TIDMSIHL
RNS Number : 2934N
Symphony International Holdings Ltd
08 August 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
8 August 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 30 June 2017
was US$636,946,206 and NAV per share was US$1.2443. This compares
to NAV and NAV per share at 31 March 2017 of US$663,184,528 and
US$1.2806, respectively
-- The change in NAV was predominantly due to cash dividends
paid to shareholders and fair value adjustments to unlisted
investments during the quarter, which were partially offset by an
increase in the share price of Minor International Pcl ("MINT") and
an appreciation in the Thai baht, Malaysian ringgit and Singapore
dollar
-- In addition to these factors, NAV per share was positively
impacted by the purchase and cancellation of 1.3% of Symphony's
shares outstanding during 2Q17 (6.6 million shares) through the
share buyback program announced in January 2017
-- Symphony's share price continued to trade at a discount to
NAV in 2Q17. At 30 June 2017, Symphony's share price was US$0.8325,
representing a discount to NAV per share of 33.1% which compares to
33.6% at 31 March 2017
-- Temporary investments (which includes cash net of working
capital) and listed investments amounted to US$456.4 million, or
US$0.892 per share. Symphony's share price on the same date
represented a discount of 6.6% to temporary and listed
investments
-- During 2Q17, Symphony partially exited its investments in
PREIT and MINT with the sale of 6.7 million units and 4.2 million
shares, respectively. The sales of PREIT units and MINT shares
generated proceeds of US$12.1 million and US$5.1 million,
respectively. Symphony also partially exited an investment in a
structured transaction, bringing the amount outstanding related to
this investment to less than 1% of NAV
Anil Thadani, Chairman of Symphony Asia Holdings Private Limited
and a Director of Symphony, said:
"Asian financial markets strengthened during the second quarter
of 2017 despite ongoing geopolitical uncertainty and 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."
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 second quarter of 2017 was marked by continued geopolitical
volatility and US Dollar weakness together with improving economic
conditions in many major world markets.
In April, North Korea continued to conduct missile tests that
have caused widespread concern in Asia, particularly in Japan and
South Korea, despite the limited impact in regional stock markets.
The US and China have attempted to reign in North Korea but so far
with limited apparent success. In Europe, Emmanuel Macron won the
French presidential election by defeating the populist and
far-right candidate and is expected to usher in a business-friendly
and pro-EU climate. The United Kingdom's Conservative Party
announced a snap election, which ultimately weakened its
coalition's political power ahead of the current Brexit
negotiations with the European Union.
In May, Donald Trump's political agenda continued to weigh on
the economic environment in and outside the US. The America-first
related policies have led to the US withdrawal from the
Trans-Pacific Partnership trade agreement with Asian nations. Asian
nations vowed in May to press on lacking US participation.
In June, Japan announced it would keep interest rates on hold
with the overnight interest rate maintained at -0.1% and would
continue with asset purchases to help it achieve its goal of a 2%
inflation target following the announcement of an increase in Q1
GDP to 1.0%. The US Fed in the same month announced that it would
increase the target Fed Funds rate by 25 basis points to 1.25% and
maintained its forecast for one more rate hike later in 2017. It
will also reduce its balance sheet by letting mortgage-backed
securities expire at maturity instead of reinvesting the proceeds,
starting at US$10 billion per month and rising to $50 billion per
month. This is expected to start the tightening process within the
current regime of loose US monetary policy.
Despite the concerns over trade and geopolitical security, the
economic outlook is positive. In July, the International Monetary
Fund ("IMF") released its revised economic forecast. The IMF held
steady on its forecast for global output growth at 3.5% and 3.6%
for 2017 and 2018, respectively, as growth in global trade and
industrial production remained well above 2015-2016 rates despite
retreating from the very strong pace registered in late 2016 and
early 2017. For Emerging and Developing Asia, the IMF increased its
output growth forecast to 6.5% from 6.4% for both 2017 and 2018 due
to a pickup in global trade and strengthening domestic demand, and
China's policy easing and supply-side reforms inclusive of
anticipated delays to fiscal adjustments. As a result, the IMF's
forecasts for China's output growth increased to 6.7% from 6.6% and
to 6.4% from 6.2% for 2017 and 2018, respectively, but for India
output estimates were maintained at growth of 7.2% and 7.7% for
2017 and 2018, respectively.
In accordance with the dividend policy introduced in 2014,
Symphony paid a dividend during the 2Q17 of approximately US$22
million that comprised an ordinary and extraordinary dividend of
2.50 cents and 1.0 cents per share, respectively. In addition and
also as part of an initiative to narrow the discount that Symphony'
share price trades to NAV per share, Symphony announced a share buy
back program in the first quarter with the intention to acquire at
least 10% of its shares on issue on an annual basis. By the end of
2Q17, Symphony had acquired 17.6 million shares, or approximately
3.3% of shares outstanding at 31 December 2016, which were
subsequently cancelled.
During 2Q17, Symphony partially exited its investments in PREIT
and MINT with the sale of 6.7 million units and 4.2 million shares,
respectively. The sales of PREIT units and MINT shares generated
proceeds of US$12.1 million and US$5.1 million, respectively.
Symphony also partially exited an investment in a structured
transaction, bringing the amount outstanding related to this
investment to less than 1% of NAV.
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 75.5% of NAV at 30
June 2017 (or US$0.939 per share), which is up from 68.9% of NAV at
31 March 2017. The increase is predominantly due to an increase in
the share price of MINT and the strengthening of the Thai baht,
Singapore dollar, and Malaysian ringgit during 2Q17 offset by the
sale of 6.7 million shares of Parkway Life Real Estate Investment
Trust ("PREIT") and 4.2 million shares of Minor International Pcl
("MINT") which generated cash proceeds of approximately US$12.1
million and US$5.1 million, respectively. On a per share basis, the
value of Symphony's unlisted investments (including property)
comprised a further 28.3% of Symphony's NAV (or US$0.353 per
share), while the remaining (3.8%) of NAV (or (US$0.047) per share)
represented temporary investments.
Symphony's share price continued to trade at a discount to NAV
in 2Q17. At 30 June 2017, Symphony's share price was US$0.8325,
representing a discount to NAV per share of 33.1% which compares to
33.6% at 31 March 2017.
As of 30 June 2017, the sum of Symphony's temporary investments
(which includes cash net of working capital) and listed investments
amounted to US$456.4 million, or US$0.891 per share. Symphony's
share price on the same date represented a discount of 6.6% 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 69 hotels and manages 86 other hotels and serviced suites
with 19,794 rooms. In addition to owning hotels under the Four
Seasons, St. Regis and Marriott brands, MINT owns and manages
hotels in 24 countries under its own brand names that include
Anantara, Oaks, Elewana, AVANI, Per AQUUM and Tivoli. MINT also
owns and operates 2,017 restaurants (comprising 1,026 equity-owned
outlets and 991 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 329
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 core revenue, EBITDA, and net profit grow on a
consolidated basis during 1Q17 year-over-year. Excluding one-time
gains and provisions, revenue, EBITDA, and net profit increased by
11%, 14%, and 17%, respectively during the period. The increase is
attributable to outstanding performance at the hotel and restaurant
businesses inclusive of recovery in Thailand operations after the
mourning period in the fourth quarter.
MINT's hotel & mixed-use business grew core revenues by 19%
in 1Q17 year-over-year, led by a rebound in Thailand and Brazil
hotels following the improving local macro conditions, stable
growth of Oaks in Australia, and exceptional performance of the
real estate business.
The mixed-use business, which includes property development
operations and plaza and entertainment, saw an increase in revenues
in 1Q17 of 56%. Real estate development revenue increased by 62%
due to the sale of three villas, five condominium units, and an
increase in membership by 18% at the Anantara Vacation Club, along
with a 12% decrease in plaza and entertainment revenue due to soft
performance at Royal Garden Pattaya.
In 1Q17, MINT's total number of restaurants reached 2,017,
representing a net increase of 21 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 1Q17 increased by 8.2% year-over-year due to stellar
performance in Thailand and China.
The fair value of Symphony's investment in MINT at 30 June 2017
was US$393.7 million compared to US$359.2 million at 31 March 2017.
The change was primarily due to an increase in the share price of
MINT to THB 40.25 from THB 36.75 and a 1.2% appreciation in the
onshore rate of the Thai baht during the quarter, offset by the
sale of 4.2 million shares which generated US$5.1 million.
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 30 June 2017 was US$80.2
million based on an independent third party valuation. The change
in value from US$79.4 million at 31 March 2017 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 and net
property income by 1.1% and 1.4%, respectively, at S$27.7 million
and S$25.9 million for 2Q17 year-over-year driven by the rent
contribution from properties acquired in the first quarter and the
upward minimum guaranteed rent revision of the Singapore hospital
properties by 1.27%.
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 with an
expected net property yield of 6.9%.
PREIT's Q2 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 30 June 2017, PREIT had a gearing ratio of 37.4%, 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 30 June 2017, the fair value of Symphony's investment in
PREIT was US$24.9 million, compared to US$35.1 million at 31 March
2017. The change is due to a partial sale comprising 6.7 million
shares offset by an increase in the share price of PREIT to SGD
2.68 from SGD 2.52 and a 1.5% 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 50 hospitals in 10 countries worldwide.
Update: IHH reported 1Q17 revenue growth of 8% to MYR2.7 billion
and EBITDA and net profit declines of 8% and 15%, respectively, to
MYR0.6 billion and MYR0.2 billion excluding exceptional items
compared to the same period a year earlier. The improvement in
revenue is due to sustained organic growth in IHH's existing
hospitals, ramp up of its newly opened hospitals in 2015, and the
acquisition of Tokuda Group and City Clinic in Bulgaria in June
2016. EBITDA and net profit decreased due to start-up costs from
the newly opened Gleneagles Hong Kong and Acibadem Altunizade
Hospitals 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 8% in 1Q17
year-over-year to MYR1.7 billion, due to sustained organic growth
for existing hospitals and continued ramp up of Mount Elizabeth
Novena Hospital in Singapore and newly opened hospitals and assets
acquired in 2015. Acibadem's revenues grew in 1Q17 by 9% due to
continued ramp up of Acibadem Atakent and Acibadem Taksim
hospitals, contribution of new assets in Bulgaria, and organic
growth.
At 30 June 2017, the fair value of Symphony's investment in IHH
was US$52.0 million down from US$52.6 million at 31 March 2017. The
change is primarily due to a decrease in the share price to MYR
5.75 from MYR 5.99 offset by an increase in the Malaysian ringgit
of 3.0% 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 30 June 2017 was valued at US$22.6 million,
which compares to US$21.5 million at 31 March 2017. The change in
value is predominantly due to an increase of the Malaysian ringgit
by 3.0% during the quarter. The project is ongoing and is expected
to be soft-launched in 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 30 June 2017
was US$10.7 million based on an independent third party valuation.
The decline in value from 31 March 2017 due to the reduced lease
term was mostly offset by the strengthening of the Thai baht by
1.2% during the quarter, so the change in value has been
marginal.
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.
Update: EBITDA has been impacted by performance below
expectations and increased cost structures resulting from actions
that management and shareholders have taken to lay a foundation for
the expansion of the business, including in Asia. Orders have
recently improved from the same period in 2016 and should benefit
sales and EBITDA during the latter half of 2017. Barring any
unforeseen circumstances, management is confident the business will
continue to improve with the current stronger project pipeline,
improved showroom orders and a strengthened corporate
organisation.
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. Additional ski lifts and ski lift upgrades have been
announced by the resorts surrounding the development site, which is
indicative of more infrastructure being developed to cope with the
growing number of visitors to the area. 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 ("CSB") F&B outlets
in selected Asian markets.
Update: C Larsen continues to see strong overall growth in its
core business with particular strength in its residential division
due to an increasing and broad range of client solutions. The
Outlet, Office, and Kitchen divisions experienced mixed results due
to timing of client deliveries. The relatively new F&B division
sees good core demand and repeat clients for CSB in Singapore and
Bangkok.
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: Construction permits for the school have been obtained
and structural work is in progress and is expected to be complete
(including interiors) by June 2018. The joint venture has secured
development financing and completed key faculty hires, including a
headmaster that will assist in developing the operational team.
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 overall growth in sales and cost
savings YTD year-over-year, which have contributed to higher
absolute revenue and EBITDA and EBITDA margins. Outlets in
Singapore continue to see strong same-store-sales growth, but
performance of outlets in Thailand have been mixed. Revenue from
outlets in Malaysia continue to grow and have been ahead of
budget.
Structured Transaction: In February 2014, Symphony completed a
structured transaction, which provides a minimum return of 15% per
annum. Following the repayment of interest and part of the
principal balance during the second quarter of 2017, the amount
outstanding was reduced to less than 1% of NAV.
Global Healthcare Services Portfolio: During the fourth quarter
of 2016, SIHL invested in a portfolio of listed healthcare
companies. This investment represents a first step towards gaining
diversified exposure to the healthcare sector using a portfolio
approach and the scope may be expanded in the future to cover other
sectors as well.
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.
Subsequent to quarter end as of 4 August, 2017, the Company
acquired and cancelled an additional 13.6 million shares at a total
cost of US$11.5 million. This brings the total shares acquired and
cancelled since the start of the buyback program to 5.9% of shares
outstanding at 31 December, 2016.
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
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