TIDMSIHL
RNS Number : 1266Y
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.
Symphony International Holdings Limited
1 March 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 December
2016 was US$645,753,260 and NAV per share was US$1.2211. This
compares to NAV and NAV per share at 30 September 2016 of
US$705,390,126 and US$1.3338, respectively
-- The change in NAV and NAV per share was predominantly due to
a decline in the value of listed securities and a depreciation in
the Thai baht, Malaysian ringgit and Singapore dollar during the
quarter
-- Symphony's share price increased by 5.6% during the quarter
to US$0.80 at 31 December 2016 from US$0.76 at 30 September 2016.
The discount to NAV on the same date was 34.3%
-- Temporary investments (which includes cash net of working
capital) and listed investments amounted to US$458.0 million, or
US$0.87 per share. Symphony's share price on the same date
represented a discount of 7.3% to temporary and listed
investments
-- Symphony completed an investment in WCIB International Co.
Ltd. ("WCIB"), a joint venture company that will build and operate
Wellington College International Bangkok, the fifth international
addition to the Wellington College family of schools. WCIB has an
option to develop additional schools in Thailand, Laos, Vietnam,
Cambodia and Myanmar under the Wellington College name
Anil Thadani, Chairman of Symphony Asia Holdings Private Limited
and a Director of Symphony, said:
"The heightened geopolitical uncertainty, particularly with the
incoming US administration that was elected in the fourth quarter
and increased expectations of interest rate increases by the
Federal Reserve had an overall negative impact on Asian financial
markets. As a result, our NAV was effected. However, 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."
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 fourth quarter of 2016 continued to experience significant
and unexpected geopolitical events globally which impacted
financial markets. Uncertainty over the business climate as a
result of Brexit, America's tumultuous presidential campaign and
election, political maneuvering by Russia and Syria, continuing
violence in Turkey and weakness in China affected markets. Together
with weaker growth, central banks have generally maintained
accommodative policies with the notable exception of the United
States.
In October, the King of Thailand, His Majesty King Bhumibol
Adulyadej, passed away and subsequently his son became the new King
of Thailand. Throughout and following the transition of power, our
investee companies report that there has been no change to the
business environment.
Also in October, the British courts ruled that the referendum
for Britain to cease membership in the European Union ("EU") was
non-binding and would have to be approved by parliament. Parliament
approved Brexit in December which is expected to occur in 2017. As
a result, companies located in the UK with extensive operations
across the European continent are now considering contingency plans
to avoid disruption.
In November, Donald Trump unexpectedly won the American
presidential election that also saw his fellow Republicans renew
control of Congress. Trump has indicated that he would like to
strengthen ties with Russia while developing strong anti-China
policies and renege on the Trans Pacific Partnership ("TPP")
agreement that was negotiated with several Asian nations exclusive
of China. In December 2016, the Federal Reserve hiked interest
rates based on rising economic output, robust job creation, and
political realities.
Also in November, India de-monetized its most popular currency
notes thereby affecting 86% of currency in circulation in an
attempt to cut down on graft and corruption in its primarily cash
economy. The maneuver caught most by surprise and it is expected
that India will see weakness in GDP for the last quarter of the
year due to the resultant cash shortage. China continued to suffer
weakness as its exports dropped for the seventh straight month and
Japan announced unlimited bond buying of Japanese Government Bonds
following currency fluctuations after the American election.
In January, the International Monetary Fund ("IMF") updated its
economic forecasts. The IMF maintained its forecast for global
growth at 3.4% and 3.6% for 2017 and 2018, respectively, largely
due to the projected pickup in the emerging markets and gradual
normalization in a number of large economies. For Emerging and
Developing Asia, the IMF increased its growth forecast to 6.4% from
6.3% in 2017 and maintained 6.3% for 2018 due to continued policy
support in China offset by the effects of a cash shortage in India,
weaker private investment in Indonesia and a slowdown of
consumption in Thailand. The IMF's forecasts for China's growth
increased to 6.5% from 6.2% in 2017 and was maintained at 6.0% for
2018 and for India decreased to 7.2% from 7.6% for 2017 while
maintaining 7.7% for 2018.
During the quarter, Symphony announced its entry into the
education sector with a joint venture to operate a school in
Bangkok, Thailand under licensing from Wellington College UK. The
school will cater to over 1,500 students aged 2-18 when complete.
To support this joint venture investment, Minuet sold a portion of
its land where the new school will be situated. Minuet additionally
sold a portion of land to a listed Thai property developer.
Symphony's listed investments that include Minor International
Pcl ("MINT"), IHH Healthcare Berhad ("IHH"), and Parkway Life Real
Estate Investment Trust ("PREIT") continue to see growth. MINT
announced three new hotel openings under the Anantara brand in Sri
Lanka and Oman. IHH announced a strategic partnership with Taikang
Insurance Group to accelerate its China strategy. PREIT divested
four nursing homes in the Osaka prefecture in Japan which is part
of its strategic intent to rebalance and enhance the overall
resiliency of its Japan portfolio.
Symphony's unlisted lifestyle investments that include the
Christian Liaigre Group ("CLG"), Wine Connection Group ("WCG"), and
C Larsen continue to focus on building their operations, while the
Desaru Amanresorts development is currently ongoing.
Symphony continues to support the management teams of its
portfolio companies and continues to evaluate several opportunities
to grow or enhance its portfolio.
COMPANY UPDATE
Symphony's listed investments accounted for 71.4% of NAV at 31
December 2016 (or US$0.872 per share), which is down from 73.5% of
NAV at 30 September 2016. On a per share basis, the value of
Symphony's unlisted investments (including property) comprised a
further 29.1% of Symphony's NAV (or US$0.356 per share), while the
remaining (0.5%) of NAV (or (US$0.006) per share) represented
temporary investments.
Symphony's share price continued to trade at a discount to NAV
in 4Q16. At 31 December 2016, Symphony's share price was US$0.80,
representing a discount to NAV per share of 34.3%.
As of 31 December 2016, the sum of Symphony's temporary
investments (which includes cash net of working capital) and listed
investments amounted to US$458.0 million, or US$0.866 per share.
Symphony's share price on the same date represented a discount of
7.3% 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 saw decreases in EBITDA and net profit.
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 December
2016 was US$336.0 million down from US$378.6 million at 30
September 2016. The change was primarily due to a decrease in the
share price of MINT to THB 35.75 from THB 39.00 and a 3.2% decrease
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 December 2016.
The value of Symphony's interest at 31 December 2016 was US$76.7
million based on an independent third party valuation on the same
date. The change in value from US$84.5 million at 30 September 2016
is predominantly due to a depreciation of the Thai baht and partial
realisation of land by Minuet and subsequent distribution to
Symphony of US$13.7 million, which was partially offset by an
increase in value of land.
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 and net
property income by 5.4% and 4.0% to S$27.7 million and S$25.6
million, respectively, in 4Q16 year-over-year. The increase was
primarily due to higher rent from the Singapore properties,
appreciation of the Japanese Yen, and net income hedges.
In December, PREIT completed the divestment of four nursing home
properties in Japan. Subsequent to quarter end, PREIT pre-emptively
termed out all existing long-term debts with no immediate
refinancing need till 2019, bringing the weighted average debt term
to maturity to 3.6 years from 3.2 years. In February 2017, PREIT
acquired five properties in Japan with a net property yield of
6.9%.
PREIT's 2016 year-end portfolio stands at 44 properties. The
portfolio includes 39 properties in Japan, three in Singapore and
strata titled units/lots within Gleneagles Medical Centre, Kuala
Lumpur, Malaysia.
As at 31 December 2016, PREIT had a gearing ratio of 36.3%,
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 December 2016, the fair value of Symphony's investment
in PREIT was US$60.5 million, compared to US$70.9 million at 30
September 2016. The change is due to a decrease in the share price
of PREIT to SGD 2.35 from SGD 2.59, a depreciation of the Singapore
dollar by 6.1%, and the sale of 54,000 shares.
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 in 2015. 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 November, IHH
announced a strategic partnership with Taikang Insurance Group to
leverage the strengths of both companies in the areas of healthcare
and insurance to drive growth in China.
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 December 2016, the fair value of Symphony's investment in
IHH was US$54.9 million down from US$59.2 million at 30 September
2016. The change is primarily due to a weakening of the Malaysian
ringgit by 8.4% partially offset by an increase in the share price
to MYR 6.34 from MYR 6.31 during the quarter.
Property Joint Venture in Malaysia: Symphony 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.
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 December 2016 was US$21.4 million, which
compares to US$23.3 million at 30 September 2016. The change in
value is predominantly due to a decrease of the Malaysian ringgit
by 8.4% 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 value of SG Land at 31 December 2016 was
US$10.0 million based on an independent third party valuation at 31
December 2016. The change from US$10.8 million at 31 December 2016
is due to a 3.2% decrease of the Thai baht and a reduced lease term
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.
Update: The consortium is working closely with management to
support the business plan and assist with initiatives to create
incremental value for stakeholders. CLG is valued at more than 5%
of NAV but due to strategic reasons, specific valuation information
is not disclosed.
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 expect visitor numbers to
continue to increase and drive more demand and higher prices for
vacation properties in the area. The joint venture continues to
evaluate options with respect to the property site in order to
maximize profits for its shareholders.
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 the tough economic environment and uncertainty
in Thailand, C Larsen continued to benefit strong growth in sales
orders, revenue and cash flow, which has been driven by a focus on
new products, superior service, and solutions to ultra high-net
worth customers. As part of its diversification strategy, C Larsen
opened its second franchise of the Clinton Street Baking Company in
Bangkok, which follows the 2015 opening in Singapore.
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 increased the number of outlets in its portfolio to
76 at the end of 2016. There have been strong headwinds in the food
and beverage sector in the markets that WCG operates, but the
business has seen strong improvement during the latter half of
2016, particularly in Singapore. Management is currently focused on
increasing efficiency and exploring additional outlet openings. We
expect the overall environment to continue to improve in WCG's core
markets.
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 quarter, 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.
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 several
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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