the Investment Manager) that replaced the Investment Management
and Advisory Agreement (with SIMgL as the Investment Manager)
("Investment Management Agreement") on 15 October 2015.
Net Asset Value
The NAV attributable to the ordinary shares on 31 December 2016
was US$1.2211 per share (US$1.1988 per share on a fully diluted
basis). This represents a 7.3% decline over the NAV per share of
US$1.3172 at 31 December 2015 (US$1.3011 per share on a fully
diluted basis).
Chairmen's Statement
If there was one lesson from 2016, it is that anything can
happen. The level of volatility and geopolitical uncertainty in
2016 resulting from a number of unexpected outcomes and events has
been unprecedented in recent times. In particular, the political
developments in the US and United Kingdom, as well as terrorist
attacks in Europe, the US and a number of other locations had a
mixed, but generally unfavourable, impact across geographies. Asia
experienced more of an impact in the fourth quarter as a result of
uncertainty over foreign and trade policies under a new US
administration as well as heightened expectations of more rate
rises by the US Federal Reserve in 2017. As a result, the value of
Symphony's portfolio was also affected toward the end of the year.
At 31 December 2016, our NAV and NAV per share were US$645.8
million and US$1.22 (US$1.20 on a fully diluted basis),
respectively. This compares to a NAV and NAV per share a year
earlier of US$695.6 million and US$1.32, respectively. Excluding
the impact of the US$40 million dividend paid in 2016 (6.25 cents
per share), Symphony's NAV would have been 1.4% lower
year-over-year.
Despite the difficult environment, Symphony made three new
investments and several partial exits during 2016. In June,
Symphony announced the acquisition of the Christian Liaigre Group
("CLG") with a co-investor. CLG is a leading luxury brand that fits
well into our investment portfolio. We see significant opportunity
to grow the existing business, particularly in Asia and into new
complementary business areas. Symphony also invested in a portfolio
of listed healthcare companies during the year. This investment is
the result of over two years of development effort by the
investment management team to create a platform for Symphony to
gain diversified exposure to healthcare services businesses using a
portfolio approach. In December, we made the first investment in
the education sector through a joint venture, WCIB International
Co. Ltd ("WCIB"), with established Thai partners that have
extensive experience in the sector. WCIB is developing the
Wellington College International Bangkok, the fifth international
addition to the Wellington College family of schools outside the
UK. This is a very exciting project that fits perfectly with our
strategy to invest in businesses that cater to rising affluence in
Asia. WCIB will also have an option to develop schools under the
Wellington College name in Myanmar, Cambodia, Laos and Vietnam.
Symphony made partial exits of its listed investments through
several transactions in 2016 that generated proceeds of US$34.4
million. The sale of 25.3 million MINT shares was completed at an
annualised rate of return and times the original cost of the
investment of 20.1% and 4.4 times, respectively, which generated
US$26.6 million. The residual balance of proceeds was from the sale
of 3.4 million shares and 1.2 million units of IHH and PREIT,
respectively, which also generated double-digit annualised
returns.
We announced two transactions in December that relate to the
sale of land by Symphony's joint venture company, Minuet.
Approximately eight hectares of land was sold to WCIB and Minuet
entered into a binding agreement to sell an additional seven
hectares of land to Land & Houses Public Company limited, a
Thai listed property developer. The land sales will generate gross
proceeds for Minuet of approximately US$50 million based on the
average December 2016 exchange rate. The gross sale price for both
transactions was over 70% above Minuet's average cost of land in US
dollars based on current exchange rates. We expect these land sales
and the school development by WCIB to support incremental demand
and higher prices for land in the vicinity, which should benefit
Symphony's land holdings in the area. These partial exits endorse
our investment strategy and ability to generate attractive
returns.
In terms of the performance of our portfolio, MINT added an
additional 17 hotels with 2,062 rooms and increased the number of
restaurants from 1851 to 1,996 during the year. MINT's revenue and
EBITDA in 2016 grew by 19% and 18%, respectively, year-over-year.
Our healthcare investments, IHH and PREIT also expanded their
portfolios. IHH acquired the Tokuda and City Clinic Groups in
Bulgaria, which added 750 beds and four medical centres to its
portfolio. IHH also broke ground for the 250-bed Parkway Yangon
Hospital and signed an agreement for a new ParkwayHealth Shanghai
International Hospital, which will add an additional 450 beds when
completed. IHH posted revenue and EBITDA growth of 19% and 7%,
respectively, year-over-year. In addition to generating value
through asset recycling initiatives that saw the divestment of four
properties, PREIT also acquired one nursing home in March 2016,
bringing the number of properties in its portfolio to 44. PREIT's
revenue and net property income increased both by 7% in 2016,
year-over-year.
The performance of our lifestyle sector investments that include
WCG, C Larsen and CLG was mixed during the year. WCG continued to
expand its footprint and added nine outlets, bringing the total
number of outlets in South East Asia to 76. Following a difficult
first half of 2016, particularly in Thailand, same-store-sales and
total system sales improved in the fourth quarter. WCG saw an
overall improvement in revenues, but weaker EBITDA in 2016 due to
higher expenses associated with a new central kitchen and ERP
system, which was required to support further store openings. We
expect to see an improvement in margins as WCG continues to build
scale. C Larsen reported an improvement in sales due to growth from
a combination of orders for large homes, miscellaneous projects and
offices. C Larsen also recently opened its second franchise of the
Clinton Street Baking Company in Bangkok. CLG, the newest addition
to our lifestyle sector portfolio, had a disappointing year due to
various factors including weaker general economic conditions in
Europe, terrorist attacks in Paris and Brussels and Brexit. Based
on recent results the business appears to be stabilising and we are
working with management to expand the existing business and explore
complementary businesses to further leverage the Liaigre brand
name.
On the property side of Symphony's portfolio, we continue to
explore opportunities to increase value and monetise assets where
appropriate. The Amanresorts development in Desaru, Malaysia is
ongoing and after some delays, we plan to launch at the end of
2017. We have received inquiries regarding villa sites at this
development, which is promising as marketing has not yet begun. As
mentioned earlier, Minuet made two land sales in December 2016,
which should benefit values in the vicinity as the Wellington
College International Bangkok and other housing developments
progress. Our other property asset in Thailand, the two office
buildings in central Bangkok held by SG Land continue to provide an
attractive yield. In Japan, we continue to hold our interest in the
joint venture that holds a key development site in Hirafu village
in Niseko, Hokkaido. Recent property developments in the area have
been met with strong sales and together with increasing arrivals,
we are now evaluating the advantages of a development versus an
outright sale of the property.
The discount that our share price traded to NAV per share at 31
December was 34%. Although this discount compares favourably to 46%
a year earlier, we continue to try to reduce this gap. In December,
we announced the appointment of Numis Securities Limited as our
corporate broker and subsequently initiated a share buyback plan in
January. At the time of writing this, the buyback programme seems
to have had some success with the discount narrowing to around 24%.
Subject to shareholder approval at the next annual general meeting,
we plan to continue the share buyback, which together with our
existing dividend programme, should narrow the gap further.
Despite the current difficult environment, we expect our
portfolio to continue to benefit from rising incomes in Asia. The
global shift in politics and changing policies towards
protectionism, particularly in the US, could have a negative impact
on Asia and investor sentiment, but the fundamental growth drivers
in the region remain intact. Although we expect headwinds to
continue, the majority of our portfolio is driven more by domestic
and intra-regional demand and is less susceptible to fluctuations
in global trade. We continue to focus on growing our NAV over time
and hope to announce some new transactions we are currently working
on over the next year.
Once again, we thank our shareholders and business partners for
their continued support.
Pierangelo Bottinelli
Chairman, Symphony International Holdings Limited
Anil Thadani
Symphony Asia Holdings Pte. Ltd.
27 February 2017
Investment Manager's Report
This "Investment Manager's Report" should be read in conjunction
with the financial statements and related notes of the Company. The
financial statements of the Company were prepared in accordance
with the International Financial Reporting Standards ("IFRS") and
are presented in U.S. dollars. The Company reports on each
financial year that ends on 31 December. In addition to the
Company's annual reporting, NAV and NAV per share are reported on a
quarterly basis being the periods ended 31 March, 30 June, 30
September and 31 December. The Company's NAV reported quarterly is
based on the sum of cash and cash equivalents, temporary
investments, the fair value of unrealised investments (including
investments in unconsolidated subsidiaries, associates and joint
ventures) and any other assets, less any other liabilities. The
financial results presented herein include activity for the period
from 1 January 2016 through 31 December 2016, referred to as "the
year ended 31 December 2016".
Our Business
Symphony is an investment company incorporated under the laws of
the British Virgin Islands. The Company's shares were listed on the
London Stock Exchange on 3 August 2007. Symphony's investment
objective is to create value for shareholders through longer term
strategic investments in high growth innovative consumer
businesses, primarily in the healthcare, hospitality and lifestyle
sectors (including branded real estate developments), which are
expected to be among the fastest growing sectors in Asia, as well
as through investments in special situations and structured
transactions.
Symphony's Investment Manager is Symphony Asia Holdings Pte.
Ltd. ("SAHPL"), which replaced Symphony Investment Managers Limited
("SIMgL") on 15 October 2015, (with SAHPL and SIMgL, as the case
maybe, hereinafter referred to as the "Investment Manager"). The
Company entered into an Investment Management Agreement (with SAHPL
as the Investment Manager) that replaced the Investment Management
and Advisory Agreement (with SIMgL as the Investment Manager)
("Investment Management Agreement") on 15 October 2015. Symphony
Capital Partners Limited ("SCPL") is a service provider to the
Investment Manager. The common shareholders and their respective
interests in SIMgL and SAHPL are the same.
SAHPL's licence for carrying on fund management in Singapore is
restricted to serving only accredited investors and/ or
institutional investors. Symphony is an accredited investor.
Investments
At 31 December 2016, the total amount invested by Symphony since
admission to the Official List of the London Stock Exchange in
August 2007 was US$412.5 million. SIHL's total cost of investments
after taking into account shareholder loan repayments, partial
realisations and the cost of fully realised investments was
US$283.6 million at 31 December 2016 from US$261.5 million a year
earlier. As at 31 December 2016, the healthcare, hospitality,
lifestyle, lifestyle/ real estate sectors and a structured
investment accounted for 22.3%, 15.1%, 27.8%, 31.9% and 2.9% of
total cost of investments, respectively.
The fair value of investments, excluding temporary investments
(but including structured investments), held by Symphony was
approximately US$661.1 million at 31 December 2016, up from
US$639.1 million a year earlier. This change is comprised of new
investments of US$70.5 million less shareholder loan repayments and
proceeds from partial exits of US$48.5 million. The fair value of
listed investments declined by approximately US$3.4 million, which
was offset by similar gain in the value of unlisted investments
during the same period.
As at 31 December 2016, we had the following investments:
Minor International Public Company Limited
Minor International Public Company Limited ("MINT") is a
diversified consumer business and is one of the largest hospitality
and restaurant companies in the Asia-Pacific region. Anil Thadani
(a Director of the Company) currently serves on MINT's board of
directors. Sunil Chandiramani (a Director of the Company) currently
serves as an advisor to MINT's board of directors. MINT is a
company that is incorporated under the laws of Thailand and is
listed on the Stock Exchange of Thailand.
MINT owns 68 hotels and manages 87 other hotels and serviced
suites with 19,776 rooms. In addition to owning hotels under the
Four Seasons, St. Regis and Marriott brands, MINT owns and manages
hotels under its own brand names that include Anantara, Oaks,
Elwana, Avani, Tivoli and Per AQUUM in 23 countries.
As at 31 December 2016, MINT also owned and operated 1,996
restaurants (comprising 1,018 equity-owned outlets and 978
franchised outlets) under the brands The Pizza Company, Swensen's,
Sizzler, Dairy Queen, Burger King, Beijing Riverside, Thai Express
and The Coffee Club amongst others. Approximately two-thirds of
these outlets are in Thailand with the remaining number in other
Asian countries and the Middle East. MINT's operations also include
contract manufacturing and an international lifestyle consumer
brand distribution business in Thailand focusing on fashion,
cosmetics through retail (327 outlets), wholesale and direct
marketing channels under brands that include GAP, Banana Republic,
Brooks Brothers, Kojima Denim, Etam, Esprit, Bossini, Charles &
Keith, Henckels and Red Earth.
MINT reported core revenue and EBITDA (before non-recurring
items) of 19% and 18%, respectively. The growth was driven by all
business units. Core net profit declined by 3% during the same
period due to weaker performance in the fourth quarter, together
with higher depreciation and tax rates of recently consolidated
businesses that reduced overall profit margins to 8.4% in 2016 from
10.3% in 2015.
MINT's hotel and mixed-use business had revenues (excluding
non-recurring items) of THB27.8 billion during 2016, which is 18%
higher than the same period a year earlier. MINT increased the
number of rooms in its portfolio that are owned (including majority
owned and joint ventures) and managed by 1,332 and 730 during the
year, respectively. During 2016, MINT expanded its hospitality
business inorganically and organically. In January 2016, MINT
announced the launch of the Oaks brand in India with the
development of Oaks Neemrana. In February, MINT completed the
acquisition of the Tivoli hotel group and announced a new hotel
development in Bali, Indonesia. Additional other projects were
announced during the year in India, Sri Lanka, the UAE and Oman
amongst others.
At the end of 2016, MINT's total number of restaurants reached
1,996 comprising 1,018 equity-owned outlets and 978 franchised
outlets. Approximately 64% were in Thailand with the remaining
number in other Asian countries and the Middle East. Approximately
145 restaurants were added during 2016 and total system sales
increased by 9.1% during the same period. The retail trading and
contract manufacturing businesses remained flat with revenues of
THB3.5 billion during 2016.
Symphony's gross and net investment cost in MINT was
approximately US$74.0 million and US$42.9 million, respectively at
31 December 2016. On the same date, the fair value of Symphony's
investment in MINT was US$336.0 million, down from US$361.9 million
a year earlier. The change in value of approximately US$25.9
million was predominantly driven by the sale of 25.3 million MINT
shares during the year that generated proceeds of US$26.6 million,
which was partially offset by a marginal increase in the value of
MINT shares. The annualised return and times the original cost of
investment on the partial sale of shares in 2016 was 20.1% and 4.4
times. Symphony has received in aggregate proceeds of US$31.1
million from the sale of MINT shares and after tax dividends of
US$17.8 million from the date of investment to 31 December
2016.
Minuet Limited
Minuet Ltd ("Minuet") is a joint venture between the Company and
an established Thai partner. The Company has a direct 49% interest
in the venture and is considering several development and/or sale
options for the land owned by Minuet, which is located in close
proximity to central Bangkok, Thailand. As at 31 December 2016,
Minuet held approximately 331 rai (53 hectares) of land in Bangkok,
Thailand.
The Company initially invested approximately US$78.3 million by
way of an equity investment and interest bearing shareholder loans.
Since the initial investment by the Company, Minuet has received
proceeds from rental income and partial land sales. As at 31
December 2016, the Company's investment cost (net of shareholder
loan repayments) was approximately US$47.2 million. The fair value
of the Company's interest in Minuet on the same date was US$76.7
million (31 December 2015: US$80.2 million) based on an independent
third party valuation of the land plus the net value of the other
assets and liabilities of Minuet. The change in value is
predominantly related to a decline in the value of the land held by
Minuet following the sale of approximately 47 rai (8 hectares) of
land to WCIB, an education joint venture between SIHL and
established Thai partners. The decline in the value related to the
sale of land was partially offset by an increase in the average
value per rai of residual land by 10.2%. SIHL received
distributions of US$13.7 million from Minuet during the year. At
the end of December 2016, Minuet entered into an agreement to sell
an additional 6.9 hectares of Land & Houses Public Company
Limited, a Thai listed property developer.
Parkway Life Real Estate
Parkway Life Real Estate Investment Trust ("P-REIT") is one of
Asia's largest listed healthcare real estate investment trusts by
asset size. It is listed on the Singapore Exchange. PREIT was
established by Parkway Holdings Limited to invest primarily in
income-producing real estate and/or real estate-related assets in
the Asia-Pacific region that is/are used primarily for healthcare
and/or healthcare-related purposes.
As at 31 December 2016, P-REIT's total portfolio size stood at
44 properties with a value of approximately S$1.7 billion. P-REIT
owns the leasehold to three Singapore hospitals, which are leased
to Parkway Holdings Limited on long-term leases, and a mixture of
leasehold and freehold ownership of 40 properties in Japan
(comprising 39 nursing homes and one pharmaceutical manufacturing
unit) and strata titled units/lots within Gleneagles Medical
Centre, Kuala Lumpur, Malaysia. The Company holds 37.3 million
units in P-REIT, which equates to a shareholding of approximately
6.2%.
PREIT reported net property income of S$102.4 million in 2016,
which is 6.7% higher from the same period a year ago. The growth
was driven by the contribution from the Japan property acquired in
March 2016, higher yielding properties acquired from the asset
recycling initiative completed in March 2015, higher rent from
existing properties and an appreciation of the Japanese yen.
Annualised dividend per unit declined by 8.8% in 2016 compared
to 2015, where unit holders benefited from a one-off capital
distribution (spread over four quarters) that related to proceeds
from the divestment of seven Japan properties in December 2014.
PREIT's gearing at 31 December 2016 was 36.3%, which is well within
the 60% limit allowed under the Monetary Authority of Singapore's
Property Funds Guidelines and will allow for further yield
accretive acquisitions.
As at 31 December 2016, Symphony's gross and net investment cost
in PREIT was US$33.8 million and US$31.5 million, respectively. The
fair value on the same date was US$60.5 million (31 December 2015:
US$63.2 million). The change in value predominantly relates to the
sale of 1.2 million units during 2016, which generated proceeds of
US$2.3 million. The annualised return and times the original cost
of the investment for the partial sale was 15.2% and 2.9 times,
respectively. In addition to the sale proceeds, Symphony has
received cumulative dividends of US$25.4 million from PREIT.
IHH Healthcare Berhad
IHH Healthcare Berhad ("IHH") is one of the largest healthcare
providers in the world by market capitalisation. Its portfolio of
healthcare assets includes Parkway Holdings Limited, Pantai
Holdings Berhad, International Medical University, Acibadem Saglik
Yatirimlari Holding A.S. ("Acibadem") and a minority shareholding
in Apollo Hospitals Enterprises Limited. IHH has a broad footprint
of assets in Asia as well as Turkey, Abu Dhabi, Central and Eastern
Europe that employs over 30,000 people and operates close to 10,000
licensed beds in 52 hospitals worldwide.
IHH reported revenue and EBITDA growth of 19% and 7%,
respectively, in 2016 year-over-year. The change was driven by
organic growth of existing operations and hospitals acquired in
2015 (Continental and Global Hospitals) and 2016 (Tokuda Group and
City Clinic Group). Net profit after tax and minority interest
(excluding exceptional items) declined by 4% during the same period
due to unrealised foreign exchange losses, higher financing costs,
impairment charges related to a hospital in India and higher
depreciation related to new hospitals.
Parkway Pantai saw in-patient admissions increase by 9.1% and
5.4% in Singapore and Malaysia, respectively, in 2016 compared to a
year earlier. Average revenue per inpatient admission decreased by
0.4% in Singapore and increased by 7.7% in Malaysia during the same
period. The organic revenue growth from Parkway Pantai,
particularly the continued ramp up of the Mount Elizabeth Novena
Hospital, was partially offset by start-up losses at new hospitals
in Malaysia and pre-opening expenses related to Gleneagles Hong
Kong.
Acibadem saw admissions increase by 31.6% while average revenue
per inpatient admission declined by 2.5% in 2016. Excluding the
effects of the depreciation of the Turkish lira, Acibadem's revenue
and EBITDA increased by 22% and 7%, respectively during the same
period.
The Company's gross and net investment cost in IHH was US$50.1
million and US$21.6 million, respectively at 31 December 2016. The
fair value on the same date was US$54.9 million (31 December 2015:
US$64.1 million). The change in value relates to the sale of 3.4
million IHH shares during 2016 and a decline in the value of
residual shares due to a 2.8% and 4.5% decline in the share price
and the Malaysian ringgit, respectively. The sale of shares in 2016
generated gross proceeds for US$5.5 million with an annualised
return and times money over the original cost of 15.0% and 1.9
times, respectively. Symphony has received proceeds of US$28.5
million from the sale of IHH shares and aggregate dividend proceeds
of US$1 million since the date of investment.
Investment in the Christian Liaigre Group
The Christian Liaigre Group ("CLG") was founded in 1985 in Paris
and is a brand synonymous with discreet luxury, and has become one
of the most sought-after luxury furniture brands, renowned for its
minimalistic design style. CLG has a strong intellectual property
portfolio and provides a range of bespoke furniture, lighting,
fabric & leather, and accessories. In addition to operating a
network of 26 showrooms in 11 countries across Europe, the US and
Asia, CLG undertakes exclusive interior architecture projects for
select yachts, hotels, and restaurants and private residences.
The weaker economic environment in Europe, the terrorist attacks
in Paris and Brussels, as well as Brexit have contributed to less
traffic in the showrooms and lower orders than forecast in 2016.
The management team has seen a recovery in traffic and orders since
December and recently secured an exceptional new site on rue du
Faubourg Saint Honoré that will become the flagship showroom for
Liaigre brand. Symphony together with a co-investor are working
with management to expand and grow the existing business,
particularly in Asia, and explore new complementary businesses to
further compliment and leverage the Liaigre brand name.
Symphony, together with Navis Capital Partners and key
management, acquired CLG in June 2016 for an undisclosed sum.
Symphony's investment was more than 5% of NAV and due to strategic
concerns, specific valuation information has not been disclosed
publicly.
Property Joint Venture In Malaysia
The Company has a 49% interest in a property joint venture in
Malaysia with an affiliate of Destination Resorts and Hotels Sdn
Bhd, a hotel and destination resort investment subsidiary of
Khazanah Nasional Berhad, the investment arm of the Government of
Malaysia. The joint venture is developing a beachfront country club
and private villas on the south-eastern coast of Malaysia that will
be branded and managed by Amanresorts.
The development is ongoing and operations are expected to
commence at the end of 2017. The property will include a Club, 46
club suites and prototype villas. When fully developed the site
will have a total of 52 villas.
The Company invested approximately US$29.0 million in January
2012 for its interest in Desaru. Based on an independent third
party valuation, the investment was valued at US$21.4 million at 31
December 2016 (31 December 2015: US$22.5 million). The change in
value is predominantly reflects of the weakening of the Malaysian
ringgit by 4.5% during 2016.
Other Investments
In addition to the investments above, Symphony has seven
additional non-material investments, at 31 December 2016. Pending
investment in suitable opportunities, Symphony has placed funds in
certain temporary investments. As at 31 December 2016, cash and
cash equivalents that comprised bank deposits and cash at bank
amounted to US$15.8 million.
Capitalisation and NAV
As at 31 December 2016, the Company had US$414.1 million in
issued share capital and its NAV was approximately US$645.8
million. Symphony's NAV is the sum of its cash and cash
equivalents, temporary investments, the fair value of unrealised
investments (including investments in subsidiaries, associates and
joint ventures) and any other assets, less any other liabilities.
The audited financial statements contained herein may not account
for the fair value of certain unrealised investments. Accordingly,
Symphony's NAV may not be comparable to the net asset value in the
audited financial statements. The primary measure of SIHL's
financial performance and the performance of its subsidiaries will
be the change in Symphony's NAV per share resulting from changes in
the fair value of investments.
Symphony was admitted to the Official List of the London Stock
Exchange ("LSE") on 3 August 2007 under Chapter 14 of the Listing
Manual of the LSE. The proceeds from the IPO amounted to US$190
million before issue expenses pursuant to which 190.0 million new
shares were issued in the IPO. In addition to these 190.0 million
shares and 94.9 million shares pre-IPO, a further 53.4 million
shares were issued comprising of the subscription of 13.2 million
shares by investors and SIHL's investment manager, the issue of
33.1 million bonus shares, and the issue of 7.1 million shares to
SIHL's investment manager credited as fully paid raising the total
number of issued shares to 338.3 million.
The Company issued 4,119,490 shares, 2,059,745 shares, 2,059,745
shares and 2,059,745 shares on 6 August 2010, 21 October 2010, 4
August 2011 and 23 October 2012, respectively, credited as fully
paid, to the Investment Manager, Symphony Investment Managers
Limited. The shares were issued as part of the contractual
arrangements with the Investment Manager.
On 4 October 2012, SIHL announced a fully underwritten 0.481 for
1 rights issue at US$0.60 per new share to raise proceeds of
approximately US$100 million (US$93 million net of expenses)
through the issue of 166,665,997 million new shares, fully paid,
that commenced trading on the London Stock Exchange on 22 October
2012.
As part of the contractual arrangements with the Investment
Manager in the Investment Management Agreement, as amended, the
Investment Manager was granted 82,782,691 and 41,666,500 share
options to subscribe for ordinary shares at an exercise price of
US$1.00 and US$0.60 on 3 August 2008 and 22 October 2012,
respectively. The share options vest in equal tranches over a
five-year period from the date of grant. The Investment Manager
exercised share options amounting to 4,054,970, 4,278,330,
4,538,197 and 742,616 on 8 May 2014, 10 June 2014, 17 April 2015
and 23 June 2016, respectively, at the exercise price of US$0.60
per share. Together with the shares issued to the Investment
Manager, the shares issued pursuant to the rights issue and shares
issued pursuant the exercise of options, increased the Company's
fully paid issued share capital to 528.8 million shares.
Revenue and Other Operating Income
Management concluded during 2014 that the Company meets the
definition of an investment entity and adopted IFRS 10, IFRS 12 and
IAS 27 standards where subsidiaries are de-consolidated and their
fair value is measured through profit or loss. As a result,
revenue, such as dividend income, from underlying investments in
subsidiaries is no longer consolidated.
During the 2016 fiscal year, Symphony recognised other income of
US$1.0 million, which comprised interest income from bank deposits
and loan interest from unconsolidated subsidiaries. This compares
with other income of US$1.4 million in 2015 comprising the same
items.
Expenses
Other Operating Expenses
Other operating expenses include fees for professional services,
exchange losses, interest expense, insurance, communication,
travel, Directors' fees and other miscellaneous expenses and costs
incurred for analysis of proposed deals. For the year ended 31
December 2016, other operating expenses amounted to US$4.9 million
(2015: US$7.4 million). The change in other operating expenses is
predominantly due to lower exchange losses of US$3.6 million (2015:
US$6.3 million), a non-cash item that was partially offset higher
operating expenses of US$0.2 million.
Management Fee
The management fee amounted to US$15.0 million for the year
ended 31 December 2016 (2015: US$15.0 million). The management fee
was calculated on the basis of 2.25% of NAV (with a floor and cap
of US$8 million and US$15 million per annum, respectively).
Share Options Expense
Under the terms of the Investment Management and Advisory
Agreement, the Investment Manager was granted Share Options to
subscribe for shares of the Company. On 3 August 2008, the
Investment Manager was granted 82,782,691 Share Options to
subscribe for shares at US$1.00 each and on 22 October 2012, the
Investment Manager was granted 41,666,500 Share Options to
subscribe for shares at US$0.60 each. The share options vest in
five equal tranches over a period of five years. The 82,782,691
Share Options granted on 3 August 2008 were fully vested and
expensed by the end of the 2012 financial year.
An expense was recognised based on the fair value of the Share
Options calculated using the Binomial Tree option-pricing model at
31 March, 30 June, 30 September and 31 December, respectively. The
total expense during the 2016 financial year was US$1.2 million
(2015: US$2.0 million) that was recognised in the statement of
comprehensive income.
Liquidity and Capital Resources
At 31 December 2016, Symphony's cash balance was US$15.8
million. Symphony's primary uses of cash are to fund investments,
pay expenses and to make distributions to shareholders, if and when
declared by our board of directors. Taking into account current
market conditions, it is expected that Symphony has sufficient
liquidity and capital resource for its operations. The primary
sources of liquidity are capital contributions received in
connection with the initial public offering of shares, related
transactions and a rights issue (See description under
"Capitalisation and NAV"), in addition to cash from investments
that it receives from time to time and bank facilities.
This cash from investments is in the form of dividends on equity
investments, payments of interest and principal on fixed income
investments and cash consideration received in connection with the
disposal of investments. Temporary investments made in connection
with Symphony's cash management activities provide a more regular
source of cash than less liquid longer-term and opportunistic
investments, but generate lower expected returns. Other than
amounts that are used to pay expenses, or used to make
distributions to our shareholders, any returns generated by
investments are reinvested in accordance with Symphony's investment
policies and procedures. Symphony may enter into one or more credit
facilities and/or utilise other financial instruments from time to
time with the objective of increasing the amount of cash that
Symphony has available for working capital or for making
opportunistic or temporary investments. At 31 December 2016, the
Company had total interest-bearing borrowings of US$5.0 million
(2015: US$4.8 million) associated with our property related
investment in Niseko, Hokkaido, Japan. The Company's unconsolidated
subsidiary, Symphony (MINT) Investment Limited, which hold's the
Company's investment in MINT had a bank facility outstanding of
approximately US$10.1 million at 31 December 2016 (2015: nil).
Principal Risks
Described below are some of the risks that the Company is
exposed to:
The Company's and the Company's investment management team's
past performance is not necessarily indicative of the Company's
future performance and any unrealised values of investments
presented in this document may not be realised in the future.
The Company is not structured as a typical private equity
vehicle (it is structured as a permanent capital vehicle), and thus
may not have a comparable investment strategy. The investment
opportunities for the Company are more likely to be as a long term
strategic partner in investments, which may be less liquid and
which are less likely to increase in value in the short term.
The Company's organisational, ownership and investment structure
may create certain conflicts of interests (for example in respect
of the directorships, shareholdings or interests, including in
portfolio companies that some of the Directors and members of the
Company's investment management team may have). In addition,
neither the Investment Manager nor any of its affiliates owes the
Company's shareholders any fiduciary duties under the Investment
Management Agreement between, inter alia, the Company and the
Investment Manager. The Company cannot assume that any of the
foregoing will not result in a conflict of interest that will have
a material adverse effect on the business, financial condition and
results of operations.
The Company is highly dependent on the Investment Manager, the
Key Persons (as defined in the Investment Management Agreement) and
the other members of the Company's investment management team and
the Company cannot assure shareholders that it will have continued
access to them or their undivided attention, which could affect the
Company's ability to achieve its investment objectives.
The Investment Manager's remuneration is based on the Company's
NAV (subject to minimum and maximum amounts) and is payable even if
the NAV does not increase, which could create an incentive for the
Investment Manager to increase or maintain the NAV in the short
term (rather than the long-term) to the potential detriment of
Shareholders.
The Company's investment policies contain no requirements for
investment diversification and its investments could therefore be
concentrated in a relatively small number of portfolio companies in
the Healthcare, Hospitality and Leisure ("HH&L") sectors
(including education and branded real estate developments) within
the Asia-Pacific region.
The Company has made, and may continue to make, investments in
companies in emerging markets, which exposes it to additional risks
(including, but not limited to, the possibility of exchange control
regulations, political and social instability, nationalisation or
expropriation of assets, the imposition of taxes, higher rates of
inflation, difficulty in enforcing contractual obligations, fewer
investor protections and greater price volatility) not typically
associated with investing in companies that are based in developed
markets.
Furthermore, the Company has made, and may continue to make,
investments in portfolio companies that are susceptible to economic
recessions or downturns. Such economic recessions or downturns may
also affect the Company's ability to obtain funding for additional
investments.
The Company's investments include investments in companies that
it does not control, and there is a risk that such portfolio
companies may take decisions, which do not serve the Company's
interests.
A number of the Company's investments are currently, and likely
to continue to be, illiquid and/ or may require a long-term
commitment of capital. The Company's investments may also be
subject to legal and other restrictions on resale. The illiquidity
of these investments may make it difficult to sell investments if
the need arises.
The Company's real estate related investments may be subject to
the risks inherent in the ownership and operation of real estate
businesses and assets. A downturn in the real estate sector or a
materialization of any of the risks inherent in the real estate
business and assets could materially adversely affect the Company's
real estate investments. The Company's portfolio companies also
anticipate selling a significant proportion of development
properties prior to completion. Any delay in the completion of
these projects may result in purchasers terminating off-plan sale
agreements and claiming refunds, damages and/or compensation.
The Company is exposed to foreign exchange risk when investments
and/or transactions are denominated in currencies other than the
U.S. dollar, which could lead to significant changes in the net
asset value that the Company reports from one quarter to
another.
The Company's investment policies and procedures (which
incorporate the Company's investment strategy) provide that the
Investment Manager should review the Company's investment policies
and procedures on a regular basis and, if necessary, propose
changes to the Board when it believes that those changes would
further assist the Company in achieving its objective of building a
strong investment base and creating long term value for its
Shareholders. The decision to make any changes to the Company's
investment policy and strategy, material or otherwise, rests with
the Board in conjunction with the Investment Manager and
Shareholders have no prior right of approval for material changes
to the Company's investment policy.
Companies in which the Company invests in connection with
special situations and structured transactions typically have
shorter operating histories, narrower product lines and smaller
market shares than larger businesses, which tend to render them
more vulnerable to competitors' actions and market conditions, as
well as general economic downturns. Investments that fall into this
category tend to have relatively short holding periods and entail
little or no participation in the board of the company in which
such investments may be made. Special situations and structured
transactions in the form of fixed debt investments also carry an
additional risk that increases in interest rates could decrease
their value.
The Company's current investment policies and procedures provide
that it may invest an amount equivalent to not less than 70% of its
total assets, as determined at the time of each investment,
predominantly in longer-term investments in the HH&L sectors
(including education and branded real estate developments) in the
Asia-Pacific region and no more than 30% of its total assets in
special situations and structured transactions which, although they
are not typical longer-term investments, have the potential to
generate attractive returns and enhance the Company's net asset
value. Following the Company's investments, it may be that the
proportion of its total assets invested in longer-term investments
falls below 70% and the proportion of its total assets invested in
special situations and structured transactions exceeds 30% due to
changes in the valuations of the assets, over which the Company has
no control.
Pending the making of investments, the Company's capital will
need to be temporarily invested in liquid investments and managed
by a third-party investment manager of international repute or held
on deposit with commercial banks before they are invested. The
returns that temporary investments are expected to generate and the
interest that the Company will earn on deposits with commercial
banks will be substantially lower than the returns that it
anticipates receiving from its longer-term investments or special
situations and structured transactions.
In addition, while the Company's temporary investments will be
relatively conservative compared to its longer-term investments or
special situations and structured transactions, they are
nevertheless subject to the risks associated with any investment,
which could result in the loss of all or a portion of the capital
invested.
The Investment Manager has identified but has not yet contracted
to make further potential investments. The Company cannot guarantee
shareholders that any or all of these prospective investments will
take place in the future.
The market price of the Company's shares may fluctuate
significantly and shareholders may not be able to resell their
shares at or above the price at which they purchased them.
The Company's shares are currently trading, and have in the past
traded, and could in the future trade, at a discount to NAV for a
variety of reasons, including due to market conditions. The only
way for shareholders to realise their investment is to sell their
shares for cash. Accordingly, in the event that a shareholder
requires immediate liquidity, or otherwise seeks to realise the
value of his investment through a sale, the amount received by the
shareholder upon such sale may be less than the underlying NAV of
the shares sold.
ANIL THADANI
Chairman
Symphony Asia Holdings Pte. Ltd.
27 February 2017
Symphony International Holdings Limited
Unaudited condensed statement of financial position
As at 31 December 2016
Note 2016 2015
US$'000 US$'000
Non-current assets
Financial assets at fair
value through profit or
loss 7 638,222 627,292
------- -------
638,222 627,292
------- -------
Current assets
Other receivables and prepayments 67 220
Cash and cash equivalents 15,793 73,142
15,860 73,362
------- -------
Total assets 654,082 700,654
======= =======
Equity attributable to equity
holders
of the Company
Share capital 414,080 413,358
Equity compensation reserve 62,960 62,074
Accumulated profits 168,713 220,154
------- -------
Total equity carried forward 645,753 695,586
------- -------
Current liabilities
Interest-bearing borrowings 4,953 4,772
Other payables 3,362 296
Bank overdraft 14 -
------- -------
Total liabilities 8,329 5,068
------- -------
Total equity and liabilities 654,082 700,654
======= =======
Symphony International Holdings Limited
Unaudited condensed statement of comprehensive income
As at 31 December 2016
Note 2016 2015
US$'000 US$'000
Other operating income 1,020 1,435
Other operating expenses 6 (4,890) (7,407)
Management fees (15,000) (15,000)
-------- --------
(18,870) (20,972)
Share options expense (1,162) (1,986)
-------- --------
Loss before investment results
and income tax (20,032) (22,958)
Fair value changes in financial
assets at fair value
through profit or loss 7 8,571 38,425
-------- --------
(Loss)/Profit before income
tax (11,461) 15,467
Income tax expense - -
-------- --------
(Loss)/Profit for the year (11,461) 15,467
Other comprehensive income
for the year, net of tax - -
-------- --------
Total comprehensive income
for the year (11,461) 15,467
======== ========
Earnings per share:
US Cents US Cents
Basic 9 (2.17) 2.94
======== ========
Diluted (2.15) 2.90
======== ========
Symphony International Holdings Limited
Unaudited condensed statement of changes in equity
For the financial year ended 31 December 2016
Equity
Share compensation Accumulated Total
capital reserve profits equity
US$'000 US$'000 US$'000 US$'000
At 1 January 2015 409,127 61,596 234,688 705,411
Total comprehensive income for the
year - - 15,467 15,467
-------- ------------- ----------- --------
Transactions with owners of the
Company, recognised
directly in equity
Contributions by and distributions
to owners
Issuance of shares 2,723 - - 2,723
Value of services received for issue
of share options - 1,986 - 1,986
Exercise of share options 1,508 (1,508) - -
Dividend paid of US$0.05 per share - - (30,001) (30,001)
Total transaction with owners of
the Company 4,231 478 (30,001) (25,292)
-------- ------------- ----------- --------
At 31 December 2015 413,358 62,074 220,154 695,586
======== ============= =========== ========
Symphony International Holdings Limited
Unaudited condensed statement of changes in equity (continued)
For the financial year ended 31 December 2016
Equity
Share compensation Accumulated Total
capital reserve profits equity
US$'000 US$'000 US$'000 US$'000
At 1 January 2016 413,358 62,074 220,154 695,586
Total comprehensive income for the
year - - (11,461) (11,461)
-------- ------------- ----------- --------
Transactions with owners of the
Company, recognised
directly in equity
Contributions by and distributions
to owners
Issuance of shares 446 - - 446
Value of services received for issue
of share options - 1,162 - 1,162
Exercise of share options 276 (276) - -
Dividend paid of US$0.0625 per share - - (39,980) (39,980)
Total transaction with owners of
the Company 722 886 (39,980) (38,372)
-------- ------------- ----------- --------
At 31 December 2016 414,080 62,960 168,713 645,753
======== ============= =========== ========
Symphony International Holdings Limited
Unaudited condensed statement of cash flows
For the financial year ended 31 December 2016
2016 2015
US$'000 US$'000
Cash flows from operating
activities
(Loss)/Profit before income
tax (11,461) 15,467
Adjustments for:
Exchange loss 3,606 6,341
Interest income (1,020) (1,435)
Interest expense 24 23
Fair value changes in financial
assets at fair value through
profit or loss (8,571) (38,425)
Share options expense 1,162 1,986
(16,260) (16,043)
Changes in working capital:
Decrease/(Increase) in other
receivables and payments 155 (182)
Increase/(Decrease) in other
payables 17 (12)
(16,088) (16,237)
Interest received (net of
withholding tax) 1,306 1,181
Net cash used in operating
activities (14,782) (15,056)
-------- --------
Cash flows from investing
activities
Purchase of financial assets
at fair value through
profit or loss (6,025) -
Proceeds from disposal of
financial assets at fair
value through profit or
loss - 35,402
Net cash (used in)/ from
investing activities (6,025) 35,402
-------- --------
Cash flows from financing
activities
Proceeds from issuance of
shares 446 2,723
Interest paid (24) (24)
Dividend paid (36,938) (30,001)
Proceeds from borrowings 85 67
-------- --------
Net cash used in financing
activities (36,431) (27,235)
-------- --------
Net decrease in cash and
cash equivalents (57,238) (6,889)
Cash and cash equivalents
at 1 January 73,142 80,376
Effect of exchange rate
fluctuations (125) (345)
-------- --------
Cash and cash equivalents
at 31 December 15,779 73,142
======== ========
Symphony International Holdings Limited
Notes to the unaudited condensed financial statements
For the financial year ended 31 December 2016
These notes form an integral part of the unaudited condensed
financial statements
1 Reporting Entity
Symphony International Holdings Limited (the "Company") is a
company domiciled in the British Virgin Islands.
The financial statements of the Company as at and for the year
ended 31 December 2016 are available upon request from the
Company's registered office at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin
Islands.
2 Statement of compliance
These condensed financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting. They do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the financial
statements of the Company as at and for the year ended 31 December
2016.
The Board of Directors approved these unaudited condensed
financial statements on 27 February 2017.
3 Significant accounting policies
The accounting policies applied by the Company in these
condensed financial statements are the same as those applied by the
Company in its financial statements as at and for the year ended 31
December 2015.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS).
The financial statements have been prepared on a fair value
basis, except for certain items which are measured on a historical
cost basis. The financial statements are presented in thousands of
United States dollars (US$'000), which is the Company's functional
currency, unless otherwise stated.
4 Estimates and judgement
The preparation of unaudited condensed financial statements in
conformity with International Financial Reporting Standards
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these unaudited condensed financial statements, the
significant judgements made by management in applying the Company's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the financial statements as
at and for the year ended 31 December 2015.
5 Financial risk management
The Company's financial risk management objectives and policies
are consistent with those disclosed in the financial statements as
at and for the year ended 31 December 2015.
6 Other operating expenses
2016 2015
US$'000 US$'000
Exchange loss, net 3,606 6,341
Non-executive director remuneration 400 400
General operating expenses 884 666
------- -------
4,890 7,407
======= =======
7 Financial assets at fair value through profit or loss
During the financial year ended 31 December 2016, the following
occurred via the unconsolidated subsidiaries: the Company
recognised a gain in the financial assets at fair value through
profit and loss of US$8,571,000 (31 December 2015:
US$38,425,000).
8 Financial instruments
Carrying amounts versus fair values
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the unaudited condensed
statement of financial position, are as follows.
Fair
value
through Loans, Other Total
profit cash financial carrying Fair
or loss and receivables liabilities amount value
US$'000 US$'000 US$'000 US$'000 US$'000
31 December
2016
Financial assets
measured at
fair value
Financial assets
at fair value
through profit
or loss 638,222 - - 638,222 638,222
Financial assets
not measured
at fair value
Other receivables
and prepayments - 67 - 67 67
Cash and cash
equivalents - 15,793 - 15,793 15,793
638,222 15,860 - 654,082 654,082
======== ================ ============ ========= =======
Financial liabilities
not measured
at fair value
Other payables - - 3,362 3,362 3,362
Interest-bearing
borrowings - - 4,953 4,953 4,953
Bank overdraft - - 14 14 14
-------- ---------------- ------------ --------- -------
- - 8,329 8,329 8,329
======== ================ ============ ========= =======
31 December
2015
Financial assets
measured at
fair value
Financial assets
at fair value
through profit
or loss 627,292 - - 627,292 627,292
Financial assets
not measured
at fair value
Other receivables
and prepayments - 220 - 220 220
Cash and cash
equivalents - 73,142 - 73,142 73,142
627,292 73,362 - 700,654 700,654
======= ====== ===== ======= =======
Financial liabilities
not measured
at fair value
Other payables - - 296 296 296
Interest-bearing
borrowings - - 4,772 4,772 4,772
Bank overdraft - - - - -
------- ------ ----- ------- -------
- - 5,068 5,068 5,068
======= ====== ===== ======= =======
Quoted investments
Fair value is based on quoted market bid prices at the financial
reporting date without any deduction for transaction costs.
Unquoted investments
The fair value of unquoted equity investments including joint
ventures and associates are measured with reference to the
enterprise value at which the portfolio company could be sold in an
orderly disposition over a reasonable period of time between
willing parties other than in a forced or liquidation sale, and is
determined by using valuation techniques such as (a) market
multiple approach that uses a specific financial or operational
measure that is believed to be customary in the relevant industry,
(b) price of recent investment, or offers for investment, for the
portfolio company's securities, (c) current value of publicly
traded comparable companies, (d) comparable recent arms' length
transactions between knowledgeable parties, and (e) discounted cash
flows analysis.
The objective of valuation techniques is to arrive at a fair
value measurement that reflects the price that would be received to
sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement
date.
Other financial assets and liabilities
The notional amounts of financial assets and liabilities with a
maturity of less than one year or which reprice frequently
(including other receivables, cash and cash equivalents, accrued
operating expenses, and other payables) approximate their fair
values because of the short period to maturity/repricing.
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices);
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Level Level Level
1 2 3 Total
US$'000 US$'000 US$'000 US$'000
31 December 2016
Financial assets
at fair value through
profit or loss - - 638,222 638,222
31 December 2015
Financial assets
at fair value through
profit or loss - - 627,292 627,292
Significant unobservable inputs used in measuring fair value
This table below sets out information about significant
unobservable inputs used at 31 December 2016 in measuring the
underlying investments of the financial assets categorised as Level
3 in the fair value hierarchy.
Fair value
at Range Sensitivity to changes in
Underlying 31 December Unobservable (Weighted significant unobservable
investment US$'000 Valuation technique input average) inputs
2016 2015
Rental growth 0%-6%
rate (2015:
6%-10%)
Occupancy 77%-82% The estimated fair value
rate (2015: would increase if the rental
80-95%) growth rate and occupancy
Rental Discount 13% (2015: rate were higher and the
properties 9,592 12,265 Income approach rate 13%) discount rate was lower.
US$51 to
US$1,865
per square
meter (2015:
Price per US$53 to
square meter US$1,484 The estimated fair value
Land related Comparable valuation for comparable per square would increase if the price
investments 94,606 99,161 method land meter) per square meter were higher.
4.7x to
116.9x,
median
Operating 10.9x (2015:
business 5.4x to
held for Enterprise value 17.2x, The estimated fair value
more than using comparable EBITDA multiple median would increase if the EBITDA
12-months 12,637 14,831 traded multiples (times) 10.2x) multiple was higher.
Discount 20% (2015: The estimated fair value
for lack 20%) would increase if the
of marketability discount
for lack of marketability
were lower.
The rental growth rate represents the growth in rental income
during the leasehold period while the occupancy rates represent the
percentage of the building that is expected to be occupied during
the leasehold period. Management adopts independent valuation
report that determines the rental growth rate and occupancy rate
after considering the current market conditions and comparable
occupancy rates for similar buildings in the same area.
The discount rate is related to the current yield on long-term
government bonds plus a risk premium to reflect the additional risk
of investing in the subject properties. Management adopts
independent valuation report that determines the discount based on
the independent valuers judgement after considering current market
rates.
The comparable recent sales represent the recent sales prices of
properties that are similar to the Group's properties, which are in
the same area. Management adopts independent valuation report to
determine the value per square meter based on the average recent
sales prices.
The EBITDA multiple represents the amount that market
participants would use when pricing investments. The EBITDA
multiple is selected from comparable public companies with similar
business as the underlying investment. Management obtains the
average EBITDA multiple from the comparable companies and applies
the multiple to the EBITDA of the underlying investment. The amount
is further discounted for considerations such as lack of
marketability.
The discount for lack of marketability represents the discount
applied to the comparable market multiples to reflect the
illiquidity of the investee relative to the comparable peer group.
Management determines the discount for lack of marketability based
on its judgement after considering market liquidity conditions and
company-specific factors.
The investment entity approach requires the presentation and
fair value measurement of immediate investments; the shares of
intermediate holding companies are not listed. However, ultimate
investments in listed entities amounting to US$451,373,016 (2015:
US$489,220,722) are held through intermediate holding companies;
the value of these companies are mainly determined by the fair
values of the ultimate investments.
Level 3 valuations
The following table shows a reconciliation from the beginning
balances to the ending balances for fair value measurements in
Level 3 of the fair value hierarchy.
----- 31 December ----- 31 December
2016 ----- 2015 -----
Financial Financial
assets assets
at fair at fair
value through value through
profit profit
or loss Total or loss Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 January 627,292 627,292 630,053 630,053
Total gains or
losses in
profit or loss 8,571 8,571 38,425 38,425
Additions/(deductions) 2,359 2,359 (41,186) (41,186)
Balance at 31
December 638,222 638,222 627,292 627,292
============== ======= ============== ========
Sensitivity analysis
Although the Company believes that its estimates of fair value
are appropriate, the use of different methodologies or assumptions
could lead to different measurements of fair value. For fair value
measurements in Level 3 assets, changing one or more of the
assumptions used to reasonably possible alternative assumptions
would have the following effects on the profit or loss:
----- 31 December ----- 31 December
2016 ----- 2015 -----
Effect on profit Effect on profit
or loss or loss
Favourable (Unfavourable) Favourable (Unfavourable)
US$'000 US$'000 US$'000 US$'000
Level 3 assets 14,836 (15,915) 16,517 (17,083)
========== ============== ========== ==============
The favourable and unfavourable effects of using reasonably
possible alternative assumptions have been calculated by
recalibrating the valuation model using a range of different
values.
For rental properties, the projected rental rates and occupancy
levels were increased by 5% for the favourable scenario and reduced
by 5% for the unfavourable scenario. The discount rate used to
calculate the present value of future cash flows was also decreased
by 1% for the favourable case and increased by 1% for the
unfavourable case compared to the discount rate used in the
year-end valuation.
For land related investments (except those held for less than
12-months where cost approximates fair value), which are valued on
comparable transaction basis by third party valuation consultants,
the fair value of the land is increased by 15% in the favourable
scenario and reduced by 15% in the unfavourable scenario.
For operating businesses (except those where a last transacted
price exists within the past 12-months that provides the basis for
fair value) that are valued on a trading comparable basis using
enterprise value to earnings before interest, tax, depreciation and
amortisation ("EBITDA"), EBITDA is increased by 15% and decreased
by 15% in the favourable and unfavourable scenarios.
9 Earnings per share
2016 2015
US$'000 US$'000
Basic and diluted earnings
per share are based on:
Net (loss)/profit for the
year attributable to equity
holders of the Company (11,461) 15,467
======== =======
Basic earnings per share
Number Number
of shares of shares
2016 2015
Issued ordinary shares at
1 January 528,096,195 523,557,998
Shares issued 742,616 4,538,197
----------- -----------
Issued ordinary shares at
31 December 528,838,811 528,096,195
=========== ===========
Weighted average number
of shares (basic) 528,498,445 526,772,554
=========== ===========
For the purpose of calculation of the diluted earnings per
share, the weighted average number of shares in issue is adjusted
to take into account any potential dilutive effect arising from the
dilutive warrants, share options and contingently issuable shares,
with the potential shares weighted for the period outstanding.
The effect of the exercise of warrants and issue of contingently
issuable shares on the weighted average number of shares in issue
is as follows:
2016 2015
Weighted average number
of shares (basic) 528,498,445 526,772,554
Effect of share options 5,070,268 5,713,299
Weighted average number
of shares (diluted) 533,568,713 532,485,853
=========== ===========
As at 31 December 2016 and 31 December 2015, there were no
outstanding warrants. 111,855,210 warrants to subscribe for
111,855,210 new ordinary shares of no par value at an exercise
price of US$1.22 expired on 3 August 2015.
At 31 December 2016, there were 110,835,078 (2015: 111,577,694)
outstanding share options to subscribe for ordinary shares of no
par value. At 31 December 2016, 102,501,778 (2015: 94,911,094) of
the unexercised share options had fully vested. 82,782,691 (2015:
82,782,691) of the share options have an exercise price of US$1.00
and have not been included in the computation of diluted earnings
per share as their effect would have been anti-dilutive. At 31
December 2016, 19,719,087 (2015: 12,128,403) of the share options
have an exercise price of US$0.60 (2015: US$0.60) and have been
included in the computation of diluted earnings per share. At 31
December 2016, 8,333,300 (2015: 16,666,600) of the share options
had not yet vested and had an exercise price of US$0.60 (2015:
US$0.60) and have not been included in the computation of diluted
earnings per share.
10 Operating segments
The Company has investment segments, as described below.
Investment segments are reported to the Board of Directors of the
Investment Manager who review this information on a regular basis.
The following summary describes the investments in each of the
Company's reportable segments.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis.
Business activities which do not meet the definition of an
operating segment have been reported in the reconciliations of
total reportable segment amounts to the financial statements.
Healthcare Includes investments in Parkway
Life Real Estate Investment
Trust (PREIT) and IHH Healthcare
Bhd (IHH)
and SQR Global Healthcare
Services Fund II
Hospitality Includes investment in Minor
International Public Company
Limited (MINT)
Lifestyle Includes investments in C
Larsen (Singapore) Pte Ltd.
and the Wine Connection Group
(WCG) and Christian Liaigre
Group (CLG) and WCIB International
Co. Ltd. (WCIB)
Lifestyle/Real Estate Includes investments in Minuet
Ltd, SG Land Co. Ltd. and
a property joint venture in
Niseko, Hokkaido, Japan and
Desaru Peace Holdings Sdn
Bhd
Cash and temporary Includes government securities
investments or other investment grade
securities, liquid investments
which are managed by third
party investment managers
of international repute, and
deposits placed with commercial
banks
Information on reportable segments
Cash
Lifestyle/ and temporary
Healthcare Hospitality Lifestyle real estate investments Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
31 December
2016
Investment
income
* Interest income 816 - - 24 180 1,020
* Unrealised gain in profit or loss (1,558) 3,466 (2,376) 7,388 1,651 8,571
---------- ----------- --------- ------------ -------------- --------
(742) 3,466 (2,376) 7,412 1,831 9,591
Investment
expenses
* Exchange loss (30) * (2,719) (835) (22) (3,606)
---------- ----------- --------- ------------ -------------- --------
Net investment
results (772) 3,466 (5,095) 6,577 1,809 5,985
========== =========== ========= ============ ============== ========
Cash
Lifestyle/ and temporary
Healthcare Hospitality Lifestyle real estate investments Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
31 December
2015
Investment
income
* Interest income 1,026 - - 23 386 1,435
* Unrealised gain in profit or loss 8,171 40,758 (3,381) (8,494) 1,371 38,425
---------- ----------- --------- ------------ -------------- --------
9,197 40,758 (3,381) (8,471) 1,757 39,860
Investment
expenses
* Exchange loss (1,187) * 9 (4,801) (362) (6,341)
---------- ----------- --------- ------------ -------------- --------
Net investment
results 8,010 40,758 (3,372) (13,272) 1,395 33,519
========== =========== ========= ============ ============== ========
31 December 2016
Segment assets 125,145 325,895 70,496 104,198 28,281 654,015
======= ======= ====== ======= ====== =======
31 December 2015
Segment assets 128,269 361,895 14,972 111,421 83,877 700,434
======= ======= ====== ======= ====== =======
The reportable operating segments derive their revenue primarily
by achieving returns, consisting of dividend income, interest
income and appreciation in fair value. The Company does not monitor
the performance of the investments by measure of profit or
loss.
* Less than US$1,000
Reconciliations of reportable segment profit or loss and
assets
31 December 31 December
2016 2015
US$'000 US$'000
Profit or loss
Net investments results 5,985 33,519
Unallocated amounts:
* Other corporate expenses (17,446) (18,052)
----------- -----------
(Loss) / profit for the year (11,461) 15,467
=========== ===========
Assets
Total assets for reportable
segments 654,015 700,434
Other assets 67 220
----------- -----------
Total assets 654,082 700,654
=========== ===========
11 Significant related party transactions
Key management personnel compensation
Key management personnel of the Company are those persons having
the authority and responsibility for planning, directing and
controlling the activities of the Company.
During the financial year, directors' fees amounting to
US$400,000 (2015: US$400,000) were declared as payable to four
directors (2015: four directors) of the Company. The remaining two
directors of the Company are also directors of the Investment
Manager who provides management and administrative services to the
Company on an exclusive and discretionary basis. No remuneration
has been paid to these directors as the cost of their services form
part of the Investment Manager's remuneration.
Other related party transactions
During the financial year ended 31 December 2016, the Company
recognised interest income received/receivable on advances made to
its unconsolidated subsidiaries totalling US$1,020,000 (31 December
2015: US$1,049,000).
Pursuant to the Investment Management Agreement, the Investment
Manager will provide investment management and advisory services
exclusively to the Company. Details of the remuneration of the
Investment Manager are disclosed in the financial statements as at
and for the year ended 31 December 2014. During the financial year
ended 31 December 2016, management fee amounting to US$15,000,000
(31 December 2015: US$15,000,000) paid/payable to the Investment
Manager has been recognised in the condensed financial
statements.
Pursuant to Schedule 2 of the Investment Management Agreement,
as amended, the Investment Manager was granted 124,449,191 (31
December 2015: 124,449,191) share options to subscribe for ordinary
shares at an exercise price of US$1.00 or US$0.60.
On 3 August 2008, the Company granted 82,782,691 share options
with an exercise price of US$1.00 to the Investment Manager, which
had been previously deferred. These share options have fully vested
in five tranches over a period of five years and will expire on the
tenth anniversary of the actual grant date, which has been
similarly deferred by 1 year as a result of the deferment of the
grant.
On 22 October 2012, the Company granted to the Investment
Manager 41,666,500 share options with an exercise price of US$0.60
that will vest in five equal tranches over a period of five years
and will expire on the tenth anniversary of the date of grant.
The Investment Manager exercised share options amounting to
4,054,970 and 4,278,330 on 8 May 2014 and 10 June 2014,
respectively, and 4,538,197 on 17 April 2015 and 742,616 on 23 June
2016 at the exercise price of US$0.60 per share.
At 31 December 2016, the Investment Manager has been issued nil
(31 December 2015: nil) management shares.
Symphony's Investment Manager is Symphony Asia Holdings Pte.
Ltd. ("SAHPL"), which replaced Symphony Investment Managers Limited
("SIMgL") on 15 October 2015, (with SAHPL and SIMgL, as the case
maybe, hereinafter referred to as the "Investment Manager"). The
Company entered into an Investment Management Agreement (with SAHPL
as the Investment Manager) that replaced the Investment Management
and Advisory Agreement (with SIMgL as the Investment Manager)
("Investment Management Agreement") on 15 October 2015.
Other than as disclosed elsewhere in the condensed unaudited
financial statements, there were no other significant related party
transactions during the years ended 31 December 2016 and 31
December 2015.
12 Commitments
In September 2008, the Company entered into a loan agreement
with a joint venture, held via its unconsolidated subsidiary, to
grant loans totaling US$3,900,000 (THB140,000,000). As at 31
December 2016, US$3,300,000 (THB120,000,000) has been drawn down.
The Company is committed to grant the remaining loan amounting to
US$600,000 (THB20,000,000), subject to terms set out in the
agreement.
In the general interests of the Company and its unconsolidated
subsidiaries, it is the Company's current policy to provide such
financial and other support to its group of companies to enable
them to continue to trade and to meet liabilities as they fall
due.
13 Subsequent events
On 27 January 2017, the Company's wholly owned subsidiary,
Dynamic Idea Investments Limited, which holds the Company's
interest in the Christian Liaigre Group, entered into an assignment
agreement to take-up part of a bridge loan related to this
investment. The associated cost for the assignment was less than 5%
of NAV.
The Company announced on 16 January 2017 the initiation of a
share Buyback Programme with the intention to acquire at least 10%
of its shares in issue on an annual basis. As at 24 February the
Company had acquired and cancelled 3.5 million shares at a total
cost of US$3.1 million.
Subsequent to 31 December 2016 and up to 24 February 2017, the
Company sold 6.1 million units of PREIT in multiple transactions
that generated proceeds of US$10.1 million.
IMPORTANT INFORMATION
This document is not for release, publication or distribution,
in whole or in part, directly or indirectly, in or into the United
States or any other jurisdiction into which the publication or
distribution would be unlawful. These materials do not constitute
an offer to sell or issue or the solicitation of an offer to buy or
acquire securities in the United States or any other jurisdiction
in which such offer or solicitation would be unlawful. THE
securities referred to in this document have not been and will not
be registered under the securities laws of such jurisdictions and
may not be sold, resold, taken up, transferred, delivered or
distributed, directly or indirectly, within such jurisdictions.
No representation or warranty is made by the Company or its
Investment Manager as to the accuracy or completeness of the
information contained in this document and no liability will be
accepted for any loss whatsoever arising in connection with such
information.
This Document contains (or may contain) certain forward-looking
statements with respect to certain of the Company's current
expectations and projections about future events. These statements,
which sometimes use words such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "potential",
"should", "will" and "would" or the negative of those terms or
other comparable terminology, are based on the Company's beliefs,
assumptions and expectations of its future performance, taking into
account all information currently available to it at the date of
this document. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, not all of
which are known to the Company at the date of this announcement or
are within its control. If a change occurs, the Company's business,
financial condition and results of operations may vary materially
from those expressed in its forward-looking statements. Neither the
Company nor its Investment Manager undertake to update any such
forward looking statements
Statements contained in this DOCUMENT regarding past trends or
activities should not be taken as a representation that such trends
or activities will continue in the future. The information
contained in this document is subject to change without notice and,
except as required by applicable law, neither the Company nor THE
INVESTMENT MANAGER assumes any responsibility or obligation to
update publicly or review any of the forward-looking statements
contained herein. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
announcement.
This document is for information purposes only and does not
constitute an invitation or offer to underwrite, subscribe for or
otherwise acquire or dispose of any securities of the Company in
any jurisdiction. All investments are subject to risk. Past
performance is no guarantee of future returns. Shareholders and
prospective investors are advised to seek expert legal, financial,
tax and other professional advice before making any investment
decisions.
This DOCUMENT is not an offer of securities for sale into the
United States. The Company's securities have not been, and will not
be, registered under the United States Securities Act of 1933 and
may not be offered or sold in the United States absent registration
or an exemption from registration. There will be no public offer of
securities in the United States.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this DOCUMENT.
The Company and the Investment Manager are not associated or
affiliated with any other fund managers whose names include
"Symphony", including, without limitation, Symphony Financial
Partners Co., Ltd.
End of Announcement
This information is provided by RNS
The company news service from the London Stock Exchange
END
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