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Symphony International Holdings Limited announced its interim financial results for the six months ended 30 June 2022, reporting a Net Asset Value of US$0.94 per share and a loss for the period of US$6.385 million. As of 30 June 2022, cash and cash equivalents amounted to US$9.91 million. Subsequent to the period end, Symphony sold approximately 1.0 million Minor International Public Company Limited (MINT) shares for US$0.94 million and completed the sale of approximately 35% of its ASG Hospital Private Limited securities for US$17.3 million.
| Date | 1 Sept 2022 |
| Time | 07:00:07 |
| Category | Results |
| ID | 8398X |
Not for Distribution, directly or indirectly, in or into the United States or any jurisdiction in which such distribution would be unlawful.
1 September 2022
Symphony International Holdings Limited
Interim Financial Results for the six-month period ended 30 June 2022
Symphony International Holdings Limited ("SIHL", the "Company" or "Symphony") announces the interim results for the six months ended 30 June 2022. The condensed interim financial statements of the Company and its subsidiaries have been prepared in accordance with IAS 34 Interim Financial Reporting and have not been audited or reviewed by the auditors of the Company.
Introduction
The Company is an investment company initially incorporated as a limited liability company under the laws of the British Virgin Islands on 5 January 2004. The Company voluntarily re-registered itself as a BVI Business Company on 17 November 2006. The Company's investment objectives are to increase the aggregate net asset value of the Company ("NAV") calculated in accordance with the Company's policies through strategic longer-term investments in consumer-related businesses, primarily in the healthcare, hospitality, lifestyle (including branded real estate developments), logistics and education sectors, and through investments in special situations and structured transactions, which have the potential to generate attractive returns and to enhance the NAV.
The Company was admitted to the Official List of the UK Listing Authority on 3 August 2007 under Chapter 14 of the UK Listing Rules and its securities were admitted to trading on the London Stock Exchange's main market for listed securities on the same date.
Symphony's Investment Manager is Symphony Asia Holdings Pte. Ltd. (the "Investment Manager" or "SAHPL"). The Company has entered into an Investment Management Agreement with the Investment Manager. SAHPL's licence for carrying on fund management in Singapore is restricted to serving only accredited investors and/or institutional investors. Symphony is an accredited investor.
As at 30 June 2022, the issued share capital of the Company was US$409.70 million (31 December 2021: US$409.70 million) consisting of 513,366,198 (31 December 2021: 513,366,198) ordinary shares.
Net Asset Value
Symphony's NAV is the sum of its cash and cash equivalents, temporary investments, the fair value of unrealised investments (including investments in subsidiaries, associates and joint ventures) and any other assets, less any other liabilities. The unaudited financial statements contained herein may not account for the fair value of certain unrealised investments. Accordingly, Symphony's NAV may not be comparable to the net asset value in the unaudited financial statements. The primary measure of SIHL's financial performance and the performance of its subsidiaries will be the change in Symphony's NAV per share resulting from changes in the fair value of investments.
The NAV attributable to the ordinary shares on 30 June 2022 was US$0.94 (30 June 2021: US$0.83) per share. This represented a 1.24% decrease over the NAV per share of US$0.95 at 31 December 2021. The change in NAV from 31 December 2021 to 30 June 2022 is due to a decrease in the value of unlisted investments, predominantly due to a depreciation in Asian currencies relative to the US dollar and weaker market valuation parameters used in the valuation of investments, which was partially offset by an increase in the share price of Minor International Public Company Limited.
Portfolio Overview
The following is an overview of the Company's portfolio as at 30 June 2022:
HOSPITALITY
Minor International Public Company Limited ("MINT") is a diversified consumer business and is one of the largest hospitality and restaurant companies in the Asia-Pacific region. Anil Thadani (a Director of the Company) currently serves on MINT's board of directors. Sunil Chandiramani (a Director of the Company) currently serves as an advisor to MINT's board of directors. MINT is a company that is incorporated under the laws of Thailand and is listed on the Stock Exchange of Thailand.
MINT is one of the largest hospitality and restaurant companies in the Asia Pacific region. MINT is a hotel owner, operator and investor with a portfolio of over 520 hotels under the Anantara, Avani, Oaks, Tivoli, NH Collection, NH Hotels, nhow, Elewana, Marriott, Four Seasons, St. Regis, Radission Blu and Minor International brands in 56 countries across Asia Pacific, the Middle East, Africa, the Indian Ocean, Europe, South and North America. MINT is also one of Asia's largest restaurant companies with over 2,400 outlets system-wide in 23 countries under The Pizza Company, The Coffee Club, Benihana, Swensen's, Sizzler, Dairy Queen, Burger King, Riverside, Thai Express, Coffee Journey and Bonchon. MINT is one of Thailand's largest distributors of lifestyle brands, with over 300 outlets, and contract manufacturers. Its brands include Anello, BergHOFF, Bodum, Bossini, Charles & Keith, Esprit, Joseph Joseph, Radley, Zwilling J.A. Henckels and Minor Smart Kids.
As at 30 June 2022, the Company's gross cost in MINT was approximately US$82.82 million (31 December 2021: US$82.82 million). The net cost on the same date, after deducting partial realisations and dividends received was (US$233.57 million) (31 December 2021: (US$225.49 million)). The negative net investment cost is due to the proceeds from partial realisations and dividends being in excess of cost for this investment.
As at 30 June 2022, the market value of the Company's investment in MINT was US$68.57 million (31 December 2021: US$67.97 million). The change in value since 31 December 2021 is due to (i) the sale of 8.06 million shares that generated net proceeds of US$8.07 million and (ii) a depreciation in the onshore Thai baht rate by 5.83%, which was more than offset by an increase in the share price of MINT by 18.42% during the same period. Subsequent to 30 June 2022, Symphony sold 1.0 million MINT shares that generated net proceeds of US$0.94 million.
HEALTHCARE
ASG Hospital Private Limited ("ASG") is a full-service eye-healthcare provider with operations in India, Africa, and Nepal. ASG was co-founded in Rajasthan, India in 2005 by Dr. Arun Singhvi and Dr. Shilpi Gang. ASG's operations have since grown to 46 clinics, which offer a full range of eye-healthcare services, including outpatient consultation and a full suite of inpatient procedures (cataract, retina surgeries, Lasik, glaucoma, cornea and other complicated eye surgeries). ASG also operates an optical and pharmacy business, which is located within clinics. Symphony invested in ASG in tranches and held a 19.80% interest as at 30 June 2022.
Symphony's gross and net investment cost in ASG was US$20.67 million at 30 June 2022 (31 December 2021: US$20.67 million). The fair value of Symphony's investment at 30 June 2022 was US$48.84 million (31 December 2021: US$24.72 million), which comprises US$17.28 million received from the sale of securities subsequent to 30 June 2022 plus the value of the residual securities that were not part of an arm's length transaction in the shares of ASG. The change in value is the result of the transaction providing an available market price for valuation purposes that is higher than derived from using the comparable market multiple valuation methodology at 31 December 2021. Symphony's unconsolidated subsidiary which holds its investment in ASG entered into an agreement on 6 July to sell 34.93% of its securities held in ASG. On 18 August, the transaction completed and Symphony received after tax proceeds of US$17.28 million, representing an annualised return of approximately 38.06% on the securities sold in US dollar terms (using an average cost method).
Soothe Healthcare Pvt. Ltd. ("Soothe") was founded in 2012 and operates within the fast-growing consumer healthcare products market segment in India. With growing disposable income, the demand for consumer healthcare products is expected to grow rapidly over the coming decades. Soothe's core product portfolio includes feminine hygiene and diaper products. Symphony completed its equity investment in Soothe in August 2019 and became a significant minority shareholder in the company. Symphony subsequently made investments through convertible notes and securities in 2020, 2021 and 2022.
Symphony's gross and net investment cost in Soothe was US$12.75 million at 30 June 2022 (31 December 2021: US$8.88 million). The fair value of Symphony's investment at 30 June 2022 was US$30.50 million, which compares to US$27.86 million at 31 December 2021. The change in value is predominantly due to an increase in investment by US$3.87 million during the first half of 2022.
LIFESTYLE
The Liaigre Group ("Liaigre") was founded in 1985 in Paris and is a brand synonymous with discreet luxury, and has become one of the most sought-after luxury furniture brands, renowned for its minimalistic design style. Liaigre has a strong intellectual property portfolio and provides a range of bespoke furniture, lighting, fabric & leather, and accessories. In addition to operating a network of 27 showrooms across Europe, the US and Asia, Liaigre undertakes exclusive interior architecture projects for select yachts, hotels, and restaurants and private residences.
Symphony's gross investment cost in Liaigre was US$79.68 million at 30 June 2022 (31 December 2021: US$79.68 million). The net cost on the same date, after deducting partial realisations, was US$67.63 million (31 December 2021: US$67.63 million). The fair value of Symphony's investment at 30 June 2022 was US$37.04 million (31 December 2021: US$37.36 million). The change in fair value is due to a depreciation in Euro by 7.79% and a decrease in the median comparable market multiple used to value the business by 9.72%, which were partially offset by a 17.22% increase in earnings before interest, tax, depreciation and amortisation ("EBITDA") used to value the business for the 12-month period ended 30 June 2022 compared to the 12-month period ended 31 December 2021.
CHANINTR ("Chanintr") is a luxury lifestyle company, based in Thailand, which primarily sells several high-end U.S. and European furniture and household accessory brands. The current portfolio of furniture brands includes Christian Liaigre, Barbara Barry, Baker, Herman Miller & Minotti. In addition, Chanintr also sells Bulthaup kitchens, Puiforcat flatware, and St. Louis crystal. It also provides Furniture, Fixtures & Equipment solutions for various real estate and hotel projects. Chanintr also has the franchise to operate the Clinton Street Baking Company F&B outlets in selected Asian markets. In 2019, Chanintr launched a new program called Chanintr Residences which will showcase custom-designed luxury residences as turnkey projects.
Wine Connection Group ("WCG") is Southeast Asia's leading wine themed Food and Beverage chain with approximately 83 outlets in Singapore, Thailand and Malaysia. Founded in 1998, WCG has developed an expertise in offering affordable, high quality and exclusive wines from around the world through owned F&B outlets. Symphony invested in WCG in 2014.
LIFESTYLE/REAL ESTATE
Minuet Ltd ("Minuet") is a joint venture between the Company and an established Thai partner. The Company has a direct 49% interest in the venture and is considering several development and/or sale options for the land owned by Minuet, which is located in close proximity to central Bangkok, Thailand. As at 30 June 2022, Minuet held approximately 186.75 rai (29.88 hectares) of land in Bangkok, Thailand.
The Company initially invested approximately US$78.30 million by way of an equity investment and interest-bearing shareholder loans. Since the initial investment by the Company, Minuet has received proceeds from rental income and partial land sales. As at 30 June 2022, the Company's investment cost (net of shareholder loan repayments) was approximately US$13.13 million (31 December 2021: US$17.81 million). The fair value of the Company's interest in Minuet on the same date was US$59.38 million (31 December 2021: US$69.81 million) based on an independent third party valuation of the land plus the net value of the other assets and liabilities of Minuet. The change in value of Symphony's interest predominantly relates to the sale of land, which resulted in distributions of US$4.68 million, a depreciation in the offshore Thai baht rate by 6.30% and the termination of an agreement to sell a small parcel of land at a higher price than a third party independent valuation.
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 Millennia Tower. The two buildings in SG Land's portfolio have high occupancy rates and offer attractive rental yields. The Company holds a 49.9% interest in the venture.
The value of SG Land as at 30 June 2022 was US$4.99 million (31 December 2021: US$5.77 million) based on an independent third party valuation. The change in value from 31 December 2021 is due to reduced cash on the balance sheet of SG Land following distributions to shareholders, a reduction in the lease term used to value the asset and a 6.30% depreciation in the offshore Thai baht rate. Symphony received net distributions of US$0.79 million during the first half of 2022.
Niseko Property Joint Venture ("Niseko JV") is a property development venture that acquired land in Niseko, Hokkaido, Japan. Symphony has a 37.5% interest in this venture, which it acquired for a total investment of US$10.2 million and has to date received distributions of US$16.7 million that relate to the partial sale of land held by the venture. The Niseko JV sold 31% of the development site to Hanwha Hotels & Resorts with a further 39% to a new joint venture company that is equally held and being co-developed by the Niseko JV and Hanwha Hotels & Resorts. The Niseko JV continues to effectively hold approximately 50% of the development site, of which one third is held for future development and/or sale.
Desaru property joint venture in Malaysia ("Desaru") is 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 has developed a beachfront resort with private villas for sale on the south-eastern coast of Malaysia and that are branded and managed by One&Only Resorts ("O&O"). The hotel operations were officially launched in September 2020. The Company has a 49% equity interest in the joint venture.
Symphony invested approximately US$58.78 million in the joint venture at 30 June 2022 (31 December 2021: US$58.78 million). The fair value for this investment on the same date was US$28.27 million based on a discounted cashflow model. This compares to US$28.96 million at 31 December 2021, which was based on an independent third party valuation of the land plus the net value of other assets and liabilities of the joint venture. The change in valuation methodology was to account for the start of normalised hotel operations (following the easing of Covid-19 related movement restrictions) and initiation of marketing for the sale of branded residences.
Interest in Phuket Luxury Villa ("Phuket Villa"). Symphony held a one third interest in a luxury villa in Phuket, Thailand. Together with an effective cash payment, the Phuket Villa formed part of the settlement in June 2020 for a structured loan transaction made by Symphony in 2014. The Villa was sold in the fourth quarter of 2021. The overall annualised return and times money from the structured loan transaction (including the villa sale) is 14.44% over a period of approximately eight years and 1.94 times our cost, respectively.
EDUCATION
WCIB International Co. Ltd. ("WCIB") is a joint venture that developed and operates Wellington College International Bangkok, the fifth international addition to the Wellington College family of schools. WCIB operates a co-educational school that will ultimately cater to over 1,500 students aged 2-18 years of age when all phases are fully complete. WCIB commenced operations in August 2018 with inaugural students attending Nursery to Year 6. Symphony initially invested in the joint venture in January 2017 and has made periodic investments with its partners to facilitate ongoing development of the school for more senior year intake and working capital requirements.
Creative Technology Solutions DMCC ("CTS") is a UAE-based company that provides technology solutions to K12 schools in the UAE and the Kingdom of Saudi Arabia ("KSA"). The company was founded in 2013 to provide customized IT solutions to the education sector, including hardware, software and training. Symphony made its investment in CTS in June 2019.
LOGISTICS
Indo Trans Logistics Corporation ("ITL") was founded in 2000 as a freight-forwarding company and has since grown to become Vietnam's largest independent integrated logistics company with a network that is spread across Vietnam, Cambodia, Laos, Myanmar, and Thailand. ITL has grown to national champion status in Vietnam.
The Company acquired a significant minority interest in ITL in June 2019 for US$42.64 million and has a net cost of US$42.14 million (31 December 2021: US$42.14 million). The fair value for Symphony's interest in ITL at 30 June 2022 was US$130.99 million, which is based on an arm's length transaction in the shares of ITL that provides an available market price for valuation purposes. This compares to a fair value of US$143.99 million at 31 December 2021, which was based on comparable company market multiples.
NEW ECONOMY
In November 2019, Symphony invested in Smarten Spaces Pte. Ltd ("Smarten"), a Singapore based SaaS (Software-as-a-Service) company that provides software solutions for space management in commercial and industrial properties. Smarten was founded in 2017 by Dinesh Malkani and offers an end- to-end solution for workplace safety and flexibility on a single technology platform, to help businesses navigate the new hybrid workplace. The SaaS technology includes four key aspects - Desk Management, Workforce Rostering, Demand & Supply, Expenses & Chargeback, and Asset Management: bringing together key workforce and workplace considerations for a future-ready solution.
In September 2020, Symphony invested in August Jewellery Private Limited ("Melorra"), a Bangalore based omni-channel fast fashion Indian jewellery company that introduces a fresh collection of 75 new designs every Friday, resulting in over 300 new designs per month. Founded by Saroja Yeramilli in January 2015, Melorra adopts a minimal inventory model that uses 3-D printing technology to achieve just-in-time manufacturing to bring products to market efficiently. The company currently has 12 operational experience centers across India.
Good Capital is majority owned by brothers Rohan and Arjun Malhotra who founded Investopad in 2014 by investing their own capital into building substantial infrastructure across India (Delhi, Bangalore and Gurgaon) and creating a thriving ecosystem of technology startups. Symphony announced its investment in July 2019, and has a stake in the General Partner, Good Capital Partners ("GCP") and its first fund, Good Capital Fund I ("GCF").
In August 2021, Symphony invested in Catbus Infolabs Private Limited ("Blowhorn"), the owner of the Blowhorn platform. Blowhorn is a same-day intra-city last-mile logistics provider headquartered in Bangalore, India. The company provides seamless transportation, warehousing, and a fully technologically integrated system to manage the end-to-end supply chain process through an asset-light transportation and distributed micro-warehousing network.
In September 2021, Symphony invested in Kieraya Furnishing Solutions Private Limited ("Furlenco") a Bangalore based online residential furniture business. Founded by Ajith Karimpana in October 2012, Furlenco has a subscription-based furniture rental business; a refurbished & recycled furniture business; an appliance subscription service and Prava, which sells high-end retail furniture.
In September 2021, Symphony invested in Meesho Inc. ("Meesho"), a Bangalore based social e-commerce platform for micro-entrepreneurs and Medium and Small Enterprises ("MSME") to sell to the next 500 million Indians coming online. Founded by Vidit Aatrey and Sanjeev Barnwal in March 2016, Meesho aims to enable small businesses, including individual entrepreneurs, to succeed online by bringing a range of products and new customers onto the Meesho platform. Meesho started as a reseller-focused platform enabling millions to sell online and has now become a single ecosystem connecting sellers to consumers and entrepreneurs.
In September 2021, Symphony invested in SolarSquare Energy Private Limited ("Solar Square") a rooftop solar power company that focuses on residential homes, primarily standalone houses, gated societies, and small commercial centres. Solar Square was founded by Neeraj Jain and Nikhil Nahar in 2015; they have since been joined by Shreya Mishra to refocus the company on the consumer space. The company aims to make clean energy affordable and accessible and become the trusted brand in the space.
Cash and cash equivalents
Symphony has placed funds in certain temporary investments. As at 30 June 2022, cash and cash equivalents amounted to US$9.91 million (31 December 2021: US$8.36 million).
Outlook
There remains considerable uncertainty in financial markets due to high inflation, geopolitical tensions including the war in Ukraine and Sino-US relations, ongoing effects of Covid-19 and the more recent outbreak of monkeypox. With interest rate increases to combat inflation by the US Federal Reserve and other central banks, there is growing concern of recession as global growth slows. While we believe our businesses will be affected by global events in the short term, we remain cautiously optimistic that Symphony's portfolio companies will continue to grow given sector characteristics and concentration in faster growing developing countries in Asia, such as India, Vietnam and Thailand.
Principal Risks
Some of the risks that the Company is exposed to are described below.
The Company's and the Company's investment management team's past performance is not necessarily indicative of the Company's future performance and any unrealised values of investments presented in this document may not be realised in the future.
The Company is not structured as a typical private equity vehicle (it is structured as a permanent capital vehicle), and thus may not have a comparable investment strategy. The investment opportunities for the Company are more likely to be as a long-term strategic partner in investments, which may be less liquid, and which are less likely to increase in value in the short term.
The Company's organisational, ownership and investment structure may create certain conflicts of interests (for example in respect of the directorships, shareholdings or interests, including in portfolio companies that some of the Directors and members of the Company's investment management team may have). In addition, neither the Investment Manager nor any of its affiliates owes the Company's shareholders any fiduciary duties under the Investment Management Agreement between, inter alia, the Company and the Investment Manager. The Company cannot assume that any of the foregoing will not result in a conflict of interest that will have a material adverse effect on the business, financial condition and results of operations.
The Company is highly dependent on the Investment Manager, the Key Persons (as defined in the Investment Management Agreement) and the other members of the Company's investment management team and the Company cannot assure shareholders that it will have continued access to them or their undivided attention, which could affect the Company's ability to achieve its investment objectives.
The Investment Manager's remuneration is based on the Company's NAV (subject to minimum and maximum amounts) and is payable even if the NAV does not increase, which could create an incentive for the Investment Manager to increase or maintain the NAV in the short term (rather than the long-term) to the potential detriment of Shareholders.
The Company's investment policies contain no requirements for investment diversification and its investments could therefore be concentrated in a relatively small number of portfolio companies in the Healthcare, Hospitality, Lifestyle (including branded real estate developments), logistics and education sectors predominantly in Asia.
The Company has made, and may continue to make, investments in companies in emerging markets, which exposes it to additional risks (including, but not limited to, the possibility of exchange control regulations, political and social instability, nationalisation or expropriation of assets, the imposition of taxes, higher rates of inflation, difficulty in enforcing contractual obligations, fewer investor protections and greater price volatility) not typically associated with investing in companies that are based in developed markets.
Furthermore, the Company has made, and may continue to make, investments in portfolio companies that are susceptible to economic recessions or downturns. Such economic recessions or downturns may also affect the Company's ability to obtain funding for additional investments.
The Company's investments include investments in companies that it does not control and/or made with other co-investors for financial or strategic reasons. Such investments may involve risks not present in investments where the Company has full control or where a third party is not involved. For example, there may be a possibility that a co-investor may have financial difficulties or become bankrupt or may at any time have economic or business interests or goals which are inconsistent with those of the Company or may be in a position to take or prevent actions in a manner inconsistent with the Company's objectives. The Company may also be liable in certain circumstances for the actions of a co-investor with which it is associated. In addition, the Company holds a non-controlling interest in certain investments, and therefore, may have a limited ability to protect its position in such investments.
A number of the Company's investments are currently, and likely to continue to be, illiquid and/ or may require a long-term commitment of capital. The Company's investments may also be subject to legal and other restrictions on resale. The illiquidity of these investments may make it difficult to sell investments if the need arises.
The Company's real estate related investments may be subject to the risks inherent in the ownership and operation of real estate businesses and assets. A downturn in the real estate sector or a materialization of any of the risks inherent in the real estate business and assets could materially adversely affect the Company's real estate investments. The Company's portfolio companies also anticipate selling a significant proportion of development properties prior to completion. Any delay in the completion of these projects may result in purchasers terminating off-plan sale agreements and claiming refunds, damages and/or compensation.
The Company is exposed to foreign exchange risk when investments and/ or transactions are denominated in currencies other than the U.S. dollar, which could lead to significant changes in the net asset value that the Company reports from one quarter to another.
The Company's investment policies and procedures (which incorporate the Company's investment strategy) provide that the Investment Manager should review the Company's investment policies and procedures on a regular basis and, if necessary, propose changes to the Board when it believes that those changes would further assist the Company in achieving its objective of building a strong investment base and creating long term value for its Shareholders. The decision to make any changes to the Company's investment policy and strategy, material or otherwise, rests with the Board in conjunction with the Investment Manager and Shareholders have no prior right of approval for material changes to the Company's investment policy.
Investments in connection with special situations and structured transactions typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors' actions and market conditions, as well as general economic downturns. Investments that fall into this category tend to have relatively short holding periods and entail little or no participation in the board of the company in which such investments may be made. Special situations and structured transactions in the form of fixed debt investments also carry an additional risk that an increase in interest rates could decrease their value.
The Company's current investment policies and procedures provide that it may invest an amount of no more than 30% of its total assets in special situations and structured transactions which, although they are not typical longer-term investments, have the potential to generate attractive returns and enhance the Company's net asset value. Following the Company's investment, it may be that the proportion of its total assets invested in longer-term investments falls below 70% and the proportion of its total assets invested in special situations and structured transactions exceeds 30% due to changes in the valuations of the assets, over which the Company has no control.
Pending the making of investments, the Company's capital will need to be temporarily invested in liquid investments and managed by a third-party investment manager of international repute or held on deposit with commercial banks before they are invested. The returns that temporary investments are expected to generate and the interest that the Company will earn on deposits with commercial banks will be substantially lower than the returns that it anticipates receiving from its longer-term investments or special situations and structured transactions.
In addition, while the Company's temporary investments will be relatively conservative compared to its longer-term investments or special situations and structured transactions, they are nevertheless subject to the risks associated with any investment, which could result in the loss of all or a portion of the capital invested.
The Investment Manager has identified but has not yet contracted to make further potential investments. The Company cannot guarantee shareholders that any or all of these prospective investments will take place in the future.
The market price of the Company's shares may fluctuate significantly and shareholders may not be able to resell their shares at or above the price at which they purchased them.
The Company's shares are currently trading, and have in the past traded, and could in the future trade, at a discount to NAV for a variety of reasons, including due to market conditions. The only way for shareholders to realise their investment is to sell their shares for cash. Accordingly, in the event that a shareholder requires immediate liquidity, or otherwise seeks to realise the value of his investment through a sale, the amount received by the shareholder upon such sale may be less than the underlying NAV of the shares sold.
The Company could be materially adversely affected by the widespread outbreak of infectious disease or other public health crises (or by the fear or imminent threat thereof), including the current COVID-19 pandemic. Public health crises such as SARS, H1N1/09 flu, avian flu, Ebola, and the current COVID-19 pandemic, together with any related containment or other remedial measures undertaken or imposed, could have a material and adverse effect on the Company including by (i) disrupting or otherwise materially adversely affecting the human capital, business operations or financial resources of the Company, the Company's portfolio companies, the Investment Manager or service providers and (ii) adversely affect the ability, or the willingness, of a party to perform its obligations under its contracts and lead to uncertainty over whether such failure to perform (or delay in performing) might be excused under so-called "material adverse change," force majeure and similar provisions in such contracts that could cause a material impact to the Company, the Company's portfolio companies, the Investment Manager or service providers and (iii) severely disrupting global, national and/or regional economies and financial markets and precipitating an economic downturn or recession that could materially adversely affect the value and performance of the Company's shares.
Our business could be materially affected by conditions in the global capital markets and the economy generally. Geopolitical issues, including the recent Russian invasion of Ukraine and related international response measures may have a negative impact on regional and global economic conditions, as a result of disruptions in foreign currency markets and increased energy and commodity prices. This could in turn have a spill-over effect on our portfolio companies, such as reducing demand for products or services offered by our portfolio companies and/or cause for example, higher operating and financing costs.
Directors' Responsibility Statement
We, the directors of Symphony International Holdings Limited, confirm that to the best of our knowledge:
(a) the condensed interim financial statements, which have been prepared in accordance with IAS 34 - Interim Financial Reporting, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.2.4R; and
(b) the interim financial results include a fair review of information required by:
(i) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
(ii) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period, and any changes in the related party transactions described in the last annual report that could do so.
For and on behalf of the Board of Directors
Georges Gagnebin
Chairman, Symphony International Holdings Limited
Anil Thadani
Chairman, Symphony Asia Holdings Pte. Ltd.
Director, Symphony International Holdings Limited
Symphony International Holdings Limited
Condensed statement of financial position
As at 30 June 2022
|
|
Note |
30 June 2022 |
31 December 2021 |
|
|
|
US$'000 |
US$'000 |
|
Non-current assets |
|
|
|
|
Financial assets at fair value through profit or loss |
7 |
472,909 |
480,755 |
|
Prepayments |
|
* |
* |
|
|
|
472,909 |
480,755 |
|
Current assets |
|
|
|
|
Other receivables and prepayments |
|
31 |
70 |
|
Cash and cash equivalents |
|
9,915 |
8,357 |
|
|
|
9,946 |
8,427 |
|
|
|
|
|
|
Total assets |
|
482,855 |
489,182 |
|
|
|
|
|
|
Equity attributable to equity holders |
|
|
|
|
Share capital |
|
409,704 |
409,704 |
|
Accumulated profits |
|
72,781 |
79,151 |
|
Total equity |
|
482,485 |
488,855 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Other payables |
|
370 |
327 |
|
Total liabilities |
|
370 |
327 |
|
Total equity and liabilities |
|
482,855 |
489,182 |
|
|
|
|
|
* Less than US$1,000
The accompanying notes form an integral part of these condensed interim financial statements
Symphony International Holdings Limited
Condensed statement of comprehensive income
for the financial period from 1 January 2022 to 30 June 2022
|
|
Note |
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Other operating income |
|
8,507 |
37,459 |
|
Other operating expenses |
|
(5,497) |
(3,141) |
|
Management fees |
|
(5,404) |
(4,382) |
|
(Loss)/ Profit before investment results and income tax |
|
(2,394) |
29,936 |
|
Loss on disposal of financial assets at fair value through profit or loss |
|
- |
(37,461) |
|
Fair value changes in financial assets at fair value through profit or loss |
7 |
(3,991) |
51,933 |
|
(Loss)/Profit before income tax |
|
(6,385) |
44,408 |
|
Income tax expense |
|
- |
- |
|
(Loss)/Profit for the period |
|
(6,385) |
44,408 |
|
Other comprehensive income for the period, |
|
- |
- |
|
Total comprehensive income for the period |
|
(6,385) |
44,408 |
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
US Cents |
US Cents |
|
|
|
|
|
|
Basic |
8 |
(1.24) |
8.65 |
|
Diluted |
|
(1.24) |
8.65 |
|
|
|
|
|
The accompanying notes form an integral part of these condensed interim financial statements.
Symphony International Holdings Limited
Condensed statement of changes in equity
for the financial period from 1 January 2022 to 30 June 2022
|
|
|
Share capital |
Accumulated (losses)/profits |
Total |
|
|
|
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
At 1 January 2021 |
|
409,704 |
(30,645) |
379,059 |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
|
|
|
Profit for the period |
|
- |
44,408 |
44,408 |
|
Total comprehensive income for the period |
|
- |
44,408 |
44,408 |
|
|
|
|
|
|
|
Transactions with owners of the Company, recognised directly in equity |
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
Forfeiture of dividend paid in prior years |
|
- |
160 |
160 |
|
Total transaction with owners of the Company |
|
- |
160 |
160 |
|
|
|
|
|
|
|
At 30 June 2021 |
|
409,704 |
13,923 |
423,627 |
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed interim financial statements.
Symphony International Holdings Limited
Condensed statement of changes in equity
for the financial period from 1 January 2022 to 30 June 2022
|
|
|
Share capital |
Accumulated profits |
Total |
|
|
|
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
At 1 January 2022 |
|
409,704 |
79,151 |
488,855 |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
|
|
|
Loss for the period |
|
- |
(6,385) |
(6,385) |
|
Total comprehensive income for the period |
|
- |
(6,385) |
(6,385) |
|
|
|
|
|
|
|
Transactions with owners of the Company, recognised directly in equity |
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
Forfeiture of dividend paid in prior years |
|
- |
15 |
15 |
|
Total transaction with owners of the Company |
|
- |
15 |
15 |
|
|
|
|
|
|
|
At 30 June 2022 |
|
409,704 |
72,781 |
482,485 |
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed interim financial
statements.
Symphony International Holdings Limited
Condensed statement of cash flows
for the financial period from 1 January 2022 to 30 June 2022
|
|
|
6 months |
6 months |
|
|
|
US$'000 |
US$'000 |
|
Cash flows from operating activities |
|
|
|
|
(Loss)/Profit before income tax |
|
(6,385) |
44,408 |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
Dividend income |
|
(8,505) |
(37,459) |
|
Exchange loss |
|
5,017 |
2,422 |
|
Interest income |
|
(2) |
- |
|
Interest expense |
|
- |
17 |
|
Write-off of amount due from unconsolidated subsidiary |
|
12 |
- |
|
Loss on disposal of financial assets at fair value through profit or loss |
|
- |
37,461 |
|
Fair value changes in financial assets at fair value through profit or loss |
|
3,991 |
(51,933) |
|
|
|
(5,872) |
(5,084) |
|
Changes in: |
|
|
|
|
- Other receivables and prepayments |
|
40 |
(5) |
|
- Other payables |
|
52 |
76 |
|
|
|
(5,780) |
(5,013) |
|
Interest received |
|
* |
- |
|
Net cash used in operating activities |
|
(5,780) |
(5,013) |
|
|
|
|
|
|
Cash flows from investing activity |
|
|
|
|
Net proceeds received from unconsolidated subsidiaries |
|
7,326 |
31,897 |
|
Net cash from investing activity |
|
7,326 |
31,897 |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Interest paid |
|
- |
(18) |
|
Forfeiture of dividend paid in prior years |
|
15 |
160 |
|
Repayment of borrowings |
|
- |
(2,730) |
|
Net cash from/(used in) financing activities |
|
15 |
(2,588) |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
1,561 |
24,296 |
|
Cash and cash equivalents at beginning of period |
|
8,357 |
257 |
|
Effect of exchange rate fluctuations |
|
(3) |
1 |
|
Cash and cash equivalents at end of the period |
|
9,915 |
24,554 |
|
|
|
|
|
* Less than US$1,000
The accompanying notes form an integral part of these condensed interim financial statements.
Symphony International Holdings Limited
Notes to the condensed interim financial statements
for the financial period from 1 January 2022 to 30 June 2022
These notes form an integral part of the condensed interim financial statements.
1 REPORTING ENTITY
Symphony International Holdings Limited (the "Company") is a company domiciled in the British Virgin Islands.
The financial statements of the Company as at and for the year ended 31 December 2021 are available upon request from the Company's registered office at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola VG1110 British Virgin Islands.
2 STATEMENT OF COMPLIANCE
These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the financial statements of the Company as at and for the year ended 31 December 2021.
These condensed interim financial statements were approved by the Board of Directors on 31 August 2022.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its financial statements as at and for the year ended 31 December 2021. The Company qualifies as an investment entity, as a result of which all immediate investments are carried at fair value through profit or loss.
4 Estimates
The preparation of interim financial statements in conformity with International Financial Reporting Standards requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the condensed financial statements as at and for the year ended 31 December 2021.
COVID-19 pandemic and ongoing Russian-Ukraine conflict
The COVID-19 pandemic and ongoing Russian-Ukraine conflict has increased the estimation uncertainty in developing significant accounting estimates, predominantly related to the valuation of financial assets at fair value through profit or loss ("FVTPL").
The estimation uncertainty is associated with:
· the extent and duration of the expected economic downturn and subsequent recovery. This includes the impacts on liquidity, increasing unemployment, declines in consumer spending and forecasts for key economic factors;
· the extent and duration of the disruption to business arising from the containment measures by governments, businesses and consumers to contain the spread of the virus;
· the extent and duration of supply chain disruptions as a result of the war in Ukraine which also led to a jump in inflation and commodity prices; and
· the effectiveness of government and central bank measures that have and will be put in place to fight inflation and support businesses and consumers through this disruption and economic downturn.
The Company has developed accounting estimates based on forecasts of economic conditions which reflect expectations and assumptions as at 30 June 2022 about future events that management believes are reasonable in the circumstances.
There is a considerable degree of judgement involved in preparing forecasts. The underlying assumptions are also subject to uncertainties which are often outside the control of the Company. Accordingly, actual economic conditions are likely to be different from those forecast since anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact accounting estimates included in these financial statements.
The impact of the COVID-19 pandemic and ongoing Russian-Ukraine conflict on financial assets at fair value through profit or loss is discussed further in note 7.
5 financial risk management
The Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 December 2021.
6 Financial assets at fair value through profit or loss
During the financial period ended on 30 June 2022:
i. The Company recognised a fair value loss in financial assets at FVTPL of US$3,991,000 (30 June 2021: gain of US$51,933,000) and a loss on disposal of financial assets at fair value through profit and loss of US$Nil (30 June 2021: US$37,461,000).
ii. During the six-month period ended 30 June 2021, the Company's wholly owned subsidiary, Symphony (Mint) Investment Limited, sold approximately 8.06 million shares held in Minor International PCL in the market through a series of transactions.
iii. On 16 February 2022, the Company's wholly owned subsidiary, Thai Education Holdings Pte. Ltd., made an additional shareholder's loans to WCIB International Co. Ltd. The associated cost for the investment was less than 1% of NAV.
iv. On 25 March 2022, the Company's partly owned subsidiary, Eagles Holdings Pte. Ltd., subscribed to compulsory convertible debentures issued by Kieraya Furnishing Solutions Private Limited. The associated cost for the investment was less than 1% of NAV.
v. On 23 May 2022 and 31 May 2022, the Company's wholly owned subsidiary, Britten Holdings Pte. Ltd., converted its convertible note into Compulsory Convertible Preference Shares ("CCPS") and subscribed to additional CCPS in Soothe Healthcare Private Limited respectively. The associated cost for the additional investment was less than 1% of NAV.
vi. On 14 June 2022, the Company funded a capital call from Good Capital Fund I as part of its commitment as an anchor investor. The capital call amounted to less than 1% of the Company's NAV.
vii. On 14 June 2022, a wholly owned subsidiary of the Company, Haydn Holdings Pte. Ltd, received principal shareholder loan repayments of US$4.68 million from Minuet Limited as a result of the sale of land.
7 financial instruments
Accounting classification and fair values
The carrying amounts and fair values of financial assets and financial liabilities are as follows. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
|
|
Carrying amount |
|
|||
|
|
Fair value through |
Amortised cost |
Other financial liabilities |
Total |
Fair value |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
30 June 2022 |
|
|
|
|
|
|
Financial assets measured at fair value |
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
472,909 |
- |
- |
472,909 |
472,909 |
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
Other receivables1 |
- |
2 |
- |
2 |
|
|
Cash and cash equivalents |
- |
9,915 |
- |
9,915 |
|
|
|
472,909 |
9,917 |
- |
482,826 |
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
Other payables |
- |
- |
(370) |
(370) |
|
|
|
|
|
|
|
|
1 Excludes prepayments
|
|
Carrying amount |
|
|||
|
|
Fair value through |
Amortised cost |
Other financial liabilities |
Total |
Fair value |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
31 December 2021 |
|
|
|
|
|
|
Financial assets measured at fair value |
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
480,755 |
- |
- |
480,755 |
480,755 |
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
Other receivables1 |
- |
1 |
- |
1 |
|
|
Cash and cash equivalents |
- |
8,357 |
- |
8,357 |
|
|
|
480,755 |
8,358 |
- |
489,113 |
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
Other payables |
- |
- |
(327) |
(327) |
|
|
|
|
|
|
|
|
1 Excludes prepayments
Fair value
The financial assets at fair value through profit or loss are measured using the adjusted net asset value method, which is based on the fair value of the underlying investments. The fair values of the underlying investments are determined based on the following methods:
i) for quoted equity investments, based on quoted market bid prices at the financial reporting date without any deduction for transaction costs;
ii) for unquoted investments, with reference to the enterprise value at which the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale, and is determined by using valuation techniques such as (a) market multiple approach that uses a specific financial or operational measure that is believed to be customary in the relevant industry, (b) price of recent investment, or offers for investment, for the portfolio company's securities, (c) current value of publicly traded comparable companies, (d) comparable recent arms' length transactions between knowledgeable parties, and (e) discounted cash flows analysis; and
iii) for financial assets and liabilities with a maturity of less than one year or which reprice frequently (including other receivables, cash and cash equivalents, interest-bearing borrowings and other payables) the notional amounts are assumed to approximate their fair values because of the short period to maturity/repricing.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.
Fair value hierarchy for financial instruments
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
· Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
· Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are not considered active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.
· Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes input not based on observable data and the unobservable inputs have a significant effect on the instruments' valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between instruments.
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
30 June 2022 |
|
|
|
|
|
Financial assets at fair value through profit or loss |
- |
- |
472,909 |
472,909 |
|
|
|
|
|
|
|
31 December 2021 |
|
|
|
|
|
Financial assets at fair value through profit or loss |
- |
- |
480,755 |
480,755 |
|
|
|
|
|
|
The fair value hierarchy table excludes financial assets and financial liabilities such as cash and cash equivalents, other receivables and payables and interest-bearing borrowings because their carrying amounts approximate their fair values due to their short-term period to maturity/repricing.
Level 3 valuations
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy.
|
|
30 June 2022 |
31 December 2021 |
|
|
Financial assets at fair value through profit or loss |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Balance at 1 January |
480,755 |
381,949 |
|
Fair value changes in profit or loss |
(3,991) |
(45,094) |
|
Net (repayment from)/payment to unconsolidated subsidiaries |
(3,855) |
138,691 |
|
Net additions |
- |
5,209 |
|
Balance at 30 June/31 December |
472,909 |
480,755 |
|
|
|
|
Significant unobservable inputs used in measuring fair value
This table below sets out information about significant unobservable inputs used at 30 June 2022 in measuring the underlying investments of the financial assets categorised as Level 3 in the fair value hierarchy excluding investments purchased during the year that are valued at transaction prices as they are reasonable approximation of fair values and ultimate investments in listed entities.
|
Description |
Fair value at 30 June 2022 US$'000 |
Fair value at 31 December 2021 US$'000 |
Valuation technique |
Unobservable input |
Range (Weighted average) |
Sensitivity to changes in significant unobservable |
|
Rental properties |
5,002 |
6,191 |
Income approach |
Rental growth rate
Occupancy rate
Discount rate |
0-3% (Dec 2021: 0%-3%)
80%-90% (Dec 2021: 80%-90%)
13%-13.5%
|
The estimated fair value would increase if the rental growth rate and occupancy rate were higher and the discount rate was lower. |
|
Description |
Fair value at 30 June 2022 US$'000 |
Fair value at 31 December 2021 US$'000 |
Valuation technique |
Unobservable input |
Range (Weighted average) |
Sensitivity to changes in significant unobservable |
|
Land related investments |
57,588 |
98,838 |
Comparable valuation method |
Price per |
US$372 to US$3,316 per square meter |
The estimated fair value would increase if the price per square meter was higher. |
|
|
|
|
|
|
|
|
|
Operating business |
283,151 |
276,793 |
Enterprise value using comparable traded multiples, adjusted net asset value or option pricing model |
Earnings before interest, tax, depreciation and amortisation ("EBITDA") multiple (times)
|
0.9x - 296.4x, median 9.2x |
The estimated fair value would increase if the EBITDA multiple was higher.
|
|
|
|
|
Revenue multiple (times) |
2.7x - 11.3x, median 6.0x |
The estimated fair value would increase if the revenue multiple was higher |
|
|
|
|
|
Discount for lack of marketability |
25.0% |
The estimated fair value would increase if the discount for lack of marketability was lower. |
|
|
|
|
|
|
Volatility |
39.0%-59.0% |
The estimated fair value would increase if volatility was higher. |
|
|
|
|
|
Risk-free rate |
3.0% - 6.7% |
The estimated fair value would increase if risk free rate was lower. |
|
|
|
|
|
|
|
|
|
Greenfield business held for more than 12-months |
36,690 |
12,200 |
Discounted cash flow method |
Revenue growth |
2.8% - 159.8% |
The estimated fair value would increase if the revenue growth increases, expense ratio decreases, and WACC was lower. |
|
|
|
|
|
Expense ratio |
60.5% - 92.3% |
|
|
|
|
|
|
Weighted average cost of capital ("WACC")
|
13.9% - 14.70% |
|
The rental growth rate represents the growth in rental income during the leasehold period while the occupancy rates represent the percentage of the building that is expected to be occupied during the leasehold period. Management adopt a valuation report produced by an independent valuer that determines the rental growth rate and occupancy rate after considering the current market conditions and comparable occupancy rates for similar buildings in the same area.
The discount rate is related to the current yield on long-term government bonds plus a risk premium to reflect the additional risk of investing in the subject properties. Management adopt a valuation report produced by an independent valuer that determines the discount based on the independent valuer's judgement after considering current market rates.
The comparable recent sales represent the recent sales prices of properties that are similar to the investee companies' properties, which are in the same area. Management adopt a valuation report produced by an independent valuer to determine the value per square meter based on the average recent sales prices.
During the period ended 30 June 2022, an investment that was valued using comparable recent sales was valued using the discounted cash flow method in the current period due to changes in the operations and future earnings potential of the underlying investee company.
The EBITDA multiple represents the amount that market participants would use when pricing investments. The EBITDA multiple is selected from comparable public companies with similar business as the underlying investment. Management obtains the median EBITDA multiple from the comparable companies and applies the multiple to the EBITDA of the underlying investment. In some instances, Management obtains the lower quartile multiple from comparable companies and applies the multiple to the EBITDA of the underlying investment. The amount is further discounted for considerations such as lack of marketability.
The revenue multiple represents the amount that market participants would use when pricing investments. The revenue multiple is selected from comparable public companies with similar business as the underlying investment. Management obtains the median revenue multiple from the comparable companies and applies the multiple to the revenue of the underlying investment. The amount is further discounted for considerations such as lack of marketability.
The discount for lack of marketability represents the discount applied to the comparable market multiples to reflect the illiquidity of the investee relative to the comparable peer group. Management determines the discount for lack of marketability based on its judgement after considering market liquidity conditions and company-specific factors.
During the year ended 31 December 2021, two investments that were respectively valued using the revenue multiple and adjusted net assets techniques in the prior year were both valued using the EBITDA multiple in the current year due to changes in the profitability of the underlying investee companies.
During the period ended 30 June 2022, two investments that were valued using the EBITDA multiple technique were valued using the price of recent investment for the investee company's securities in the current period as there were recent transactions in the secondary market.
The option pricing model uses distribution allocation for each equity instrument at different valuation breakpoints, taking into consideration the different rights/terms of each instrument. An option pricing computation is done using a Black Scholes Model at different valuation breakpoints (strikes) using market volatility and risk-free rate parameters. Where a recent transaction price for an identical or similar instrument is available, it is used as the basis for fair value.
The revenue growth represents the growth in sales of the underlying business and is based on the operating management team's judgement on the change of various revenue drivers related to the business from year-to-year. The expense ratio is based on the judgement of the operating management team after evaluating the expense ratio of comparable businesses and is a key component in deriving EBITDA and free cash flow for the greenfield business. The free cashflow is discounted at the WACC to derive the enterprise value of the greenfield business. Net debt is then deducted to arrive at an equity value for the business. WACC is derived after adopting independent market quotes or reputable published research-based inputs for the risk-free rate, market risk premium, small cap premium and cost of debt.
The investment entity approach requires the presentation and fair value measurement of immediate investments; the shares of intermediate holding companies are not listed. However, ultimate investments in listed entities amounting to US$68,572,000 (31 December 2021: US$67,972,000) are held through intermediate holding companies; the value of these companies are mainly determined by the fair values of the ultimate investments.
Sensitivity analysis
Although the Company believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3 assets, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on the profit or loss by the amounts shown below. The effect of the COVID-19 pandemic and ongoing Russian-Ukraine conflict has meant that the range of reasonably possible changes is wider than in pre-pandemic and pre-conflict periods.
|
|
‹-------- 30 June 2022 --------› |
‹-------- 30 June 2021 --------› |
||
|
|
Effect on profit or loss |
Effect on profit or loss |
||
|
|
Favourable |
(Unfavourable) |
Favourable |
(Unfavourable) |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
Level 3 assets |
41,382 |
(44,402) |
67,828 |
(57,105) |
|
|
|
|
|
|
The favourable and unfavourable effects of using reasonably possible alternative assumptions have been calculated by recalibrating the valuation model using a range of different values.
For rental properties, the projected rental rates and occupancy levels were increased by 10% (30 June 2021: 10%) for the favourable scenario and reduced by 10% (30 June 2021: 10%) for the unfavourable scenario. The discount rate used to calculate the present value of future cash flows was also decreased by 2% (30 June 2021: 2%) for the favourable case and increased by 2% (30 June 2021: 2%) for the unfavourable case compared to the discount rate used in the valuation as at 30 June 2022.
For land related investments (except those held for less than 12-months where cost represents the most reliable estimate of fair value in the absence of significant developments since the transaction), which are valued on comparable transaction basis by third party valuation consultants, the fair value of the land is increased by 20% (30 June 2021: 20%) in the favourable scenario and reduced by 20% (30 June 2021: 20%) in the unfavourable scenario.
For operating businesses (except those where a last transacted price exists within the past 12-months that provides the basis for fair value) that are valued on a trading comparable basis using enterprise value to revenue or EBITDA, the revenue or EBITDA is increased by 20% (30 June 2021: 20%) and decreased by 20% (30 June 2021: 20%) in the favourable and unfavourable scenarios respectively. Similarly, where adjusted net assets are used, the value is increased by N/A (30 June 2021: 20%) and decreased by N/A (30 June 2021: 20%) in the favourable and unfavourable scenarios.
For operating business (except those where a last transacted price exists within the past 12-months that provides the basis for fair value) that are valued using an option pricing model, the volatility is increased by 10% (30 June 2021: 10%) and the risk-free rate is reduced by 2% (30 June 2021: 2%) in the favourable scenario. The volatility is reduced by 10% (30 June 2021: 10%) and the risk-free rate is increased by 2% (30 June 2021: 2%) in the unfavourable scenario.
For greenfield businesses (except those where a last transacted price exists within the past 12-months) that are valued using a discounted cashflow, the revenue growth rate is increased by 2% (30 June 2021: 2%), the expense ratio rate is decreased by 10% (30 June 2021: 10%) and the WACC is reduced by 2% (30 June 2021: 2%) in the favourable scenario. Conversely, in the unfavourable scenario, the revenue growth rate is reduced by 2% (30 June 2021: 2%), the expense ratio rate is increased by 10% (30 June 2021: 10%) and the WACC is increased by 2% (30 June 2021: 2%).
8 earnings PER SHARE
|
|
|
6 months ended 30 June 2022 |
6 months ended 30 June 2021 |
|
|
|
US$'000 |
US$'000 |
|
Basic and diluted earnings per share are based on: |
|
|
|
|
(Loss)/Profit for the period attributable to ordinary shareholders |
|
(6,385) |
44,408 |
|
Basic and diluted earnings per share
|
|
|
|
|
|
|
Number |
Number |
|
|
|
30 June 2022 |
30 June 2021 |
|
|
|
|
|
|
Issued ordinary shares at 1 January and 30 June |
|
513,366,198 |
513,366,198 |
|
|
|
|
|
|
Weighted average number of shares (basic and diluted) |
|
513,366,198 |
513,366,198 |
|
|
|
|
|
At 30 June 2022 and 30 June 2021, there were no outstanding share options to subscribe for ordinary shares of no par value.
9 Operating segments
The Company has investment segments, as described below. Investment segments are reported to the Board of Directors of Symphony Asia Holdings Pte. Ltd., the Investment Manager, who review this information on a regular basis.
For the 6 months period ending 30 June 2022, the Company has renamed its 'Other' segment as 'New Economy'.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Business activities which do not meet the definition of an operating segment have been reported in the reconciliations of total reportable segment amounts to the financial statements.
The following summary describes the investments in each of the Company's reportable segments.
|
|
|
|
Healthcare |
Includes investments in ASG Hospital Private Limited (ASG) and Soothe Healthcare Private Limited (Soothe) |
|
|
|
|
Hospitality |
Minor International Public Company Limited (MINT) |
|
|
|
|
Education |
Includes investments in WCIB International Co. Ltd. (WCIB) and Creative Technology Solutions DMCC (CTS) |
|
|
|
|
Lifestyle |
Includes investments in Chanintr Living Ltd. (Chanintr), the Wine Connection Group (WCG) and Liaigre Group (Liaigre) |
|
|
|
|
Lifestyle/Real Estate |
Includes investments in Minuet Ltd., SG Land Co. Ltd., a property joint venture in Niseko, Hokkaido, Japan, Desaru Peace Holdings Sdn Bhd and a villa in Phuket, Thailand |
|
|
|
|
Logistics
New Economy |
In Do Trans Logistics Corporation (ITL)
Includes Smarten Spaces Pte. Ltd. (Smarten), Good Capital Partners and Good Capital Fund I (collectively, Good Capital), August Jewellery Pvt. Ltd (Melorra), Kieraya Furnishing Solutions Private Limited (Furlenco), Catbus Infolabs Pvt. Ltd (Blowhorn), Meesho Inc. (Meesho), SolarSquare Energy Pvt Limited (Solar Square) and Epic Games |
|
|
|
|
Cash and temporary investments |
Includes government securities or other investment grade securities, liquid investments which are managed by third party investment managers of international repute, and deposits placed with commercial banks |
|
|
|
The reportable operating segments derive their revenue primarily by achieving returns, consisting of dividend income, interest income and appreciation in fair value. The Company does not monitor the performance of the investments by measure of profit or loss.
Information regarding the results of each reportable segment is included below:
|
|
Healthcare |
Hospitality |
Education |
Lifestyle |
Lifestyle/ real estate |
Logistics |
Cash and temporary investments |
New Economy |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
6 months ended 30 June 2022 |
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
|
|
|
|
|
- Dividend income |
- |
- |
- |
- |
7,495 |
- |
1,010 |
- |
8,505 |
|
- Interest income |
- |
- |
- |
- |
- |
- |
2 |
- |
2 |
|
|
- |
- |
- |
- |
7,495 |
- |
1,012 |
- |
8,507 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment expenses |
|
|
|
|
|
|
|
|
|
|
- Exchange loss |
(3) |
* |
(3) |
(3,263) |
(1,757) |
(1) |
15 |
(5) |
(5,017) |
|
- Fair value changes of financial assets at FVTPL |
22,847 |
8,652 |
(6,162) |
(4,901) |
(14,721) |
(12,999) |
(1,011) |
4,304 |
(3,991) |
|
|
22,844 |
8,652 |
(6,165) |
(8,164) |
(16,478) |
(13,000) |
(996) |
4,299 |
(9,008) |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment results |
22,844 |
8,652 |
(6,165) |
(8,164) |
(8,983) |
(13,000) |
16 |
4,299 |
(501) |
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2021 |
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
|
|
|
|
|
- Dividend income |
37,459 |
- |
- |
- |
- |
- |
- |
- |
37,459 |
|
- Interest income |
- |
- |
- |
- |
- |
- |
* |
- |
* |
|
- Fair value changes in financial assets at FVTPL |
3,471 |
14,155 |
3,105 |
6,383 |
(8,781) |
34,214 |
(15) |
(599) |
51,933 |
|
|
40,930 |
14,155 |
3,105 |
6,383 |
(8,781) |
34,214 |
(15) |
(599) |
89,392 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment expenses |
|
|
|
|
|
|
|
|
|
|
- Exchange loss |
(1) |
* |
(1) |
(1,322) |
(1,109) |
(1) |
13 |
(1) |
(2,422) |
|
- Loss on disposal of financial assets at FVTPL |
(37,461) |
- |
- |
- |
- |
- |
- |
- |
(37,461) |
|
|
(37,462) |
* |
(1) |
(1,322) |
(1,109) |
(1) |
13 |
(1) |
(39,883) |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment results |
3,468 |
14,155 |
3,104 |
5,061 |
(9,890) |
34,213 |
(2) |
(600) |
49,509 |
|
|
|
|
|
|
|
|
|
|
|
* Less than US$1,000
|
|
Healthcare |
Hospitality |
Education |
Lifestyle |
Lifestyle/ real estate |
Logistics |
Cash and temporary investments |
New Economy |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2022 |
|
|
|
|
|
|
|
|
|
|
Segment assets |
79,679 |
69,065 |
11,240 |
45,277 |
90,861 |
130,995 |
9,915 |
45,792 |
482,824 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2021 |
|
|
|
|
|
|
|
|
|
|
Segment assets |
52,830 |
68,487 |
16,765 |
53,415 |
105,029 |
143,989 |
8,366 |
40,231 |
489,112 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of reportable segment profit or loss, assets and liabilities
|
|
|
30 June 2022 |
30 June 2021 |
|
|
|
US$'000 |
US$'000 |
|
Profit or loss |
|
|
|
|
Net investments results |
|
(501) |
49,509 |
|
Unallocated amounts: |
|
|
|
|
- Other corporate expenses |
|
(5,884) |
(5,101) |
|
(Loss)/Profit for the period |
|
(6,385) |
44,408 |
|
|
|
|
|
|
Assets |
|
|
|
|
Total assets for reportable segments |
|
482,824 |
424,110 |
|
Other assets |
|
31 |
79 |
|
Total assets |
|
482,855 |
424,189 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Total liabilities for reportable segments |
|
- |
- |
|
Other payables |
|
370 |
562 |
|
Total liabilities |
|
370 |
562 |
|
|
|
|
|
10 Significant Related Party Transactions
For the purposes of these condensed interim financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or entities.
Dividend income
During the financial period ended 30 June 2022, the Company recognised dividend income from its unconsolidated subsidiaries amounting to US$8,505,000 (30 June 2021: US$37,459,000).
Key management personnel compensation
Key management personnel of the Company are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company. The directors of the Company are considered as key management personnel.
During the financial period ended 30 June 2022, directors' fees amounting to US$198,000 (30 June 2021: US$198,000) were declared as payable to four directors of the Company. The remaining two directors of the Company are also directors of the Investment Manager who provides management and administrative services to the Company on an exclusive and discretionary basis. No remuneration has been paid to these two directors as the cost of their services form part of the Investment Manager's remuneration.
Other related party transactions
Pursuant to the Investment Management Agreement, the Investment Manager will provide investment management and advisory services exclusively to the Company. Details of the remuneration of the Investment Manager are disclosed in the financial statements as at and for the year ended 31 December 2021. During the financial period ended 30 June 2022, management fee amounting to US$5,404,000 (30 June 2021: US$4,382,000) paid/payable to the Investment Manager has been recognised in the condensed interim financial statements.
Other than as disclosed elsewhere in the condensed interim financial statements, there were no other significant related party transactions during the 6 months periods ended 30 June 2022 and 30 June 2021.
11 commitments
In September 2008, the Company entered into a loan agreement with a joint venture, held via its unconsolidated subsidiary, to grant loans totalling US$3,966,000 (THB140,000,000). As at 30 June 2022, US$3,399,000 (THB 120,000,000) (30 June 2021: US$3,700,000 (THB120,000,000)) has been drawn down. The Company is committed to grant the remaining loan amounting to US$567,000 (THB20,000,000) (30 June 2021: US$620,000 (THB20,000,000)), subject to terms set out in the agreement.
In July 2019, the Company committed to subscribe to Good Capital Fund I for an amount less than 1% of the net asset value as at 30 June 2022. Approximately 59% of this commitment has been funded at 30 June 2022 with 41% of the commitment subject to be called over the next two years.
In the general interests of the Company and its unconsolidated subsidiaries, it is the Company's current policy to provide such financial and other support to its group of companies to enable them to continue to trade and to meet liabilities as they fall due.
12 Subsequent events
Subsequent to 30 June 2022,
· Symphony sold approximately 1.0 million MINT shares through a series of market transactions that generated net proceeds of approximately US$0.94 million.
· Symphony completed the sale of approximately 35% of its securities held in ASG Hospital Private Limited for an after-tax consideration of US$17.3 million.