TIDMSIHL
RNS Number : 6915V
Symphony International Holdings Ltd
07 November 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
7 November 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 September
2017 was US$574,996,522 and NAV per share was US$1.1669. This
compares to NAV and NAV per share at 30 June 2017 of US$636,946,206
and US$1.2443, respectively. On a fully-diluted basis (adjusting
for in-the-money vested options), the NAV per share was US$1.1458
on the same date
-- The change in NAV and NAV per share was predominantly due to
an extraordinary dividend payable of US$60.3 million, equivalent to
10.00 cents per share, which was announced on 22 September 2017
-- In addition to these factors, NAV per share benefited during
Q3 2017 from the purchase and cancellation of 3.6% (19.2 million
shares) of Symphony's shares outstanding as at December 31, 2016
through the share buyback program announced in January 2017
-- Symphony's share price continued to trade at a discount to
NAV in 3Q17. At 30 September 2017, Symphony's share price was
US$0.87, representing a discount to NAV per share of 25.4% which
compares to 33.1% at 30 June 2017
-- During 3Q17, Symphony made a partial exit of its interest in
MINT to take advantage of the higher average trading price with the
sale of 72.4 million shares and 16.6 million warrants (to subscribe
for 1.1 ordinary shares), which generated proceeds (net of costs)
of approximately US$87.7 million. In addition, Symphony exited its
residual interest in PREIT during the quarter with the sale of 12.8
million units that generated proceeds (net of costs) for US$25.2
million. The sales generated attractive risk adjusted returns,
which reaffirms the Company's investment thesis
Anil Thadani, Chairman of Symphony Asia Holdings Private Limited
and a Director of Symphony, said:
"World financial markets continued to strengthen in conjunction
with stronger economic sentiment despite US dollar weakness and
geopolitical uncertainty. Our ongoing share buyback program and
dividend policy has reduced the discount between the SIHL's share
price and NAV per share. During 2017 shareholders will have
received dividends of 13.50 cents per share and the company
repurchased a total of 41.2 million shares. The share price
discount narrowed from 41.7 percent on 31 March 2014 to 25.4
percent on September 30, 2017. We continue our efforts to increase
the value of our portfolio companies by active participation
through the Boards, M&A activity and financial advice.
Simultaneously, we continue to evaluate new investment
opportunities."
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
Global financial markets continued to gain in Q3 2017 driven by
strong macroeconomic data and corporate reporting season in many
markets. The strong results overshadowed political and geopolitical
uncertainty and natural disasters, particularly associated with
policies of the current US administration, posturing related to
North Korea as well as damage caused by hurricanes affecting the US
and parts of South America.
In October, the International Monetary Fund ("IMF") released its
revised economic forecasts. The IMF increased its forecast for
global output growth by 10 basis points to 3.6% and 3.7% for 2017
and 2018, respectively, as growth continues to be supported by a
benign global financial environment and recovery in advanced
economies. For Emerging and Developing Asia, the IMF held steady
for 2017 and 2018 output growth at 6.5% due to a pickup in global
trade, and both internal and external demand. As a result, the
IMF's forecasts for China's output growth increased to 6.8% from
6.7% and to 6.5% from 6.4% for 2017 and 2018, respectively, but
India's output estimates decreased to a growth rate of 6.7% from
7.2% and 7.4% from 7.7% for 2017 and 2018, respectively, due to
lingering effects from the de-monetization policy in November 2016
and uncertainty related to the newly-introduced GST tax.
As part of an initiative to narrow the discount that Symphony's
share price trades to NAV per share, Symphony announced a share
buyback program in the first quarter of 2017 with the intention to
target the acquisition of at least 10% of its shares outstanding.
As at 2 November 2017, Symphony had acquired a total of 41.2
million shares, or approximately 7.8% of shares outstanding at 31
December 2016, which were subsequently cancelled. With the same
objective, Symphony introduced a dividend policy in 2014 and during
Q3 2017 announced an extraordinary dividend of 10.0 cents per
share. This distribution brings the total dividends paid during
2017 to 13.5 cents per share.
During 3Q17, Symphony made a partial exit of its interest in
MINT to take advantage of the higher average trading price with the
sale of 72.4 million shares and 16.6 million warrants (to subscribe
for 1.1 ordinary shares), which generated proceeds (net of costs)
of approximately US$87.7 million. In addition, Symphony exited its
residual interest in PREIT during the quarter with the sale of 12.8
million units that generated proceeds (net of costs) for US$25.2
million. The sales generated attractive risk adjusted returns,
which reaffirms the Company's investment thesis.
Symphony continues to support the management teams of its
portfolio companies and to evaluate opportunities to grow and
optimize its portfolio.
COMPANY UPDATE
Symphony's listed investments accounted for 65.4% of NAV at 30
September 2017 (or US$0.763 per share), which is down from 75.5% of
NAV at 30 June 2017. The decrease is predominantly due to the sale
of 72.4 million Minor International Plc ("MINT") shares, 16.6
million MINT warrants (exercisable into ordinary MINT shares), and
12.8 million Parkway Life Real Estate Investment Trust ("PREIT")
units, which cumulatively generated proceeds (net of costs) of
US$112.9 million. On a per share basis, the value of Symphony's
unlisted investments (including property) comprised a further 33.1%
of Symphony's NAV (or US$0.387 per share), while the remaining 1.5%
of NAV (or US$0.017 per share) represented temporary
investments.
Symphony's share price continued to trade at a discount to NAV
in 3Q17. At 30 September 2017, Symphony's share price was US$0.87,
representing a discount to NAV per share of 25.4% which compares to
33.1% at 30 June 2017.
The share buyback programme initiated earlier this year together
with the dividend policy that began in 2014 has had a positive
impact on Symphony's share price by narrowing the discount that it
trades to NAV per share. Symphony's share price traded at a 25.4%
discount to NAV per share at 30 September 2017, which compares to
34.3% prior to the initiation of the share buyback programme and
41.7% on the date of the announcement of the dividend policy.
Symphony's share price has appreciated by 25.4% from the date
immediately preceding the dividend announcement on 22 September
2017 till 3 November 2017 (inclusive).
As the volume weighted average closing price of Symphony's
shares for the trading days over the three months prior to 30
September 2017 represents a discount of 27.7% to the 30 September
NAV per share, there is no need for the Directors to put a
resolution to shareholders as provided for in Part 1, sub-section 5
on page 69 of the Rights Issue Prospectus dated 4 October 2012.
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 19,896 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 2,037 restaurants (comprising 1,031 equity-owned
outlets and 1,006 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 339
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 2Q17 year-over-year. Excluding one-time
gains and provisions, revenue, EBITDA, and net profit increased by
5%, 5%, and 24%, respectively during the period. The increase is
attributable to operational performance and multi-brand strategy at
the hotel and restaurant businesses despite a challenging business
environment.
MINT's hotel & mixed-use business grew core revenues by 8%
in 2Q17 year-over-year, led by performance in Thailand and Brazil
hotels, strong sales of Anantara Vacation Club villas and
consolidation of the Zambia properties in July 2016.
The mixed-use business, which includes property development
operations and plaza and entertainment, saw a decrease in revenues
in 2Q17 of 4%. Real estate development revenue decreased by 4% due
to the absence of sales at Layan Residences offset by an increase
in membership by 22% at the Anantara Vacation Club, along with a 3%
decrease in plaza and entertainment revenue due to soft performance
at Royal Garden Pattaya.
In 2Q17, MINT's total number of restaurants reached 2,037,
representing a net increase of 20 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 2Q17 increased by 5.7% year-over-year due to an 8% store
expansion.
The fair value of Symphony's investment in MINT at 30 September
2017 was US$313.4 million compared to US$393.7 million at 30 June
2017. The change was primarily due to the sale of 72.4 million
shares and 16.6 million warrants (to subscribe to 1.1 ordinary
shares each), which generated proceeds (net of costs) of
approximately US$87.7 million. These sales were partially offset by
a slight increase in the share price of MINT to THB 40.50 from THB
40.25 and an 1.9% appreciation in the onshore rate of 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 30 September 2017.
The fair value of Symphony's interest at 30 September 2017 was
US$81.4 million based on an independent third party valuation at 30
June 2017. The change in value from US$80.2 million at 30 June 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, 45 properties in Japan and
strata titled units / lots in Malaysia. Established by Parkway
Holdings Limited, PREIT is among the largest listed healthcare
REITs in Asia by asset size with a total portfolio size of S$1.7
billion. Symphony invested in the initial public offer of PREIT
units in August 2007, acquiring a 6.36% interest for US$33.8
million.
Update: During the third quarter of 2017, Symphony exited its
residual interest in PREIT. Beginning in July 2016, Symphony sold
units of PREIT in the market through an orderly sale process that
was completed on 22 September 2017. The sale of PREIT units
resulted in Symphony exiting its entire interest and realizing
proceeds (net of costs) of US$70.3 million. Since making its
initial investment, Symphony has received additional proceeds in
the form of dividend income from PREIT of US$26.8 million. The
annualized return for this investment (including dividends) is
14.4%. The sale proceeds and dividends received equated to 2.9
times the original cost of the investment.
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 35,000 people and operate over 10,000
licensed beds in 50 hospitals in 10 countries worldwide.
Update: IHH reported 2Q17 revenue growth of 12% to MYR2.8
billion along with EBITDA and core net profit declines of 3% and
54%, respectively, to MYR0.5 billion and MYR0.1 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, increased revenue intensity across all home
markets, and ramp up of newly opened hospitals in March 2017. The
acquisition of Tokuda Group and City Clinic in Bulgaria in June
2016 also contributed to revenue. EBITDA and core net profit
decreased, respectively, due to start-up costs from the newly
opened Gleneagles Hong Kong and Acibadem Altunizade Hospitals
during the quarter, and higher depreciation and finance costs from
these hospitals.
Revenues at Parkway Pantai hospitals grew 14% in 2Q17
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 2Q17 by 10% due to
continued ramp up of Acibadem Atakent and Acibadem Taksim
hospitals, contribution of new assets in Bulgaria, and organic
growth.
At 30 September 2017, the fair value of Symphony's investment in
IHH was US$52.9 million up from US$52.0 million at 30 June 2017.
The change is primarily due to an increase in the Malaysian ringgit
of 1.7%. The share price remained at MYR 5.75 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 September 2017 was valued at US$22.8
million, which compares to US$22.6 million at 30 June 2017. The
change in value is predominantly due to an increase of the
Malaysian ringgit by 1.7% during the quarter. Due to delays with
the contractor, the project is ongoing and is now expected to be
soft-launched in 2Q18.
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 September
2017 was US$11.1 million based on an independent third party
valuation at 30 June 2017. The change in value is due to an
appreciation of the Thai baht and an increase in 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.
Update: Orders in the YTD 2017 period are higher than the same
period a year earlier, but the business continues to perform below
expectations. This is due to the delay of some larger orders
expected for Q3 2017, which will impact revenue recognition in the
current year, and the lower conversion of open orders in some
showrooms. The management and shareholders continue to lay a strong
foundation to expand future business, particularly in Asia, which
has had some impact on EBITDA. Early positive signs reaffirming
this strategy have been new projects that were confirmed in early
Q4 2017 and which will contribute more meaningfully to the
performance of the business in 2018 and thereafter.
Property Joint Venture in Japan: 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. As the 2017/2018 ski season begins, new facilities and
infrastructure projects have been announced, more recently
including an international medical clinic, to cater to the growing
number of international visitors to the area. We continue to
evaluate the advantages of a development versus a 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: During the quarter, the Residential segment benefited
from increased pricing in Bangkok's luxury market and is expected
to perform well into 2018 while Outlet's strong backlog in 2016
continues to benefit C Larsen. The Kitchen segment is expected to
rebound in 2018 due to the strong backlog of projects. CSB should
benefit in 2018 from a key hire, while the new multimedia
integration segment will refocus its strategy on the higher value
luxury home market.
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 and bursar, that will assist in developing the
operational team. There have been a number of high quality academic
applicants to date, which is positive given the early stage of
development of the project.
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
78 outlets in Singapore, Thailand, and Malaysia.
Update: WCG continued to see overall growth in sales and cost
savings for H1 2017 year-over-year, which have contributed to
higher absolute revenue and EBITDA and EBITDA margins. Despite this
improvement, Management does see some headwinds in Singapore and
Thailand and continue to focus on opening strategic new outlets to
further build scale in the region.
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. In September 2017, the scope of this portfolio was
expanded to cover other sectors besides healthcare services.
SUBSEQUENT EVENTS
Share Buyback: The Company announced on 16 January 2017 the
initiation of a share Buyback Program with the intention to target
the acquisition of at least 10% of its shares in issue.
Subsequent to quarter end as of 2 November 2017, the Company
acquired and cancelled an additional 4.5 million shares at a total
cost of US$3.7 million. This brings the total shares acquired and
cancelled since the start of the buyback program to 7.8% 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 to evaluate opportunities to
grow and optimize 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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