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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Symphony International Holdings Ld | LSE:SIHL | London | Ordinary Share | VGG548121059 | ORD NPV (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.373 | 0.362 | 0.41 | 0.00 | 08:00:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | -91.13M | -102.24M | -0.1991 | -1.86 | 189.95M |
From Apr 2019 to Apr 2024
TIDMSIHL
RNS Number : 1583V
Symphony International Holdings Ltd
05 April 2019
SYMPHONY INTERNATIONAL HOLDINGS PUBLICATION OF ANNUAL REPORT FOR THE YEARED 31 DECEMBER 2018
5 April 2019
Symphony International Holdings Limited (the "Company", "SIHL" or "Symphony"), the London listed investor in fast growing Asian consumer businesses, today announces the publication of its 2018 annual report, which is available on its website at www.symphonyasia.com.
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
Dealing codes
The ISIN number of the Ordinary Shares is VGG548121059, the SEDOL code is B231M63 and the TIDM is SIHL.
The LEI number of the Company is 254900MQE84GV5DS6F03.
IMPORTANT INFORMATION
This announcement 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 as to the accuracy or completeness of the information contained in this announcement and no liability will be accepted for any loss arising from its use.
This announcement 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. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decisions.
This announcement 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.
Statements contained in this announcement 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.
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.
Independent auditors' report
Members of the Company
Symphony International Holdings Limited
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Symphony International Holdings Limited ('the Company'), which comprise the statement of financial position of the Company as at 31 December 2018, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year then ended, including a summary of significant accounting policies and other explanatory information, as set out on pages FS1 to FS40.
In our opinion, the accompanying financial statements of the Company are properly drawn up in accordance with International Financial Reporting Standards (IFRS) so as to give a true and fair view of the financial position of the Company as at 31 December 2018 and of the financial performance and changes in equity and cash flows of the Company for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) and the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code, and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Hot Features
Premium
Valuation of financial assets at fair value through profit
or loss (Level 3)
(Refer to Note 16 to the financial statements, page FS27
et seq.)
The key audit matter How the matter was addressed
in our audit
------------------------------------------------------------ -----------------------------------------------------------------
The Company's investments are As part of our audit procedures,
measured at fair value and amount we have:
to US$487 million (2017: US$608
million) at 31 December 2018. * Evaluated the design and implementation of controls
The Company holds its investments over the preparation, review and approval of the
directly or through its unconsolidated valuations.
subsidiaries. The underlying investments
comprise both quoted and unquoted
securities.
* Assessed the appropriateness of the valuation
The Company has identified underlying methodologies used.
unquoted investments amounting
to US$220 million (2017: US$213
million) which require significant
judgement in the determination * For land related investments and rental properties,
of the fair values as significant evaluated the valuers' independence, objectivity and
unobservable inputs are used in qualification; compared the assumptions and
the estimation. Changes in these parameters used to externally derived data.
unobservable inputs could have
a material impact on the valuation
of these investments.
The Company used external valuers
to measure the fair value of the
land related investments and rental
properties. The Company used an
internal model to value the operating
businesses.
* For land related investments in Thailand, Japan and
Malaysia, the external valuers applied the comparable
valuation method with the price per square metre as
the most determinative parameter.
* For rental properties in Thailand, an income approach
was used to determine the fair values, by using the
rental growth rate, occupancy rate and discount rate
as the key input parameters.
* For operating businesses in France and Thailand, the
Company measured the investments using the enterprise
values by applying comparable traded multiples and a
discount for the lack of marketability.
* For a greenfield operating business in Thailand, the
Company used a discounted cash flow method to
determine the value, using projected revenue and
expenses, terminal growth rate, small capitalisation
premium and weighted average cost of capital ('WACC')
as key input parameters.
------------------------------------------------------------ -----------------------------------------------------------------
Valuation of financial assets at fair value through profit
or loss (Level 3)
(Refer to Note 16 to the financial statements, page FS27
et seq.)
The key audit matter How the matter was addressed
in our audit
------------------------------------------------------------ -----------------------------------------------------------------
* For operating businesses valued using the comparable
enterprise model, assessed the appropriateness of
comparable enterprises and checked consistency of
EBITDA multiples and share prices to publicly
available information.
* For the operating business valued using the
discounted cash flow method, assessed the
reasonableness of key assumptions used including
projected revenue, expenses and WACC.
* Involved our in-house valuation specialist in
reviewing key assumptions such as the discount rate
used for the lack of marketability, small
capitalisation premium, WACC and the terminal growth
rate and have corroborated the reasons for any
unexpected movements from prior valuations.
* Reviewed the adequacy of the disclosures in the
financial statements on the key assumptions in the
estimates applied in the valuations.
------------------------------------------------------------ -----------------------------------------------------------------
Our findings
------------------------------------------------------------ -----------------------------------------------------------------
We found the design and the controls over the preparation,
review and approval of valuations to be effective. The valuation
methodologies used are in line with generally accepted market
practices. We found no matters of concern regarding the
independence, objectivity and qualification of the external
valuers.
Overall, the valuation estimates and assumptions made by
management were within a reasonable range of outcomes. We
also noted that the Company's disclosures were appropriate.
Other information
Management is responsible for the other information contained in the annual report. Other information is defined as all information in the annual report, but does not include the financial statements and our auditors' report thereon.
We have obtained all other information prior to the date of this auditors' report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and directors for the financial statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The directors' responsibilities include overseeing the Company's financial reporting process.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
-- Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls.
-- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors' report is Shelley Chan Hoi Yi.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
27 March 2019
Statement of financial position
As at 31 December 2018
Note 2018 2017
US$'000 US$'000
Non-current assets
Financial assets at fair value through
profit or loss 3 486,790 608,456
---------- ----------
486,790 608,456
---------- ----------
Current assets
Other receivables and prepayments 4 72 78
Cash and cash equivalents 5 11,538 15,689
11,610 15,767
---------- ----------
Total assets 498,400 624,223
========== ==========
Equity attributable to equity holders
of the Company
Share capital 6 409,704 382,797
Reserves 7 - 62,298
Accumulated profits 83,001 173,577
---------- ----------
Total equity carried forward 492,705 618,672
---------- ----------
Current liabilities
Interest-bearing borrowings 8 5,327 5,166
Other payables 9 368 385
Bank overdraft * -
Total liabilities 5,695 5,551
---------- ----------
Total equity and liabilities 498,400 624,223
========== ==========
*Less than US$1,000
The financial statements were approved by the Board of Directors on 27 March 2019.
---------------------------------------- ----------------------------------------
Anil Thadani Sunil Chandiramani Director Director
27 March 2019
Statement of comprehensive income
Year ended 31 December 2018
Note 2018 2017
US$'000 US$'000
Other operating income 26,142 118,769
Other operating expenses (4,157) (1,754)
Management fees (12,248) (14,176)
9,737 102,839
Share options expense - (506)
----------- -----------
Profit before investment results
and income tax 9,737 102,333
Loss on disposal of financial assets
at fair value through profit or loss (19) -
Fair value changes in financial assets
at fair value
through profit or loss (79,234) (12,154)
(Loss)/Profit before income tax 10 (69,516) 90,179
Income tax expense 11 - -
----------- -----------
(Loss)/Profit for the year (69,516) 90,179
Other comprehensive income for the
year, net of tax - -
----------- -----------
Total comprehensive income for the
year (69,516) 90,179
Earnings per share:
US Cents US Cents
Basic 12 (13.99) 17.79
=========== ===========
Diluted 12 (13.99) 17.54
=========== ===========
Statement of changes in equity
Year ended 31 December 2018
Share Accumulated Total
capital Reserves profits equity
US$'000 US$'000 US$'000 US$'000
At 1 January 2017 414,080 62,960 168,713 645,753
Total comprehensive
income for the year - - 90,179 90,179
-------- -------- ----------- ---------
Transactions with owners
of the Company, recognised
directly in equity
Contributions by and
distributions to owners
-------- -------- ----------- ---------
Issuance of shares 1,745 - - 1,745
Share-based payment
transactions - 506 - 506
Exercise of share options 1,168 (1,168) - -
Own shares acquired (34,196) - (3,064) (37,260)
Dividend paid of US$0.135
per share - - (82,251) (82,251)
-------- -------- ----------- ---------
Total transaction with
owners of the Company (31,283) (662) (85,315) (117,260)
-------- -------- ----------- ---------
At 31 December 2017 382,797 62,298 173,577 618,672
======== ======== =========== =========
At 1 January 2018 382,797 62,298 173,577 618,672
Total comprehensive
income for the year - - (69,516) (69,516)
-------- -------- ----------- ---------
Transactions with owners
of the Company, recognised
directly in equity
Contributions by and
distributions to owners
-------- -------- ----------- ---------
Issuance of shares 15,087 - - 15,087
Share options lapsed
during the year - (50,478) 50,478 -
Exercise of share options 11,820 (11,820) - -
Dividend paid of US$0.12
per share - - (71,538) (71,538)
-------- -------- ----------- ---------
Total transaction with
owners of the Company 26,907 (62,298) (21,060) (56,451)
-------- -------- ----------- ---------
At 31 December 2018 409,704 - 83,001 492,705
======== ======== =========== =========
Statement of cash flows
Year ended 31 December 2018
Note 2018 2017
US$'000 US$'000
Cash flows from operating activities
(Loss)/Profit before income tax (69,516) 90,179
Adjustments for:
Dividend income (25,841) (110,250)
Exchange loss/(gain), net 2,785 (8,217)
Interest income (301) (203)
Interest expense 199 505
Loss on disposal of financial assets
at fair value through profit or loss 19 -
Fair value changes in financial assets
at fair value through profit or loss 79,234 12,154
Share options expense - 506
(13,421) (15,326)
Changes in:
* Other receivables and prepayments 16 (12)
* Other payables (20) (8,691)
(13,425) (24,029)
Dividend received - 53
Interest received (net of withholding
tax) 290 232
Net cash used in operating activities (13,135) (23,744)
---------- ----------
Cash flows from investing activity
Net proceeds received from unconsolidated
subsidiaries 65,602 135,666
Net cash from investing activity 65,602 135,666
---------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 13,578 1,745
Repurchase of own shares - (37,260)
Interest paid (199) (505)
Dividend paid (70,029) (76,545)
Proceeds from borrowings 34 -
Repayment of borrowings - (55)
---------- ----------
Net cash used in financing activities (56,616) (112,620)
---------- ----------
Net decrease in cash and cash equivalents (4,149) (698)
Cash and cash equivalents at 1 January 15,689 15,779
Effect of exchange rate fluctuations (2) 608
---------- ----------
Cash and cash equivalents at 31 December 5 11,538 15,689
========== ==========
Significant non-cash transaction
During the financial year ended 31 December 2018:
-- The Company received dividends of $25,841,000 (2017: $110,250,000) from its unconsolidated subsidiaries of which $25,841,000 (2017: $110,197,000) was set off against the non-trade amounts due to the unconsolidated subsidiaries.
-- The Company declared dividends of $71,538,000 of which $1,509,000 was offset against the amount due from the Investment Manager from the exercise of share options.
Notes to the financial statements
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Board of Directors on 27 March 2019.
1 Domicile and activities
Symphony International Holdings Limited (the Company) was incorporated in the British Virgin Islands (BVI) on 5 January 2004 as a limited liability company under the International Business Companies Ordinance. The address of the Company's registered office is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola VG1110 British Virgin Islands effective 13 February 2017. The Company does not have a principal place of business as the Company carries out its principal activities under the advice of its Investment Manager.
The principal activities of the Company are those relating to an investment holding company while those of its unconsolidated subsidiaries consist primarily of making strategic investments with the objective of increasing the net asset value through long-term strategic private equity investments in consumer-related businesses, predominantly in the hospitality, healthcare and lifestyle sectors (including education and branded real estate developments), as well as investments in special situations and structured transactions which have the potential of generating attractive returns.
2 Summary of significant accounting policies 2.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).
The financial statements have been prepared on a fair value basis, except for certain items which are measured on a historical cost basis. The financial statements are presented in thousands of United States dollars (US$'000), which is the Company's functional currency, unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets within the next financial year are included in the following note:
-- Note 16 - Fair value of investments
Except as disclosed above, there are no other significant areas of estimation uncertainty or critical judgements in the application of accounting policies that have a significant effect on the amount recognised in the financial statements.
2.2 Changes in accounting policies
The Company has applied the following IFRSs, amendments to and interpretations of FRSs for the first time for the annual period beginning on 1 January 2018:
-- IFRS 15 Revenue from Contracts with Customers; -- Clarifications to IFRS 15 Revenue from Contracts with Customers (Amendments to IFRS 15); -- IFRS 9 Financial Instruments; -- Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4); -- Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2); -- Transfers of Investment Property (Amendments to IAS 40); -- Measuring an Associate or Joint Venture at Fair Value (Amendments to IAS 28); and -- IFRIC 22 Foreign Currency Transactions and Advance Consideration.
The adoption of these IFRSs, amendments to standards and interpretations did not have a material effect on the Company's financial statements.
2.3 Subsidiaries
Subsidiaries are investees controlled by the Company. The Company controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The Company is an investment entity and does not consolidate its subsidiaries and measures them at fair value through profit or loss. In determining whether the Company meets the definition of an investment entity, management considered the structure of the Company and its subsidiaries as a whole in making its assessment.
2.4 Functional currency
Items included in the financial statements of the Company are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Company (the functional currency).
For the purposes of determining the functional currency of the Company, management has considered the activities of the Company, which are those relating to an investment holding company. Funding is obtained in US dollars through the issuance of ordinary shares.
2.5 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on translation are recognised in profit or loss.
2.6 Financial instruments
The Company early adopted IFRS 9 Financial Instruments ("IFRS 9") for the first time from
12 November 2009, being the earliest date it was available for adoption. The Company elected to apply IFRS 9 retrospectively as if it had always applied. IFRS 9 specifies the basis for classifying and measuring financial assets. Classification is determined based on the Company's business model measured at either amortised cost or fair value. IFRS 9 replaces the classification and measurement requirements relating to financial assets in IAS 39 Financial Instruments: Recognition and Measurement. In 2010, 2013 and 2014, IFRS 9 was updated to include revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. The final version of IFRS 9 (2014) is effective for periods beginning on or after 1 January 2018.
(i) Recognition and initial measurement
Non-derivative financial assets and financial liabilities
Trade receivables and debt investments issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.
(ii) Classification and subsequent measurement
Non-derivative financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at FVTPL
All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
-- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
-- how the performance of the portfolio is evaluated and reported to the Company's management;
-- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
-- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
-- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company's continuing recognition of the assets.
Financial assets that are held-for-trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Non-derivative financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
-- contingent events that would change the amount or timing of cash flows; -- terms that may adjust the contractual coupon rate, including variable rate features; -- prepayment and extension features; and
-- terms that limit the Company's claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Non-derivative financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
(iii) Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
The Company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(v) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with maturities of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.
(vi) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
2.7 Impairment (i) Non-derivative financial assets
The Company recognises loss allowances for ECLs on financial assets measured at amortised costs.
Loss allowances of the Company are measured on either of the following bases:
-- 12-month ECLs: these are ECLs that result from default events that are possible within the 12 months after the reporting date (or for a shorter period if the expected life of the instrument is less than 12 months); or
-- Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument or contract asset.
General approach
The Company applies the general approach to provide for ECLs on all financial instruments. Under the general approach, the loss allowance is measured at an amount equal to 12-month ECLs at initial recognition.
At each reporting date, the Company assesses whether the credit risk of a financial instrument has increased significantly since initial recognition. When credit risk has increased significantly since initial recognition, loss allowance is measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and includes forward-looking information.
If credit risk has not increased significantly since initial recognition or if the credit quality of the financial instruments improves such that there is no longer a significant increase in credit risk since initial recognition, loss allowance is measured at an amount equal to 12-month ECLs.
The Company considers a financial asset to be in default when:
-- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or
-- the financial asset is more than 90 days past due.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
Measurement of ECLs
ECLs are probability-weighted estimates of credit losses. Credit losses are measured at the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
-- significant financial difficulty of the borrower or issuer; -- a breach of contract such as a default or being more than 90 days past due;
-- the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise;
-- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or -- the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECLs in the statement of financial position
Loss allowances for financial assets measured at amortised cost is deducted from the gross carrying amount of these assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due.
(ii) Non-financial assets
The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill, recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
2.8 Share-based payment transactions
The share option programme allows the option holders to acquire shares of the Company. The fair value of options granted to the Investment Manager is recognised as an expense in profit or loss in the statement of comprehensive income with a corresponding increase in equity. The fair value is measured when the services are received and spread over the period during which the Investment Manager becomes unconditionally entitled to the options.
The proceeds received net of any directly attributable transactions costs are credited to share capital when the options are exercised.
The fair value of Management Shares granted to the Investment Manager is recognised as an expense, with a corresponding increase in equity, over the vesting period, i.e. when the Investment Manager becomes unconditionally entitled to the Management Shares.
2.9 Revenue recognition
Dividends
Dividend income is recognised on the date that the shareholder's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
2.10 Finance income
Interest income from deposits with financial institutions and placements in money market funds and loans to associates, joint ventures and investee companies are recognised as it accrues in profit or loss, using the effective interest method.
2.11 Finance expense
All borrowing costs are recognised in profit or loss in the statement of comprehensive income using the effective interest method.
2.12 Tax expense
Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity or in other comprehensive income, in which case it is recognised in equity or in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
-- temporary differences arising from the initial recognition of goodwill; and
-- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss.
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities. Such changes to tax liabilities will impact tax expense in the period that such a determination is made.
2.13 Earnings per share
The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares and share options granted to the Investment Manager.
2.14 Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board of Directors of the Investment Manager that makes strategic investment decisions.
Segment results that are reported to the chief operating decision-maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate expenses and other assets and payable.
2.15 New standards and interpretations not adopted
A number of new standards and interpretations and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted; however, the Company has not early adopted the new or amended standards and interpretations in preparing these financial statements. None of these are expected to have a significant impact on the Company's financial statements.
3 Financial assets at fair value through profit or loss
2018 2017
US$'000 US$'000
Investments 486,790 608,456
========== ==========
4 Other receivables and prepayments
2018 2017
US$'000 US$'000
Interest receivables 12 1
Other prepayments 60 77
72 78
======= =======
5 Cash and cash equivalents
2018 2017
US$'000 US$'000
Fixed deposits with financial institutions
and placements in money market funds 6,244 6,190
Cash at bank 5,294 9,499
--------- ---------
Cash and cash equivalents in the statement
of financial position 11,538 15,689
Bank overdraft * -
--------- ---------
Cash and cash equivalents in the statement
of cash flows 11,538 15,689
========= =========
The effective interest rate on fixed deposits with financial institutions as at 31 December 2018 was 0.05% to 2.60% (2017: 0.05% to 1.43%) per annum. Interest rates reprice at intervals of one week to three months.
*Less than US$1,000
6 Share capital
Company
2018 2017
Number of Number of
shares shares
Fully paid ordinary shares, with no par
value:
At 1 January 488,221,592 528,838,811
Exercise of share options 25,144,606 2,907,781
Repurchase of own shares - (43,525,000)
At 31 December 513,366,198 488,221,592
============== ===============
Share capital in the statement of financial position represents subscription proceeds received from, and the amount of liabilities capitalised through, the issuance of ordinary shares of no par value in the Company, less transaction costs directly attributable to equity transactions.
The Company does not have an authorised share capital and is authorised to issue an unlimited number of no par value shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholder meetings of the Company. All shares rank equally with regard to the Company's residual assets. In the event that dividends are declared, the holders of the unexercised share options are entitled to receive the dividends (refer to note 13 for more details).
During the financial year, 25,144,606 (2017: 2,907,781) ordinary shares were issued as a result of the exercise of vested options arising from share options granted to the Investment Manager in 2012 (see note 13). Options were exercised at an average price of $0.60 (2017: $0.60) per share.
During the financial year, the Company had acquired and cancelled nil (2017: 43,525,000) shares as part of its Share Buyback Programme.
7 Reserves
Equity compensation reserve
The equity compensation reserve comprises the value of Management Shares and share options issued or to be issued for investment management and advisory services received by the Company (refer to note 13).
8 Interest-bearing borrowings
The interest-bearing term loan amounting to US$5,327,000 (2017: US$5,166,000) is denominated in Japanese Yen. Interest is charged at 0.45% (2017: 0.45%) per annum and reprices on a quarterly basis. The loan principals are repayable quarterly unless the loan is rolled-over.
Reconciliation of movements of liabilities to cash flows arising from financing activities
Liabilities Equity
----------------------------------------------- ----------------------------------------
Bank Interest-bearing Other Share Accumulated
overdraft borrowings payables capital Reserves profits Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2017 14 4,953 3,362 414,080 62,960 168,713 654,082
------------------ ------------ ------------------- ------------ ----------- ----------- -------------- ------------
Changes from
financing cash
flows
Proceeds from
issuance of
shares - - - 1,745 - - 1,745
Repurchase of own
shares - - - (34,196) - (3,064) (37,260)
Interest paid - - (505) - - - (505)
Dividend paid - - 5,706 - - (82,251) (76,545)
Repayment of
borrowings - (55) - - - - (55)
------------ ------------------- ------------ ----------- ----------- -------------- ------------
Total changes from
financing
cash flows - (55) 5,201 (32,451) - (85,315) (112,620)
------------------ ------------ ------------------- ------------ ----------- ----------- -------------- ------------
The effect of
changes in
foreign
exchange rates - 268 8 - - - 276
Other changes
Liability-related
Change in bank
overdraft (14) - - - - - (14)
Change in other
payables - - (8,691) - - - (8,691)
Interest expense - - 505 - - - 505
------------ ------------------- ------------ ----------- ----------- -------------- ------------
Total
liability-related
other
changes (14) - (8,186) - - - (8,200)
------------------ ------------ ------------------- ------------ ----------- ----------- -------------- ------------
Total
equity-related
other
changes - - - 1,168 (662) 90,179 90,685
------------ ------------------- ------------ ----------- ----------- -------------- ------------
Balance as at 31
December 2017 - 5,166 385 382,797 62,298 173,577 624,223
============ =================== ============ =========== =========== ============== ============
Liabilities Equity
------------------------------------------------ ---------------------------------------
Bank Interest-bearing Other Share Accumulated
overdraft borrowings payables capital Reserves profits Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2018 - 5,166 385 382,797 62,298 173,577 624,223
------------------ ------------- ------------------- ------------ ---------- ----------- -------------- -----------
Changes from
financing cash
flows
Proceeds from
issuance of
shares - - - 13,578 - - 13,578
Interest paid - - (199) - - - (199)
Dividend paid - - - 1,509 - (71,538) (70,029)
Proceeds from
borrowings - 34 - - - - 34
------------- ------------------- ------------ ---------- ----------- -------------- -----------
Total changes from
financing
cash flows - 34 (199) 15,087 - (71,538) (56,616)
------------------ ------------- ------------------- ------------ ---------- ----------- -------------- -----------
The effect of
changes in
foreign
exchange rates - 127 3 - - - 130
Other changes
Liability-related
Change in bank * - - - - -
overdraft *
Change in other
payables - - (20) - - - (20)
Interest expense - - 199 - - - 199
------------- ------------------- ------------ ---------- ----------- -------------- -----------
Total
liability-related
other
changes * - 179 - - - 179
------------------ ------------- ------------------- ------------ ---------- ----------- -------------- -----------
Total
equity-related
other
changes - - - 11,820 (62,298) (19,038) (69,516)
------------- ------------------- ------------ ---------- ----------- -------------- -----------
Balance as at 31
December 2018 * 5,327 368 409,704 - 83,001 498,400
============= =================== ============ ========== =========== ============== ===========
* Less than US$1,000
9 Other payables
2018 2017
US$'000 US$'000
Accrued operating expenses 266 283
Amount due to a director 100 100
Interest payable 2 2
368 385
======= =======
The amount due to a director is unsecured, interest free and repayable on demand.
10 (Loss)/Profit before income tax
(Loss)/Profit before income tax includes the following:
2018 2017
US$'000 US$'000
Other operating income
Dividend income 25,841 110,250
Exchange gain, net - 8,217
Interest income from:
* fixed deposits and placements in money market fund 277 121
* loans to unconsolidated subsidiaries 24 82
Other income - 99
26,142 118,769
========= ==========
Other operating expenses
Exchange loss, net 2,785 -
Non-executive director remuneration 386 400
Interest expense 199 505
--------- ----------
11 Income tax expense
The Company is incorporated in a tax-free jurisdiction, thus, it is not subject to income tax.
12 Earnings per share
2018 2017
US$'000 US$'000
Basic and diluted earnings per share
are based on:
(Loss)/profit for the year attributable
to
ordinary shareholders (69,516) 90,179
=========== =========
Basic earnings per share
Number of Number of
shares shares
2018 2017
Issued ordinary shares at 1 January 488,221,592 528,838,811
Shares issued 25,144,606 2,907,781
Own shares acquired - (43,525,000)
-------------- ---------------
Issued ordinary shares at 31 December 513,366,198 488,221,592
============== ===============
Weighted average number of shares
(basic) 496,728,851 506,773,906
============== ===============
Diluted earnings per share
2018 2017
Weighted average number of shares
(basic) 496,728,851 506,773,906
Effect of share options - 7,433,994
Weighted average number of shares
(diluted) 496,728,851 514,207,900
============== ==============
Number of outstanding options
Exercise price of US$1.00 - 82,782,691
Exercise price of US$0.60 - 25,144,606
-------------- --------------
- 107,927,297
============== ==============
At 31 December 2018, there were nil (2017: 107,927,297) outstanding share options to subscribe for ordinary shares of no par value.
At 31 December 2017, 107,927,297 of the unexercised share options had fully vested. 82,782,691 of these share options have an exercise price of US$1.00 and have not been included in the computation of diluted earnings per share as their effect would have been anti-dilutive. The remaining 25,144,606 share options have an exercise price of US$0.60 and have been included in the computation of diluted earnings per share on the same date.
13 Significant related party transactions
Dividend income
During the financial year ended 31 December 2018, the Company recognised dividend income from its unconsolidated subsidiaries amounting to US$25,841,000 (2017: US$110,250,000).
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.
During the financial year, directors' fees amounting to US$386,000 (2017: US$400,000) were declared as payable to four directors (2017: 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 directors as the cost of their services form part of the Investment Manager's remuneration.
Other related party transactions
On 10 July 2007, the Company entered into an Investment Management and Advisory Agreement with Symphony Investment Managers Limited ("SIMgL") pursuant to which SIMgL would provide investment management and advisory services exclusively to the Company. On 15 October 2015, SIMgL was replaced by Symphony Asia Holdings Pte. Ltd. ("SAHPL") (with SAHPL and SIMgL, as the case may be, hereinafter referred to as the "Investment Manager"). The Company entered into an Investment Management Agreement with SAHPL, which replaced the Investment Management and Advisory Agreement (as the case may be, hereinafter referred to as the "Investment Management Agreement"). The key persons of the management team of the Investment Manager comprise certain key management personnel engaged by the Investment Manager pursuant to arrangements agreed between the parties. They will (subject to certain existing commitments) devote substantially all of their business time as employees, and on behalf of the Investment Management Group, to assist the Investment Manager in its fulfilment of the investment objectives of the Company and be involved in the management of the business activities of the Investment Management Group. Pursuant to the Investment Management Agreement, the Investment Manager is entitled to the following forms of remuneration for the investment management and advisory services rendered.
a. Management fees
Management fees of 2.25% per annum of the net asset value, payable quarterly in advance on the first day of each quarter, based on the net asset value of the previous quarter end. The management fees payable will be subject to a minimum amount of US$8,000,000 (2017: US$8,000,000) per annum and a maximum amount of US$15,000,000 (2017: US$15,000,000) per annum.
In 2018, Management fees amounting to US$12,248,000 (2017: US$14,176,000) have been paid to the Investment Manager and recognised in the financial statements.
b. Management shares
The Company did not issue any management shares during the year. At the reporting date, an aggregate of 10,298,725 (2017: 10,298,725) management shares had been issued, credited as fully paid to the Investment Manager.
c. Share options
Share options can be used to subscribe for ordinary shares of the Company.
In the structuring of the compensation payable under the Investment Management and Advisory Agreement, the value of the share options was considered to be measurable using the Binomial Tree option pricing model. Measurement inputs include share price on measurement date, exercise price, expected volatility, expected option life, expected dividends and risk-free interest rate.
The number and exercise price of share options granted to the Investment Manager are as follows:
Number of options
Grant date 2018 2017 Vesting conditions Exercise price
--------------------------------- ----------- ----------- -------------------------------- --------------
Options granted to Investment
Manager
Fully vested in five tranches
over a period of five years
and will expire on the tenth
anniversary of the date of
On 3 August 2008 82,782,691 82,782,691 grant US$1.00
Fully vested in five equal
tranches over a period of five
years and will expire on the
tenth anniversary of the date
On 22 October 2012 41,666,500 41,666,500 of grant US$0.60
Total share options outstanding
at 1 January 107,927,297 110,835,078
Lapsed during the year 82,782,691 - US$1.00
Exercised during the year 25,144,606 2,907,781 US$0.60
Total share options outstanding
at 31 December - 107,927,297
Exercisable at 31 December
- 82,782,691 US$1.00
- 25,144,606 US$0.60
The share options expense arising from these options is recognised in accordance with the accounting policy set out in Note 2.8. For the financial year ended 31 December 2017, in respect of these options, the assumptions used in determining the fair value are set out in the following table.
Fair value of share options and assumptions
31 March 30 June 30 September 31 December
2017
Fair value US$0.31 US$0.29 US$0.24 US$0.29
Share price US$0.85 US$0.83 US$0.77 US$0.84
Exercise price US$0.60 US$0.60 US$0.60 US$0.60
Expected volatility 30.14% 29.51% 29.42% 28.99%
Expected option life 5.6 years 5.3 years 5.1 years 4.8 years
Expected dividends 2.94% 3.00% 3.23% 2.98%
Risk-free interest
rate 2.1% 1.9% 2.0% 2.2%
============== ============== =============== ==============
The expected volatility is based on the historic volatility, adjusted for any expected changes to future volatility driven by publicly available information.
There are no market conditions associated with the share options. Service conditions and non-market performance conditions are not taken into account in the measurement of the fair value of services to be received at the measurement date.
Share options expenses amounting to US$ nil (2017: US$506,000) have been recognised in the financial statements.
There were no share options outstanding as at 31 December 2018.
In the event that a dividend is declared, the holders of outstanding share options will be paid an amount equivalent to the amount which would have been paid as if all share options that have been granted, whether vested or otherwise, have been exercised. At least 50% of such amount (the "Designated Amount") will be applied towards the exercise of the outstanding share options based on the lower of the total number of vested share options held at the date of the dividend declaration and the number of vested share options held at the date of the dividend declaration which can be exercised with such amount. Any balance of the Designated Amount remaining after the exercise price of all vested share options may be retained by the share option holder. If the market price of the Company's shares is less than the exercise price of the options at the dividend declaration date, the Designated Amount will be retained by the Company and applied by the Company on behalf of the share option holder to (a) exercise options when the market price of the shares exceed the exercise price any time prior to the expiration of the share options or (b) acquire shares on the market with the Designated Amount if the Company's share price remains less than the exercise price at the time of expiry of the options that will then be distributed to the share option holder (at no consideration). Any balance of the Designated Amount remaining after the application by the Company in the manner described above will be returned to the share options holder.
During the year, the Investment Manager exercised 25,144,606 (2017: 2,907,781) share options at US$0.60 (2017: US$0.60) each.
The share options granted on 3 August 2008 expired on 3 August 2018. The share options granted on 22 October 2012 have been fully exercised. These share options cannot be reissued to the Investment Manager.
Other than as disclosed elsewhere in the financial statements, there were no other significant related party transactions during the financial year.
14 Commitments
In September 2008, the Company entered into a loan agreement with a joint venture, held via its unconsolidated subsidiary, to grant loans totaling US$4,300,000 (THB140,000,000). As at
31 December 2018, US$3,700,000 (THB120,000,000) (2017: US$3,700,000 (THB120,000,000)) has been drawn down. The Company is committed to grant the remaining loan amounting to US$619,000 (THB20,000,000) (2017: US$600,000 (THB20,000,000)), subject to terms set out in the agreement.
In the general interests of the Company and its unconsolidated subsidiaries, it is the Company's current policy to provide such financial and other support to its group of companies to enable them to continue to trade and to meet liabilities as they fall due.
15 Operating segments
The Company has investment segments, as described below. Investment segments are reported to the Board of Directors of the Investment Manager, who review this information on a regular basis. The following summary describes the investments in each of the Company's reportable segments.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Business activities which do not meet the definition of an operating segment have been reported in the reconciliations of total reportable segment amounts to the financial statements.
Healthcare Includes an investment in IHH Healthcare
Bhd (IHH)
Hospitality Includes investment in Minor International
Public Company Limited (MINT)
Lifestyle/Education Includes investments in Chanintr Living
Ltd, the Wine Connection Group (WCG),
the Liaigre Group (Liaigre) and WCIB
International Co. Ltd. (WCIB)
Lifestyle/Real Estate Includes investments in Minuet Ltd,
SG Land Co. Ltd., a property joint
venture in Niseko, Hokkaido, Japan
and Desaru Peace Holdings Sdn Bhd
Cash and temporary investments Includes a Global Listed Portfolio,
structured investments, government
securities or other investment grade
securities, liquid investments which
are managed by third party investment
managers of international repute, and
deposits placed with commercial banks
Information regarding the results of each reportable segment is included below:
Lifestyle/ Cash and
Lifestyle/ Real temporary
Healthcare Hospitality education estate investments Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
2018
Investment income:
* Dividend income - 25,841 - - - 25,841
* Interest income - - 24 - 277 301
- 25,841 24 - 277 26,142
------------- -------------- ------------- ------------- -------------- ----------
Investment expense:
* Exchange loss, net 186 * (2,447) (483) (41) (2,785)
* Loss on disposal of financial assets at fair value
through profit or loss - - - - (19) (19)
* Fair value changes of financial assets at fair value
through profit or loss 410 (94,793) 9,534 5,899 (284) (79,234)
------------- -------------- ------------- ------------- -------------- ----------
596 (94,793) 7,087 5,416 (344) (82,038)
Net investment
results 596 (68,952) 7,111 5,416 (67) (55,896)
============= ============== ============= ============= ============== ==========
2017
Investment income:
* Dividend income 49,250 61,000 - - - 110,250
* Exchange gain (1,172) * 6,469 2,462 458 8,217
* Interest income 58 - - 24 121 203
* Other income - - 99 - - 99
------------- -------------- ------------- ------------- -------------- ----------
48,136 61,000 6,568 2,486 579 118,769
------------- -------------- ------------- ------------- -------------- ----------
Investment expense:
* Exchange loss (37,684) 42,632 (34,436) 16,130 1,204 (12,154)
(37,684) 42,632 (34,436) 16,130 1,204 (12,154)
------------- -------------- ------------- ------------- -------------- ----------
Net investment
results 10,452 103,632 (27,868) 18,616 1,783 106,615
============= ============== ============= ============= ============== ==========
2018
Segment assets 11,399 257,951 84,651 118,191 26,136 498,328
============= ============== ============= ============= ============== ==========
Segment liabilities - - - 5,327 - 5,327
============= ============== ============= ============= ============== ==========
2017
Segment assets 66,550 340,803 69,933 126,057 20,802 624,145
============= ============== ============= ============= ============== ==========
Segment liabilities - - - 5,166 - 5,166
============= ============== ============= ============= ============== ==========
* Less than US$1,000
Reconciliations of reportable segment profit or loss and assets
2018 2017
US$'000 US$'000
Profit or loss
Net investments results (55,896) 106,615
Unallocated amounts:
* Management fees (12,248) (14,176)
* Share option expense - (506)
* Non-executive director remuneration (386) (400)
* General operating expenses (986) (1,354)
----------- -----------
(Loss)/Profit for the year (69,516) 90,179
=========== ===========
Assets
Total assets for reportable segments 498,328 624,145
Other assets 72 78
----------- -----------
Total assets 498,400 624,223
=========== ===========
Liabilities
Total liabilities for reportable
segments 5,327 5,166
Other payables 368 385
Bank overdraft * -
----------- -----------
Total liabilities 5,695 5,551
=========== ===========
* Less than US$1,000
Geographical information
In presenting information on the basis of geographical information, revenue, comprising dividend income from investments, is based on the geographical location of the underlying investment. Assets are based on the principal geographical location of the assets or the operations of the investee companies. None of the underlying investments which generate revenue or assets are located in the Company's country of incorporation, BVI.
Singapore Malaysia Thailand Japan Mauritius Other Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
2018
Investment income:
* Dividend income - - - - 25,841 - 25,841
* Interest income 277 - - - - 24 301
277 - - - 25,841 24 26,142
------------ ----------- ----------- ---------- ------------ ----------- ----------
Investment expense:
* Exchange loss (178) - - - 185 (2,792) (2,785)
* Loss on disposal of financial assets at fair value
through profit or loss - - - - (19) - (19)
* Fair value changes of financial assets at fair value
through profit or loss (1,393) 3,034 (95,631) 202 - 14,554 (79,234)
------------ ----------- ----------- ---------- ------------ ----------- ----------
(1,571) 3,034 (95,631) 202 166 11,762 (82,038)
------------ ----------- ----------- ---------- ------------ ----------- ----------
Net investment
results (1,294) 3,034 (95,631) 202 26,007 11,786 (55,896)
============ =========== =========== ========== ============ =========== ==========
Singapore Malaysia Thailand Japan Mauritius Other Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
2017
Investment income:
* Dividend income - - - - 110,250 - 110,250
* Exchange gain 390 - - - (1,205) 9,032 8,217
* Interest income 121 - - - 58 24 203
* Other income 99 - - - - - 99
------------ ----------- ----------- ---------- ------------ ----------- ----------
610 - - - 109,103 9,056 118,769
------------ ----------- ----------- ---------- ------------ ----------- ----------
Investment expense:
* Exchange loss (39,226) 4,524 56,575 8,103 - (42,130) (12,154)
(39,226) 4,524 56,575 8,103 - (42,130) (12,154)
------------ ----------- ----------- ---------- ------------ ----------- ----------
Net investment
results (38,616) 4,524 56,575 8,103 109,103 (33,074) 106,615
============ =========== =========== ========== ============ =========== ==========
2018
Segment assets 11,231 44,621 356,283 18,229 257 67,707 498,328
============ =========== =========== ========== ============ =========== ==========
Segment liabilities 5,327 - - - - - 5,327
============ =========== =========== ========== ============ =========== ==========
2017
Segment assets 14,805 87,843 451,210 17,745 709 51,833 624,145
============ =========== =========== ========== ============ =========== ==========
Segment liabilities 5,166 - - - - - 5,166
============ =========== =========== ========== ============ =========== ==========
16 Financial risk management
The Company's financial assets comprise mainly financial assets at fair value through profit or loss, other receivables, and cash and cash equivalents. The Company's financial liabilities comprise interest-bearing borrowings, other payables and bank overdraft. Exposure to credit, price, interest rate, foreign currency and liquidity risks arises in the normal course of the Company's business.
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company and to set appropriate controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Investments in the form of advances are made to investee companies which are of acceptable credit risk. Credit risk exposure on the investment portfolio is managed on an asset-specific basis by the Investment Manager.
The company held cash and cash equivalents of US$11,538,000 as at 31 December 2018 (2017: US$15,689,000). The cash and cash equivalents are held with bank and financial institution counterparties, which are rated AA to Baa3, based on Moody's/TRIS/Standard & Poor's ratings.
Impairment on cash and cash equivalents has been measured on the 12-month expected loss basis and reflects the short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk based on external credit ratings of the counterparties. The amount of the allowance on cash and cash equivalents was negligible.
As at 31 December 2018, the Company has credit risk exposure relating to fixed deposits placed with financial institutions and placements in money market funds totalling US$11,538,000 (2017: US$15,689,000). Other than these balances, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Interest rate risk
The Company's exposure to changes in interest rates relates primarily to its interest-earning fixed deposits placed with financial institutions and interest-bearing term loans. The Company's fixed rate financial assets and liabilities are exposed to a risk of change in their fair value due to changes in interest rates while the variable-rate financial assets and liabilities are exposed to a risk of change in cash flows due to changes in interest rates. The Company does not enter into derivative financial instruments to hedge against its exposure to interest rate risk.
Sensitivity analysis
A 100 basis point ("bp") move in interest rate against the following financial assets and financial liabilities at the reporting date would increase/(decrease) profit or loss by the amounts shown below. The analysis assumes that all other variables remain constant.
Impact on Impact on
Profit or loss Profit or loss
100 bp 100 bp 100 bp 100 bp
increase decrease increase decrease
2018 2018 2017 2017
US$'000 US$'000 US$'000 US$'000
Deposits with financial
institutions 62 (62) 62 (62)
Interest-bearing borrowings (53) 53 (52) 52
--------- --------- --------- ---------
9 (9) 10 (10)
========= ========= ========= =========
Foreign exchange risk
The Company is exposed to transactional foreign exchange risk when transactions are denominated in currencies other than the functional currency of the operation. The Company does not enter into derivative financial instruments to hedge its exposure to Singapore dollars, Japanese Yen, Thai Baht, Malaysian Ringgit, Hong Kong dollars and Euro as the currency position in these currencies is considered to be long-term in nature and foreign exchange risk is an integral part of the Company's investment decision and returns.
The Company's exposure, in US dollar equivalent, to foreign currency risk on other financial instruments is as follows:
Singapore Japanese Thailand Malaysian
Dollars Yen Baht Ringgit Others
US$'000 US$'000 US$'000 US$'000 US$'000
2018
Financial assets at fair
value through profit or
loss 331 18,228 82,428 16,552 52,546
Other receivables 3 - - - -
Cash and cash equivalents 2,342 - * - 49
Interest-bearing borrowings - (5,327) - - -
Accrued operating expenses (246) - (2) - (18)
Net exposure 2,430 12,901 82,426 16,552 52,577
============ =========== =========== ============ ==========
2017
Financial assets at fair
value through profit or
loss 327 17,745 90,049 60,598 35,656
Other receivables * - - - -
Cash and cash equivalents 2,454 - * - 48
Interest-bearing borrowings - (5,166) - - -
Accrued operating expenses (258) - (1) - (24)
Net exposure 2,523 12,579 90,048 60,598 35,680
============ =========== =========== ============ ==========
* Less than US$1,000
Sensitivity analysis
A 10% strengthening of the US dollar against the following currencies at the reporting date would increase/(decrease) profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain constant.
Profit or loss
2018 2017
US$'000 US$'000
Singapore Dollars (243) (252)
Japanese Yen (1,290) (1,258)
Thailand Baht (8,243) (9,005)
Malaysian Ringgit (1,655) (6,060)
Others (5,258) (3,568)
========== ==========
A 10% weakening of the US dollar against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Price risk
The valuation of the Company's investment portfolio is dependent on prevailing market conditions and the performance of the underlying assets. The Company does not hedge the market risk inherent in the portfolio but manages asset performance risk on an asset-specific basis.
The Company's investment policies provide that the Company invests a majority of capital in longer-term strategic investments and a portion in special situations and structured transactions. Investment decisions are made by management on the advice of the Investment Manager.
Sensitivity analysis
All of the Company's underlying investments that are quoted equity investments are listed on either The Stock Exchange of Thailand, Singapore Stock Exchange or Bursa Malaysia. A 10% increase in the price of the equity securities at the reporting date would increase profit or loss after tax by the amounts shown below. The analysis assumes that all other variables remain constant.
Profit or loss
2018 2017
US$'000 US$'000
Underlying investments in quoted
equity securities at fair value through
profit or loss 26,883 39,646
========= =========
A 10% decrease in the price of the equity securities would have had the equal but opposite effect on the above quoted equity investments to the amounts shown above, on the basis that all other variables remain constant.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by the Investment Manager to finance the Company's operations and to mitigate the effects of fluctuations in cash flows. Funds not invested in longer-term strategic investments or investments in special situations and structured transactions are temporarily invested in liquid investments and managed by a third party manager of international repute, or held on deposit with commercial banks.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
Cash flows
--------------------
Carrying Contractual Within
amount cash flows 1 year
US$'000 US$'000 US$'000
2018
Non-derivative financial
liabilities
Interest-bearing borrowings 5,327 5,327 5,327
Other payables 368 368 368
Bank overdraft * * *
-------- ----------- -------
5,695 5,695 5,695
======== =========== =======
* Less than US$1,000
Cash flows
---------------------
Carrying Contractual Carrying
amount cash flows amount
US$'000 US$'000 US$'000
2017
Non-derivative financial
liabilities
Interest-bearing borrowings 5,166 5,166 5,166
Other payables 385 385 385
-------- ----------- --------
5,551 5,551 5,551
======== =========== ========
Capital management
The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of total equity. The Company seeks to maintain a balance between higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
The Company is not subject to externally imposed capital requirements.
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
profit Amortised Other financial
Note or loss cost liabilities Total Fair value
US$'000 US$'000 US$'000 US$'000 US$'000
2018
Financial assets
measured at fair
value
Financial assets
at fair value through
profit or loss 3 486,790 - - 486,790 486,790
Financial assets
not measured at
fair value
Other receivables(1) 4 - 12 - 12
Cash and cash equivalents 5 - 11,538 - 11,538
486,790 11,550 - 498,340
=================== ========= =============== =======
Financial liabilities
not measured at
fair value
Interest-bearing
borrowings 8 - - (5,327) (5,327)
Other payables 9 - - (368) (368)
Bank overdraft - - * *
- - (5,695) (5,695)
=================== ========= =============== =======
Carrying amount
--------------------------------------------------------
Fair value
through
profit Amortised Other financial
Note or loss cost liabilities Total Fair value
US$'000 US$'000 US$'000 US$'000 US$'000
2017
Financial assets
measured at fair
value
Financial assets
at fair value through
profit or loss 3 608,456 - - 608,456 608,456
Financial assets
not measured at
fair value
Other receivables(1) 4 - 1 - 1
Cash and cash equivalents 5 - 15,689 - 15,689
608,456 15,690 - 624,146
=================== ========= =============== =======
Financial liabilities
not measured at
fair value
Interest-bearing
borrowings 8 - - (5,166) (5,166)
Other payables 9 - - (385) (385)
- - (5,551) (5,551)
=================== ========= =============== =======
1 Excludes prepayment
*Less than US$1,000
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, accrued operating expenses, other payables and bank overdraft) 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 considered less than 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$'000
2018
Financial assets at
fair value through
profit or loss - - 486,790 486,790
=========== =========== ========== ==========
2017
Financial assets at
fair value through
profit or loss - - 608,456 608,456
=========== =========== ========== ==========
As explained in Note 2.3, the Company qualifies as an investment entity and therefore does not consolidate its subsidiaries. Accordingly, the fair value levelling reflects the fair value of the unconsolidated subsidiaries and not the underlying quoted equity investments. There were no transfers from Level 1 to Level 2 or Level 3 and vice versa during the years ended 31 December 2018 and 2017.
The fair value hierarchy table excludes financial assets and financial liabilities such as cash and cash equivalents, other receivables and payables and interest-bearing borrowings and bank overdraft because their carrying amounts approximate their fair values due to their short-term period to maturity/repricing.
Level 3 valuations
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy.
2018 2017
Financial assets at
fair value through
profit or loss
US$'000
Balance at 1 January 608,456 638,222
Fair value changes in profit or loss (79,234) (12,154)
Net repayment from unconsolidated subsidiaries (42,443) (17,612)
Disposal 11 -
Balance at 31 December 486,790 608,456
=========== ===========
Significant unobservable inputs used in measuring fair value
This table below sets out information about significant unobservable inputs used at 31 December 2018 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.
Fair value Fair value Sensitivity
at 31 at 31 to changes
December December in significant
2018 2017 Valuation Unobservable Range (Weighted unobservable
Description US$'000 US$'000 technique input average) inputs
------------- ---------- ---------- ------------- ----------------------- --------------- -------------------
Rental growth
rate 0% - 6%
(2017:
0% - 6%) The estimated
fair value
Occupancy 80% - 87% would increase
rate (2017: if the rental
78% - 82%) growth rate
and occupancy
13%-13.5% rate were higher
Rental Income Discount (2017: and the discount
properties 10,531 10,102 approach rate 13%) rate was lower.
US$73 to
US$4,102 The estimated
per square fair value
meter (2017: would increase
Price per US$74 to if the price
Comparable square meter US$4,005 per square
Land related valuation for comparable per square meter were
investments 107,659 115,955 method land meter) higher.
------------- ---------- ---------- ------------- ----------------------- --------------- -------------------
Fair value Fair value Sensitivity
at 31 at 31 to changes
December December in significant
2018 2017 Valuation Unobservable Range (Weighted unobservable
Description US$'000 US$'000 technique input average) inputs
------------- ---------- ---------- ------------- ----------------------- --------------- -------------------
4.1x to The estimated
Enterprise 19.7x, median fair value
value using 10.7x (2017: would increase
comparable EBITDA 5.5x to if the EBITDA
Operating traded multiple 82.3x, median multiple was
business 68,609 56,490 multiples (times) 12.3x) higher.
Discount 20% The estimated
for fair value
would increase
if the discount
for lack of
marketability
was lower.
lack of marketability (2017:
20%)
Price of N/A N/A
recent transaction
Revenue growth
3.8% - 172.2%
(2017: 3.9%
- 83.4%) The estimated
Expense ratio fair value
73.7% - would increase
193.5% if the revenue
Greenfield (2017: 72.7% growth increases,
business Weighted - 96.2%) expenses ratio
held for Discounted average cost decreases,
more than cashflow of capital 11.5% and WACC were
12-months 16,042 13,442 method ("WACC") (2017: 11.6%) lower.
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 valuers judgement after considering current market rates.
The comparable recent sales represent the recent sales prices of properties that are similar to the Group's 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.
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 average EBITDA multiple from the 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 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.
Price of recent transaction is not disclosed due to strategic concerns.
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 weighted average cost of capital to derive the enterprise value of the greenfield business. Net debt is then deducted to arrive at an equity value for the business. Weighted cost of capital 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$268,832,000 (2017: US$396,459,000) are held through intermediate holding companies; the value of these companies are mainly determined by the fair values of the ultimate investments.
Although the Company believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3 assets, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on the profit or loss:
------------- 2018 ------------- 2017
------------ -------------
Effect on profit or Effect on profit or
loss loss
Favourable (Unfavourable) Favourable (Unfavourable)
US$'000 US$'000 US$'000 US$'000
Level 3 assets 36,341 (32,752) 37,375 (34,266)
============= ================= ============= =================
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 5% for the favourable scenario and reduced by 5% for the unfavourable scenario. The discount rate used to calculate the present value of future cash flows was also decreased by 1% for the favourable case and increased by 1% for the unfavourable case compared to the discount rate used in the year-end valuation.
For land related investments (except those held for less than 12-months where cost approximates fair value), which are valued on comparable transaction basis by third party valuation consultants, the fair value of the land is increased by 15% in the favourable scenario and reduced by 15% 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 earnings before interest, tax, depreciation and amortisation ("EBITDA"), EBITDA is increased by 15% and decreased by 15% in the favourable and unfavourable scenarios.
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 1%, the expense ratio rate is decreased by 5% and the WACC is reduced by 1% in the favourable scenario. Conversely, in the unfavourable scenario, the revenue growth rate is reduced by 1%, the expense ratio rate is increased by 5% and the WACC is increased by 1%.
17 Unconsolidated subsidiaries
Details of the unconsolidated subsidiaries of the Company are as follows:
Place of
incorporation Equity interest
Name of subsidiary Principal activities and business 2018 2017
% %
Symphony (Mint) Investment
Limited (Formerly
Symphony Capital Partners
Limited) Investment holding Republic of Mauritius 100 100
Symphony International
Limited Investment holding Republic of Mauritius - 100
Symphony Investment
Management Limited British Virgin
and its subsidiary: Investment holding Islands 100 100
Daphon Holdings Pte.
Ltd. Investment holding Republic of Singapore 100 100
Lennon Holdings Limited
and its subsidiary: Investment holding Republic of Mauritius 100 100
Britten Holdings
Pte. Ltd. Investment holding Republic of Singapore 100 100
British Virgin
Teurina Limited Investment holding Islands 100 100
Gabrieli Holdings
Limited British Virgin
and its subsidiaries: Investment holding Islands 100 100
Ravel Holdings Pte.
Ltd. and its subsidiaries: Investment holding Republic of Singapore 100 100
Schubert Holdings
Pte. Ltd. Investment holding Republic of Singapore 100 100
Haydn Holdings Pte.
Ltd. Investment holding Republic of Singapore 100 100
Place of
incorporation Equity interest
Name of subsidiary Principal activities and business 2018 2017
% %
Thai Education Holdings
Pte. Ltd. Investment holding Republic of Singapore 100 100
Lloyd Webber Holdings British Virgin
Limited Investment holding Islands 100 100
Maurizio Holdings
Limited British Virgin
and its subsidiary: Investment holding Islands 100 100
Groupe CL Pte. Ltd. Investment holding Republic of Singapore 100 100
British Virgin
True United Limited Investment holding Islands 100 100
British Virgin
True Wisdom Limited Investment holding Islands 100 100
British Virgin
Segovia Holdings Limited Investment holding Islands 100 100
British Virgin
Anshil Limited Investment holding Islands 100 100
British Virgin
Buble Holdings Limited Investment holding Islands 100 100
O'Sullivan Holdings British Virgin
Limited and its subsidiary: Investment holding Islands 100 100
Bacharach Holdings British Virgin
Limited Investment holding Islands 100 100
British Virgin
Brahms Holdings Limited Investment holding Islands 100 100
Schumann Holdings British Virgin
Limited Investment holding Islands 100 100
Symphony Healthcare British Virgin
Holdings Limited Investment holding Islands 100 100
Dynamic Idea Investments British Virgin
Limited Investment holding Islands 100 100
Ideal Dream Limited Investment holding British Virgin 100 -
Islands
18 Underlying investments
Details of the underlying investments in unquoted equities of the Company are as follows:
Preference
Place of Ordinary shares shares
incorporation Equity interest Equity interest
Principal
Name activities and business 2018 2017 2018 2017
% % % %
Property
La Finta Limited(1) development Thailand 49 49 - -
Property
Minuet Limited(1) development Thailand 49.98 49.98 - -
SG Land Co. Limited(1) Real estate Thailand 49.91 49.91 - -
Ordinary Preference
Place of shares shares
incorporation Equity interest
Principal
Name activities and business 2018 2017 2018 2017
% % % %
C Larsen (Singapore) Distribution Republic - 49.90 - -
Pte Ltd(2) of furniture of Singapore
Chanintr Living Distribution
Limited(2) of furniture Thailand 49.90 49.90 - -
Distribution
and retail
of furniture
Chanintr Living and home
(Thailand) Limited decorations Thailand 24.45 24.45 - -
Distribution
and retail
of furniture
Chanintr Living and home Republic
Pte Ltd decorations of Singapore 49.90 49.90 - -
Well Round Holdings Property
Limited(2) development Hong Kong 37.5 37.5 - -
Silver Prance Property
Limited(2) development Hong Kong 37.5 37.5 - -
Desaru Peace Holdings Property
Sdn Bhd(2) development Malaysia 49 49 49 49
Hospitality
Oak SPV Limited and lifestyle Cayman Islands 13.4 13.4 - -
Macassar Holdings
SARL Lifestyle Luxembourg 49.90 49.90 49.90 49.90
Wellington College
International
Bangkok International
Co. Ltd. Education Thailand 39.1 40 - -
(1) Joint venture
(2) Associate
19 Subsequent events
Subsequent to 31 December 2018,
-- the Company entered into a structured transaction that will provide an opportunity to acquire a minority interest in Indo Trans Logistics Corporation ("ITL") in Vietnam. The transaction amounted to more than 5% of NAV;
-- the Company announced that the Pierre Chen family from Taiwan had become a partner and co-owner of the Liaigre group together with existing shareholders; and
-- the Company has an indirect minority interest in Oak SPV HK Limited that holds one of the Company's underlying investments in unquoted equities. Due to administrative oversight, the controlling shareholder of Oak SPV HK Limited failed to pay annual fees and make various annual filings (amongst other things) and, as a result, Oak SPV HK Limited was struck off the Companies Register in Hong Kong and subsequently dissolved. Consequently, every property and right vested in Oak SPV HK Limited immediately before the dissolution is vested in the Hong Kong Government as bona vacantia. The controlling shareholder intends to apply for restoration of Oak SPV HK Limited through the administrative restoration procedure and the process is expected to be completed in May 2019. Oak SPV HK Limited is liable for legal fees, late filing fees and penalties, and related business registration fees and penalties, which in aggregate are not expected to be material to the Company. The Company's indirect interest in Oak SPV HK Limited represents less than 2% of NAV.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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