TIDMSIHL
RNS Number : 9416D
Symphony International Holdings Ltd
03 May 2017
Not for distribution, directly or indirectly, in or into the
United States or any jurisdiction in which such distribution would
be unlawful.
Symphony International Holdings Limited
3 May 2017
Symphony International Holdings Limited ("Symphony", "SIHL" or
the "Company") (LSE: SIHL.L), a leading investor in
consumer-related businesses, primarily in the healthcare,
hospitality and lifestyle sectors (including education and branded
real estate developments) in the Asia-Pacific region, today issues
the following Shareholder Update.
Highlights
-- Symphony's unaudited Net Asset Value ("NAV") at 31 March 2017
was US$663,184,528 and NAV per share was US$1.2806. This compares
to NAV and NAV per share at 31 December 2016 of US$645,753,260 and
US$1.2211, respectively
-- The change in NAV was predominantly due to an appreciation in
the Thai baht, Malaysian ringgit and Singapore dollar and an
increase in the value of Minor International Pcl ("MINT") during
the quarter
-- During the quarter, Symphony announced a share buyback
program with the intention to acquire at least 10% of its shares in
issue on an annual basis. By the end of 1Q17, Symphony had acquired
11 million shares, or approximately 2.1% of the shares outstanding
as at 31 December 2016, which were subsequently
-- Symphony's share price increased by 6.3% during the quarter
to US$0.85 at 31 March 2017 from US$0.80 at 31 December 2016. The
discount to NAV on the same date was 33.6%
-- Temporary investments (which includes cash net of working
capital) and listed investments amounted to US$444.0 million, or
US$0.857 per share. Symphony's share price on the same date
represented a discount of 0.9% to temporary and listed
investments
-- During 1Q2017, Symphony partially exiting its investment in
Parkway Life Real Estate Investment Trust ("PREIT") with the sale
of 17.8 million units in the market that generated proceeds of
US$31.0 million and entered into an assignment agreement to take-up
part of a bridge loan related to its investment in the Christian
Liaigre Group
Anil Thadani, Chairman of Symphony Asia Holdings Private Limited
and a Director of Symphony, said:
"Asian financial markets were resilient during the first quarter
of 2017 despite the ongoing geopolitical uncertainty and
expectations of further rate rises by the US Federal Reserve. Asian
bourses and currencies generally strengthened, which benefited the
value of our portfolio. Our investments continue to be well placed
for long-term growth despite ongoing volatility in financial
markets that could impact valuations in the short-term."
For further information:
For further information:
Symphony Asia Holdings Pte. Ltd.:
Anil Thadani +65 6536 6177
Numis Securities Limited:
Hugh Jonathan +44 (0)20 7260 1000
Nathan Brown
About Symphony
Symphony is a London listed strategic investment company that
invests in consumer businesses in the healthcare, hospitality and
lifestyle ("HH&L") sectors (including education and branded
real estate developments), which are principally in Asia. It offers
a way for investors to gain exposure to the rising disposable
incomes and wealth in fast growing economies. Symphony's objective
is to provide superior capital growth by investing in high quality
companies and forming long-term business partnerships with talented
entrepreneurs. Symphony is managed by Symphony Asia Holdings
Private Limited, which has a team of investment professionals with
a broad range of expertise - many of them have been working in Asia
for more than 25 years. For more information, please visit our
website at www.symphonyasia.com
MARKET OVERVIEW
The ongoing geopolitical volatility during the first quarter of
2017 did not significantly impact global financial markets compared
to prior quarters and equity markets ended the quarter generally
higher. There remains significant uncertainty over the business
climate as a result of the new US administration, Brexit
negotiations, geopolitical maneuvering by Russia in Syria and North
Korea's belligerent activities, which are a concern for North
Asia.
The new US administration has ushered in changes to policy that
affect both the domestic socio-political environment and
international trade and balance of power. These policies have
created uncertainty within the global economy. For example, the new
administration withdrew from the Trans-Pacific Partnership ("TPP"),
a flagship trade deal with 11 countries in the Pacific rim. The TPP
was expected to boost economic development in Asian nations by
reducing trade barriers among individual Asian countries and the US
(with the notable exception of China). We expect uncertainty
surrounding future policy developments by the new US administration
to continue to weigh on financial markets in the short to medium
term.
At the end of 1Q17, the UK's Prime Minister, Theresa May,
triggered Article 50 that provides two years for the UK to
negotiate an exit from the EU. It is expected that in the short
term Brexit may cause volatility in the UK and European financial
markets. The uncertainty surrounding the outcome of Brexit
negotiations will likely affect market sentiment.
Despite the concerns over trade, geopolitical security and the
balance of power, the economic outlook is positive. In April, the
International Monetary Fund ("IMF") released its revised economic
forecasts. The IMF increased its forecast for global output growth
to 3.5% from 3.4% for 2017 and maintained output growth at 3.6% for
2018, largely due to a slight projected pickup in advanced
economies. For Emerging and Developing Asia, the IMF maintained its
output growth forecast at 6.4% in 2017 and increased it to 6.4%
from 6.3% in 2018 due to continued policy support in China and
strong consumption trends in Malaysia, Indonesia, Vietnam, and the
Philippines. The IMF's forecasts for China's output growth
increased to 6.6% from 6.5% and 6.2% from 6.0% in 2017 and 2018,
respectively, and for India output growth was maintained at 7.2%
and 7.7% for 2017 and 2018, respectively.
During the quarter, Symphony announced a share buyback program
with the intention to acquire at least 10% of its shares in issue
on an annual basis. By the end of 1Q17, Symphony had acquired 11
million shares, or approximately 2.1% of the shares outstanding as
at 31 December 2016, which were subsequently cancelled.
During 1Q2017, Symphony partially exited its investment in PREIT
with the sale of 17.8 million units in the market that generated
proceeds of US$31.0 million and entered into an assignment
agreement to take-up part of a bridge loan related to its
investment in the Christian Liaigre Group.
Symphony continues to support the management teams of its
portfolio companies and to evaluate opportunities to grow or
enhance its portfolio.
COMPANY UPDATE
Symphony's listed investments accounted for 68.9% of NAV at 31
March 2017 (or US$0.882 per share), which is down from 71.4% of NAV
at 31 December 2016. The decrease is due to the sale of 17.8
million shares of Parkway Life Real Estate Investment Trust
("PREIT") which generated cash proceeds of approximately US$31.0
million, which was partially offset by an increase in the share
price of MINT and unit price of PREIT and the strengthening of the
Thai baht, Singapore dollar and Malaysian ringgit during 1Q17. On a
per share basis, the value of Symphony's unlisted investments
(including property) comprised a further 33.0% of Symphony's NAV
(or US$0.423 per share), while the remaining (1.9%) of NAV (or
(US$0.025) per share) represented temporary investments.
Symphony's share price continued to trade at a discount to NAV
in 1Q17. At 31 March 2017, Symphony's share price was US$0.85,
representing a discount to NAV per share of 33.6% which compares to
34.3% at 31 December 2016.
As of 31 March 2017, the sum of Symphony's temporary investments
(which includes cash net of working capital) and listed investments
amounted to US$444.0 million, or US$0.857 per share. Symphony's
share price on the same date represented a discount of 0.9% to
temporary and listed investments.
PORTFOLIO DEVDELOPMENTS
Minor International Pcl ("MINT") is one of the largest
hospitality and restaurant companies in the Asia Pacific region.
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 in 23 countries under its own brand names that include
Anantara, Oaks, Elewana, AVANI, Per AQUUM and Tivoli. MINT also
owns and operates 1,996 restaurants (comprising 1,018 equity-owned
outlets and 978 franchised outlets) under brands that include The
Pizza Company, Swensen's, Sizzler, Dairy Queen, Burger King,
Beijing Riverside, Thai Express, The Coffee Club, Veneziano Coffee
Roasters, and Breadtalk.
MINT's operations also include contract manufacturing and an
international lifestyle consumer brand distribution business at 327
retail points focusing on fashion, cosmetics, wholesale and direct
marketing channels under brands that include GAP, Esprit, Bossini,
Red Earth and Henckels amongst others.
Update: MINT saw revenue growth on a consolidated basis in 4Q16
year-over-year. However net profit declined. Excluding one-time
gains and provisions, revenue increased by 5% but EBITDA and net
profit decreased by 1% and 25%, respectively, during the period.
The decrease in EBITDA and net profit was attributable to soft
performance of hotel and mixed-use, and lower operating leverage of
Thailand operations.
MINT's hotel & mixed-use business grew revenues by 4% in
4Q16 year-over-year, led by stable growth of Oaks in Australia, the
contribution of the recently consolidated Tivoli portfolio in
Portugal, and the turnaround in sales growth of Anantara Vacation
Club. In November, MINT announced three new hotel openings under
the Anantara brand in Sri Lanka and Oman.
The mixed-use business, which includes property development
operations and plaza and entertainment, saw an overall decrease in
revenues in 4Q16 of 32%. Real estate development revenue decreased
by 33% due to the lack of sales of villas, along with a 12%
decrease in plaza and entertainment revenue due to lower customer
traffic at Royal Garden Pattaya during the mourning period.
In 4Q16, MINT's total number of restaurants reached 1,996,
representing a net increase of 68 outlets during the quarter. 64%
of the total restaurants are in Thailand with the remainder in
other Asia-Pacific countries and the Middle East. Total system
sales in 4Q16 increased by 6.4% year-over-year primarily due to
outlet expansion of 8% year-over-year.
The fair value of Symphony's investment in MINT at 31 March 2017
was US$359.2 million up from US$336.0 million at 31 December 2016.
The change was primarily due to an increase in the share price of
MINT to THB 36.75 from THB 35.75 and a 4.0% appreciation in the
Thai baht during the quarter.
Minuet Limited ("Minuet") is a joint venture between Symphony
and an established Thai partner. Symphony 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.
Update: The Company's investment cost (net of shareholder loan
repayments) was approximately US$47.2 million at 31 March 2017. The
fair value of Symphony's interest at 31 March 2017 was US$79.4
million based on an independent third party valuation on 31
December 2016. The change in value from US$76.7 million at 31
December 2016 is predominantly due to an appreciation of the Thai
baht.
Parkway Life Real Estate Investment Trust ("PREIT") invests in
income generating healthcare-related properties in the Asia-Pacific
region including three of Parkway's Singapore hospitals, which are
leased back to Parkway on long leases. Established by Parkway
Holdings Limited, PREIT is among the largest listed healthcare REIT
in Asia by asset size and generates an inflation-linked yield of
5%-6% based on current valuations and historic distributions.
Update: PREIT reported an increase in gross revenue by 0.2%
while maintaining net property income at S$26.9 million and S$25.1
million, respectively, in 1Q17 year-over-year despite the
divestment of four nursing homes in Japan in December 2016. Gross
revenue was underpinned by the contribution from a nursing home
acquisition in March 2016, higher rent from the Singapore
properties and the appreciation of the Japanese Yen.
In February, PREIT completed its second asset recycling
initiative as it redeployed capital from its December sale to
acquire four nursing homes and one group property in Japan. The
properties are located in the Chiba and Yamaguchi prefectures. The
five properties are expected to have a net property yield of 6.9%
and be distribution-accretive to unit holders and improve income
diversification.
PREIT's Q1 portfolio stands at 49 properties. The portfolio
includes 45 properties in Japan, three in Singapore and strata
titled units/lots within Gleneagles Medical Centre, Kuala Lumpur,
Malaysia.
As at 31 March 2017, PREIT had a gearing ratio of 37.6%, which
is within the 45% limit allowed under the Monetary Authority of
Singapore Property Funds Appendix and will allow for further yield
accretive acquisitions.
As at 31 March 2017, the fair value of Symphony's investment in
PREIT was US$35.1 million, compared to US$60.5 million at 31
December 2016. The change is due to a partial sale comprising 17.8
million shares offset by an increase in the share price of PREIT to
SGD 2.52 from SGD 2.35 and a 3.4% appreciation in the Singapore
dollar.
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 employ more than 30,000 people and operate over 10,000
licensed beds in 52 hospitals in 10 countries worldwide.
Update: IHH reported 4Q16 revenue growth of 15% and EBITDA
decline of 8% to MYR2.6 billion and MYR0.6 billion, respectively,
whereas net profit excluding exceptional items increased by 4%
compared to the same period a year earlier. The improvement in
revenue is due to sustained organic growth in IHH's existing
hospitals and ramp up of its newly opened hospitals. The
acquisition of Continental Hospitals and Global Hospitals in India,
and Tokuda Group and City Clinic in Bulgaria also contributed to
increased revenue. Net profit increased due to lower net financing
costs and other items during the quarter. In March, IHH announced
that its Gleneagles subsidiary had opened a 500-bed multi-specialty
tertiary hospital in Hong Kong Island South.
Revenues at Parkway Pantai hospitals grew 13% in 4Q16
year-over-year to MYR1.6 billion, driven partly by the continued
ramp-up of Mount Elizabeth Novena Hospital in Singapore and
contribution from newly opened hospitals and assets acquired in
2015. Acibadem's revenues grew in 4Q16 by 19% due to an increase
the continued ramp up of Acibadem Atakent and Acibadem Taksim
hospitals, contribution of new assets in Bulgaria and organic
growth.
At 31 March 2017, the fair value of Symphony's investment in IHH
was US$52.6 million down from US$54.9 million at 31 December 2016.
The change is primarily due to a decrease in the share price to MYR
5.99 from MYR 6.34 offset by an increase in the Malaysian ringgit
of 1.4% during the quarter.
Property Joint Venture in Malaysia: Symphony has a 49% interest
in a property joint venture in Malaysia with an affiliate of Themed
Attractions Resorts & 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.
Update: Symphony invested US$29.0 million in January 2012 for
its interest in the joint venture company. Symphony's interest in
the joint venture at 31 March 2017 was valued at US$21.5 million,
which compares to US$21.4 million at 31 December 2016. The change
in value is predominantly due to an increase of the Malaysian
ringgit by 1.4% during the quarter. The project is ongoing and is
expected to be ready by 4Q17.
SG Land Co. Ltd ("SG Land") is a joint venture company that owns
the leasehold rights for two office buildings in downtown Bangkok -
SG Tower and Millenia Tower. The two buildings in SG Land's
portfolio have high occupancy rates and offer attractive rental
yields. Symphony holds 49.9% of the venture.
Update: SG Land continues to generate stable rental income on
its two office towers. The fair value of SG Land at 31 March 2017
was US$10.7 million based on an independent third party valuation
at 31 December 2016. The change from US$10.0 million at 31 December
2016 is due to an appreciation of the Thai baht and an increase in
the cash that has not yet been offset by a reduced lease term,
which is used to derive fair value.
Christian Liaigre Group ("CLG"): Symphony announced in May 2016
that it acquired, as part of a consortium, Financier CL SAS, the
holding company of the Christian Liaigre Group ("CLG"). The Liaigre
brand is synonymous with discreet luxury, and has become one of the
most sought-after luxury furniture brands. CLG has a strong
intellectual property portfolio and offers a range of bespoke
furniture, lighting, fabric & leather, and accessories through
a network of 26 showrooms in 11 countries across Europe, the US and
Asia. In addition, CLG also undertakes exclusive interior
architecture projects for select yachts, hotels, restaurants and
private residences. In January 2017, Symphony entered into an
assignment agreement to take-up part of a bridge loan related this
investment.
Update: The consortium is working closely with management to
support the business plan and assist with initiatives to create
incremental value for stakeholders. For competitive reasons, no
pricing or valuation information is disclosed for this
investment.
Property Joint Venture in Japan: Symphony invested in a property
development venture that has acquired two hotels in Niseko,
Hokkaido, Japan. Symphony has a 37.5% interest in the property
development venture.
Update: The property is located in the Hirafu area of Niseko
which continues to gain traction as a premium winter sports
destination and for its popularity as an off-ski season activity
destination. A number of new high-end developments in the Hirafu
area have been met with strong demand. We are now evaluating the
advantages of a development versus an outright sale of the
properties.
C Larsen Singapore Pte Limited ("C Larsen") is a luxury
hospitality company which primarily sells several high-end U.S. and
European furniture brands and is based in Thailand. The current
portfolio of furniture brands includes Christian Liaigre, Barbara
Barry, Baker, Thomasville, Herman Miller, Minotti, Bulthaup
kitchens, Puiforcat, and St. Louis. It also provides FF&E
solutions to drive additional furniture sales to various real
estate and hotel projects. C Larsen also has the franchise to
operate the Clinton Street Baking Company F&B outlets in
selected Asian markets.
Update: Despite facing a seasonally weak first quarter, C Larsen
continued to see overall order growth and exceeded anticipated
performance in its Residential segment, the largest part of its
business, due to a strong project pipeline. The Outlet segment was
slightly down versus budget, primarily due to merchandising mix. In
the Kitchen and Office segments, C Larsen faced revenue recognition
delays that are expected to spill over into the latter half of the
second quarter as Thailand celebrates local holidays in April.
WCIB International Co. Ltd. ("WCIB"): Symphony announced in
January 2017 that it entered into a joint venture, WCIB
International Co. Ltd. ("WCIB"), that will build and operate
Wellington College International Bangkok, the fifth international
addition to the Wellington College family of schools. WCIB will
operate a co-educational school that will cater to over 1,500
students aged 2-18 years of age when fully completed.
Update: The joint venture has begun working to develop the
school.
Wine Connection Group ("WCG"): At the end of April 2014,
Symphony invested in the Wine Connection Group ("WCG"), Southeast
Asia's leading wine themed Food and Beverage chain with currently
over 70 outlets in Singapore, Thailand, and Malaysia.
Update: WCG continued to see strong performance in Singapore and
improving business in Thailand. Total system sales and
same-store-sales growth has been robust in the fourth quarter of
2016 and first quarter of 2017. Management continues to focus on
increasing efficiency and exploring additional outlet openings. We
expect the business to continue to improve during 2017.
Structured Transaction: In February 2014, Symphony completed a
structured transaction, which provides a minimum return of 15% per
annum. The investment amount is less than 2% of NAV.
Global Healthcare Services Portfolio: During the fourth quarter
of 2016, SIHL invested in a diversified portfolio of listed
companies that operate hospitals, hospices, nursing homes,
elder-care facilities, home nursing services, and diagnostics
services in both, emerging and developed markets. This investment
represents a first step towards gaining diversified exposure to
healthcare services companies using a portfolio approach.
SUBSEQUENT EVENTS
Share Buyback: The Company announced on 16 January 2017 the
initiation of a share Buyback Program with the intention to acquire
at least 10% of its shares in issue on an annual basis. During the
first quarter, the Company acquired and subsequently cancelled 11.0
million shares at a total cost of US$9.9 million. Subsequent to
quarter end and as at 13 April 2017 the Company had acquired and
cancelled an additional 1.4 million shares at a total cost of
US$1.2 million.
Dividend: Subsequent to quarter end, the Board of Directors of
Symphony declared a dividend payable to shareholders & option
holders. The dividend will be 3.50 cents per share comprised of an
ordinary dividend of 2.50 cents per share and an extraordinary
dividend of 1.0 cent per share, which amounts to approximately
US$15.7 million and US$6.3 million, respectively. As in past years,
the Board declared this dividend having considered its dividend
policy in light of divestments, dividends received from investee
companies and the Company's liquidity.
OUTLOOK
We remain confident that the long-term prospects for our
investments remain unchanged and we believe our portfolio is well
positioned to continue to benefit from the growth in disposable
incomes in the region. Symphony continues to support the management
teams of its portfolio companies and continues to evaluate
opportunities to grow or enhance its portfolio.
IMPORTANT INFORMATION
A more detailed Shareholder Update is available on request from
the Company and can be accessed via www.symphonyasia.com.
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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