Not for Distribution, directly or
indirectly, in or into the United States or any jurisdiction in
which such distribution would be unlawful.
27 September 2024
Symphony International
Holdings Limited
Interim
Financial Results for the six-month period ended 30 June
2024
Symphony International Holdings
Limited ("SIHL", the "Company" or "Symphony") announces the interim
results for the six months ended 30 June 2024. The condensed interim
financial statements of the Company and its subsidiaries have been
prepared in accordance with IAS 34 Interim Financial Reporting and have
not been audited or reviewed by the auditors of the
Company.
Introduction
The Company is an investment company
initially incorporated as a limited liability company under the
laws of the British Virgin Islands on 5 January 2004. The
Company voluntarily re-registered itself as a BVI Business Company
on 17 November 2006. The Company's investment objectives are
to increase the aggregate net asset value of the Company ("NAV")
calculated in accordance with the Company's policies through
strategic longer-term investments in consumer-related businesses,
primarily in the healthcare, hospitality, lifestyle (including
branded real estate developments), logistics and education sectors,
and through investments in special situations and structured
transactions, which have the potential to generate attractive
returns and to enhance the NAV.
The Company was admitted to the
Official List of the UK Listing Authority on 3 August 2007 under
Chapter 14 of the UK Listing Rules and its securities were admitted
to trading on the London Stock Exchange's main market for listed
securities on the same date.
Symphony's Investment Manager is
Symphony Asia Holdings Pte. Ltd. (the "Investment Manager" or
"SAHPL"). The Company has entered into an Investment
Management Agreement with the Investment Manager. SAHPL's
licence for carrying on fund management in Singapore is restricted
to serving only accredited investors and/or institutional
investors. Symphony is an accredited investor.
As at 30 June 2024, the issued share capital of the
Company was US$409.70 million (31 December 2023: US$409.70 million) consisting of
513,366,198 (31 December 2023: 513,366,198) ordinary
shares.
Net
Asset Value
Symphony's NAV is the sum of its
cash and cash equivalents, temporary investments, the fair value of
unrealised investments (including investments in subsidiaries,
associates and joint ventures) and any other assets, less any other
liabilities. The unaudited financial statements contained herein
may not account for the fair value of certain unrealised
investments. Accordingly, Symphony's NAV may not be
comparable to the net asset value in the unaudited financial
statements. The primary measure of SIHL's financial
performance and the performance of its subsidiaries will be the
change in Symphony's NAV per share resulting from changes in the
fair value of investments.
The NAV attributable to the ordinary
shares on 30 June 2024 was US$0.74 (31 December 2023: US$0.74) per share, representing
a 0.66% decrease.
The marginal change in NAV from 31
December 2023 to 30 June 2024 is due to a net increase in the value
of investments that was more than offset by general operating
expenses.
Portfolio Overview
The following is an overview of the
Company's portfolio as at 30 June 2024:
HOSPITALITY
Minor International Public Company Limited
("MINT") is a global company focused
on two core businesses: hospitality and restaurants. MINT is
a hotel owner, operator and investor with a portfolio of over 550
hotels under the Anantara, Avani, Oaks, Tivoli, NH Collection, NH,
nhow, Elewana, Marriott, Four Seasons, St. Regis and Radisson Blu
brands in 57 countries across Asia Pacific, the Middle East,
Africa, the Indian Ocean, Europe, South and North America.
MINT is also one of Asia's largest restaurant companies with over
2,650 outlets system-wide in 24 countries under The Pizza Company,
The Coffee Club, Riverside, Benihana, Thai Express, Bonchon,
Swensen's, Sizzler, Dairy Queen, Burger King, Coffee Journey and
GAGA brands.
As at 30
June 2024, the
Company's gross cost in MINT was approximately US$82.82 million (31
December 2023:
US$82.82 million). The net cost on the same date, after deducting
partial realisations and dividends received was (US$244.67 million)
(31 December 2023:
(US$244.14 million)). The negative net investment cost is due
to the proceeds from partial realisations and dividends being in
excess of cost for this investment.
As at 30
June 2024, the
market value of the Company's investment in MINT was US$50.07
million (31 December 2023: US$52.55 million). The change in value since 31 December 2023 is due to
(i) the sale of 3.03 million warrants that cumulatively generated
net proceeds of US$0.04 million and (ii) a depreciation in the
onshore Thai baht rate by 7.50%, which was partially offset by an
increase in the share price of MINT by 2.56% during the same
period.
HEALTHCARE
ASG Hospital Private Limited ("ASG")
is a full-service eye-healthcare provider
with operations in India, Africa, and Nepal. ASG was
co-founded in Rajasthan, India in 2005 by Dr. Arun Singhvi and Dr.
Shilpi Gang. ASG's operations have since grown to 151 clinics,
which offer a full range of eye-healthcare services, including
outpatient consultation and a full suite of inpatient procedures
(cataract, retina surgeries, Lasik, glaucoma, cornea and other
complicated eye surgeries). ASG also operates an optical and
pharmacy business, which is located within clinics.
Symphony invested in ASG in tranches from October
2019 through to July 2020 and subsequently acquired secondary
shares in October 2021. In 2022, Symphony sold approximately
a third of its shares at 2.4 times its cost of shares sold.
Symphony held an 8.51% interest in ASG as
at 30 June 2024.
Symphony's gross and net investment
cost in ASG was US$20.67 million and US$3.65 million at 30
June 2024 (31
December 2023:
US$20.67 million and US$3.65 million), respectively. The fair
value of Symphony's investment at 30 June 2024 was US$60.03 million (31
December 2023:
US$40.97 million). The difference in
value is due to changes in the performance of the business and
certain assumptions used in the valuation for this
investment.
Soothe Healthcare Pvt. Ltd. ("Soothe")
was founded in 2012 and operates within the
fast-growing consumer healthcare products market segment in
India. With growing disposable income, the demand for
consumer healthcare products is expected to grow rapidly over the
coming decades. Soothe's core product portfolio includes
feminine hygiene and diaper products. Symphony completed an initial
equity investment in Soothe in August 2019 and subsequently made investments through convertible notes
and securities from 2020 to 2023.
Symphony's gross and net investment
cost in Soothe was US$13.42 million at 30 June 2024 (31 December 2023: US$13.42 million). The
fair value of Symphony's investment at 30 June 2024 was US$17.12
million, which compares to US$18.20 million at 31 December
2023. The difference in value is due to
changes in certain assumptions used in the valuation for this
investment.
LIFESTYLE
The Liaigre Group ("Liaigre") was founded in 1985 in Paris and is a brand synonymous with
discreet luxury, and has become one of the most sought-after luxury
furniture brands, renowned for its minimalistic design style.
Liaigre has a strong intellectual property portfolio and provides a
range of bespoke furniture, lighting, fabric & leather, and
accessories. In addition to operating a network of 24
showrooms across Europe, the US and Asia, Liaigre undertakes
exclusive interior architecture projects for select yachts, hotels,
and restaurants and private residences.
Symphony's gross investment cost in
Liaigre was US$79.95 million at 30 June 2024 (31 December 2023: US$79.68 million). The net
cost on the same date, after deducting partial realisations, was
US$67.90 million (31 December
2023: US$67.63
million). The fair value of Symphony's investment at 30
June 2024 was
US$23.34 million (31 December
2023: US$29.89 million).
The change in fair value from 31 December 2023 is due to a
decrease in trailing earnings before
interest, tax, depreciation and amortisation ("EBITDA"), which was
partially offset by higher comparable
company multiples used to value the
business.
CHANINTR ("Chanintr") Chanintr
is a luxury lifestyle company, based in Thailand, which primarily
distributes high-end U.S. and European furniture and household
accessory brands, including Liaigre, Barbara Barry, Baker, Herman
Miller, Marquee, Minotti, Bulthaup kitchens amongst others.
Chanintr also provides Furniture, Fixtures & Equipment
solutions for real estate and hotel projects. In 2019,
Chanintr launched a new program called Chanintr Residences which
will showcase custom-designed luxury residences as turnkey
projects.
LIFESTYLE/REAL
ESTATE
Minuet Ltd ("Minuet") is a
joint venture between the Company and an established Thai
partner. The Company has a direct 49% interest in the venture
and is considering several development and/or sale options for the
land owned by Minuet, which is located in close proximity to
central Bangkok, Thailand. As at 30 June 2024, Minuet held
approximately 186.75 rai (29.88 hectares) of land in Bangkok,
Thailand.
The Company initially invested
approximately US$78.30 million by way of an equity investment and
interest-bearing shareholder loans. Since the initial
investment by the Company, Minuet has received proceeds from rental
income and partial land sales. As at 30 June
2024, the Company's
investment cost (net of shareholder loan repayments) was
approximately US$13.13 million (31 December 2023: US$13.13 million). The
fair value of the Company's interest in Minuet on the same date was
US$77.96 million (31 December 2023: US$61.76 million) based on an
independent third-party valuation of the land plus the net value of
the other assets and liabilities of Minuet. The change in
value of Symphony's interest is predominantly due to an increase in
the value of the land, which was partially offset by a depreciation
in the Thai baht rate by 7.31%.
Niseko Property Joint Venture ("Niseko JV")
is a property development venture that acquired
land in Niseko, Hokkaido, Japan. Symphony has a 37.5%
interest in this venture, which it acquired for a total investment
of US$10.41 million and has to date received distributions of
US$16.73 million that relate to the partial sale of land held by
the venture. The Niseko JV sold 31% of the development site
to Hanwha Hotels & Resorts with a further 39% to a new joint
venture company that is equally held and being co-developed by the
Niseko JV and Hanwha Hotels & Resorts. The Niseko JV
continues to effectively hold approximately 50% of the development
site, of which one third is held for future development and/or
sale.
Desaru property joint venture in Malaysia
("Desaru") is a property joint
venture in Malaysia with an affiliate of Destination Resorts and
Hotels Sdn Bhd, a hotel and destination resort investment
subsidiary of Khazanah Nasional Berhad, the investment arm of the
Government of Malaysia. The joint venture has developed a
beachfront resort with private villas for sale on the south-eastern
coast of Malaysia and that are branded and managed by One&Only
Resorts ("O&O"). The hotel operations were officially
launched in September 2020. The
Company has a 49% equity interest in the joint venture.
Symphony invested approximately
US$58.78 million in the joint venture at 30 June 2024 (31
December 2023:
US$58.78 million). The fair value for this investment on the
same date was US$20.50 million based on a discounted cashflow model
and independent third-party valuation of the land. This
compares to US$27.11 million at 31 December 2023.
The change in value is due weaker than expected
performance of hotel operations and a decrease in the net value of
the land.
Isprava Vesta Private Limited ("Isprava")
is a company that designs,
builds and sells branded villas in non-urban markets in India such
as Alibagh, Goa and Kasauli. The Company is also in the
business of renting luxury holiday homes under the brand name of
"Lohono Stays" and includes both homes constructed and sold by
Isprava and third-party homes in India and overseas. Symphony
made an investment in Isprava in January 2023.
EDUCATION
WCIB International Co. Ltd. ("WCIB")
is a joint venture that developed and operates
Wellington College International Bangkok, the fifth international
addition to the Wellington College family of schools.
WCIB operates a co-educational school that will ultimately cater to
over 1,500 students aged 2-18 years of age when all phases are
fully complete. WCIB commenced operations in August 2018 with
inaugural students attending Nursery to Year 6. Symphony
initially invested in the joint venture in January 2017 and has
made subsequent investments with its partners to facilitate ongoing
development of the school and support working capital
requirements.
LOGISTICS
Indo Trans Logistics Corporation ("ITL")
was founded in 2000 as a freight-forwarding
company and has since grown to become Vietnam's largest independent
integrated logistics company with a network that is spread across
Vietnam, Cambodia, Laos, Myanmar, and Thailand. ITL has grown
to national champion status in Vietnam.
The Company acquired a significant
minority interest in ITL in June 2019 for US$42.64 million and had
a net cost of US$35.28 million (31 December 2023: US$42.14 million) at 30
June 2024.
Symphony completed the sale of a small number of shares to a
strategic Asian logistics company as part of a larger secondary
offering mentioned in earlier updates in 2023. The gross and
net sale consideration received was 5.5 times and 4.6 times
Symphony's cost of shares sold, respectively.
The fair value for Symphony's
interest in ITL at 30 June 2024 was US$59.71 million. The
change in value from US$74.59 million at 31 December 2023 is
predominantly due to a 21.15% decline in the median comparable
company multiples used to value this investment and a depreciation
of the Vietnamese dong by 4.66% that were partially offset by an
increase in EBITDA.
NEW
ECONOMY
In November 2019, Symphony invested
in Smarten Spaces Pte. Ltd. ("Smarten"),
a Singapore based SaaS (Software-as-a-Service) company
that provides software solutions for space management in commercial
and industrial properties. Smarten was founded in 2017 by
Dinesh Malkani and offers an end-to-end solution for workplace
flexibility on a single technology platform, to help
businesses navigate the new hybrid workplace. The SaaS technology
includes four key aspects - Desk Management, Workforce Rostering,
Demand & Supply, Expenses & Chargeback, and Asset
Management; bringing together key workforce and workplace
considerations for a future-ready solution.
In September 2020, Symphony invested
in August Jewellery Private Limited ("Melorra"), a Bangalore based
omni-channel fast fashion Indian jewellery company. Founded
by Saroja Yeramilli in January 2015, Melorra has an online
presence and also operates experience centres in Europe. Melorra
continues to be adversely affected due to capital
constraints.
Good Capital is majority owned by
brothers Rohan and Arjun Malhotra who founded Investopad in 2014 by
investing their own capital into building substantial
infrastructure across India (Delhi, Bangalore and Gurgaon) and
creating a thriving ecosystem of technology startups.
Symphony announced its investment in the General Partner, Good
Capital Partners ("GCP") and its first fund, Good Capital Fund I,
in July 2019. In March 2023, Symphony made a commitment to
Good Capital Fund II.
In August 2021, Symphony invested in
Catbus Infolabs Private Limited ("Blowhorn"), the owner of the
Blowhorn platform. Blowhorn is a same-day intra-city last-mile
logistics provider headquartered in Bangalore, India. The
company provides seamless transportation, warehousing, and a fully
technologically integrated system to manage the end-to-end supply
chain process through an asset-light transportation and distributed
micro-warehousing network. The business has been scaled down due to
capital constraints and is continuing its capital raising exercise
to support a revised business plan.
In September 2021, Symphony invested
in Kieraya Furnishing Solutions Private Limited ("Furlenco") a
Bangalore based online residential furniture business. Founded
by Ajith Karimpana in October 2012, Furlenco sells furniture and
also operates subscription-based furniture rental business.
Furlenco completed a capital raise from Sheila Foam Limited ("SFL")
in 2023. SFL is an Indian publicly listed
company that provides foam products for furniture and other related
fixtures and fittings. The investment
increased SFL's interest in Furlenco to 35.01% and facilitated the
reduction of debt and provided working capital to grow the
business.
In September 2021, Symphony invested
in Meesho Inc. ("Meesho"), a Bangalore based social e-commerce
platform for micro-entrepreneurs and Medium and Small Enterprises
("MSME") to sell to the next 500 million Indians coming
online. Founded by Vidit Aatrey and Sanjeev Barnwal
in March 2016, Meesho aims to enable small businesses,
including individual entrepreneurs, to succeed online by bringing a
range of products and new customers onto the Meesho platform.
Meesho started as a reseller-focused platform enabling millions to
sell online and has now become a single ecosystem connecting
sellers to consumers and entrepreneurs.
In September 2021, Symphony invested
in SolarSquare Energy Private Limited ("Solar Square") a rooftop
solar power company that focuses on residential homes, primarily
standalone houses, gated societies, and small commercial
centres. Solar Square was founded by Neeraj Jain and Nikhil
Nahar in 2015; they have since been joined by Shreya Mishra to
refocus the Company on the consumer space. The Company aims
to make clean energy affordable and accessible and become the
trusted brand in the space.
In December 2022, Symphony invested
in MAVI Holding Pte. Ltd. ("MAVI"), a B2B
insurance and warranty programme administration services company
headquartered in Singapore with operations in India, Thailand, and
Singapore. Mavi is an early-stage start-up business with a
goal to develop insurance products that are accessible,
competitively priced, and tailored for the Asian markets. The
Company will provide insurance and warranty programme management
services and partner with insurance and carriers in the region to
bring these products to market.
Cash and cash equivalents
Symphony has placed funds in certain
temporary investments. As at 30 June 2024, cash and cash equivalents
amounted to US$1.04 million (31 December 2023: US$9.09 million).
Outlook
In the first half of 2024, financial
markets delivered mixed results. The U.S. market continued to
outperform, driven largely by gains in major technology companies
with exposure to artificial intelligence. Meanwhile, many other
sectors and global markets showed more restrained growth. Notable
exceptions in Asia were India and Japan, where the Sensex and
Nikkei 225 posted significant gains of 9.35% and 18.28%,
respectively, for the six months ending 30 June 2024.
Inflation persisted in most regions,
delaying anticipated interest rate cuts earlier in the year. This
had a broad impact on asset values, particularly in the housing
market and in consumer demand for discretionary goods. While the
direction of interest rate policy is now clearer, uncertainty
remains regarding the pace and scale of future cuts, as central
banks, including the Federal Reserve (FED), continue to focus on
containing inflation. The easing that began with the FED's rate cut
in September 2024 is expected to bolster labour markets, consumer
spending, the housing sector, and capital markets.
Barring any geopolitical shocks,
Symphony's portfolio stands to gain from the evolving interest rate
cycle in the U.S. and Europe. Asian currencies and risk assets,
which have generally underperformed over the past 18 months, are
expected to appreciate. For instance, the Thai baht, Vietnamese
dong, and Indian rupee have depreciated by 7.92%, 7.71%, and 0.78%,
respectively, over this period. Symphony's investments,
particularly in lifestyle, real estate and new economy sectors,
should benefit from a valuation perspective.
Principal Risks
Some of the risks that the Company
is exposed to are described below.
The Company's investment management
team's past performance is not necessarily indicative of the
Company's future performance and any unrealised values of
investments presented in this document may not be realised in the
future.
The Company is not structured as a
typical private equity vehicle (it is structured as a permanent
capital vehicle), and thus may not have a comparable investment
strategy. The investment opportunities for the Company are more
likely to be as a long-term strategic partner in investments, which
may be less liquid, and which are less likely to increase in value
in the short term.
The Company's organisational,
ownership and investment structure may create certain conflicts of
interests (for example in respect of the directorships,
shareholdings or interests, including in portfolio companies that
some of the Directors and members of the Company's investment
management team may have). In addition, neither the Investment
Manager nor any of its affiliates owes the Company's shareholders
any fiduciary duties under the Investment Management Agreement
between, inter alia, the Company and the Investment Manager. The
Company cannot assume that any of the foregoing will not result in
a conflict of interest that will have a material adverse effect on
the business, financial condition and results of
operations.
The Company is highly dependent on
the Investment Manager, the Key Persons (as defined in the
Investment Management Agreement) and the other members of the
Company's investment management team and the Company cannot assure
shareholders that it will have continued access to them or their
undivided attention, which could affect the Company's ability to
achieve its investment objectives.
The Investment Manager's
remuneration is based on the Company's NAV (subject to a maximum
amount) and is payable even if the NAV does not increase, which
could create an incentive for the Investment Manager to increase or
maintain the NAV in the short term (rather than the long-term) to
the potential detriment of Shareholders.
The Company's investment policies
contain no requirements for investment diversification and its
investments could therefore be concentrated in a relatively small
number of portfolio companies in the healthcare, hospitality,
lifestyle (including branded real estate developments), logistics,
education and new economy related sectors predominantly in
Asia.
The Company has made, and may
continue to make, investments in companies in emerging markets,
which exposes it to additional risks (including, but not limited
to, the possibility of exchange control regulations, political and
social instability, nationalisation or expropriation of assets, the
imposition of taxes, higher rates of inflation, difficulty in
enforcing contractual obligations, fewer investor protections and
greater price volatility) not typically associated with investing
in companies that are based in developed markets.
Furthermore, the Company has made,
and may continue to make, investments in portfolio companies that
are susceptible to economic recessions or downturns. Such economic
recessions or downturns may also affect the Company's ability to
obtain funding for additional investments.
The Company's investments include
investments in companies that it does not control and/or made with
other co-investors for financial or strategic reasons. Such
investments may involve risks not present in investments where the
Company has full control or where a third party is not involved.
For example, there may be a possibility that a co-investor may have
financial difficulties or become bankrupt or may at any time have
economic or business interests or goals which are inconsistent with
those of the Company or may be in a position to take or prevent
actions in a manner inconsistent with the Company's objectives. The
Company may also be liable in certain circumstances for the actions
of a co-investor with which it is associated. In addition, the
Company holds a non-controlling interest in certain investments,
and therefore, may have a limited ability to protect its position
in such investments.
A number of the Company's
investments are currently, and likely to continue to be, illiquid
and/ or may require a long-term commitment of capital. The
Company's investments may also be subject to legal and other
restrictions on resale. The illiquidity of these investments may
make it difficult to sell investments if the need
arises.
The Company's real estate related
investments may be subject to the risks inherent in the ownership
and operation of real estate businesses and assets. A downturn in
the real estate sector or a materialization of any of the risks
inherent in the real estate business and assets could materially
adversely affect the Company's real estate investments. The
Company's portfolio companies also anticipate selling a significant
proportion of development properties prior to completion. Any delay
in the completion of these projects may result in purchasers
terminating off-plan sale agreements and claiming refunds, damages
and/or compensation.
The Company is exposed to foreign
exchange risk when investments and/ or transactions are denominated
in currencies other than the U.S. dollar, which could lead to
significant changes in the net asset value that the Company reports
from one quarter to another.
The Company's investment policies
and procedures (which incorporate the Company's investment
strategy) provide that the Investment Manager should review the
Company's investment policies and procedures on a regular basis
and, if necessary, propose changes to the Board when it believes
that those changes would further assist the Company in achieving
its objective of building a strong investment base and creating
long term value for its Shareholders. The decision to make any
changes to the Company's investment policy and strategy, material
or otherwise, rests with the Board in conjunction with the
Investment Manager and Shareholders have no prior right of approval
for material changes to the Company's investment policy.
Investments in connection with
special situations and structured transactions typically have
shorter operating histories, narrower product lines and smaller
market shares than larger businesses, which tend to render them
more vulnerable to competitors' actions and market conditions, as
well as general economic downturns. Investments that fall into this
category tend to have relatively short holding periods and entail
little or no participation in the board of the Company in which
such investments may be made. Special situations and structured
transactions in the form of fixed debt investments also carry an
additional risk that an increase in interest rates could decrease
their value.
The Company's current investment
policies and procedures provide that it may invest an amount of no
more than 30% of its total assets in special situations and
structured transactions which, although they are not typical
longer-term investments, have the potential to generate attractive
returns and enhance the Company's net asset value. Following the
Company's investment, it may be that the proportion of its total
assets invested in longer-term investments falls below 70% and the
proportion of its total assets invested in special situations and
structured transactions exceeds 30% due to changes in the
valuations of the assets, over which the Company has no
control.
Pending the making of investments,
the Company's capital will need to be temporarily invested in
liquid investments and managed by a third-party investment manager
of international repute or held on deposit with commercial banks
before they are invested. The returns that temporary investments
are expected to generate and the interest that the Company will
earn on deposits with commercial banks will be substantially lower
than the returns that it anticipates receiving from its longer-term
investments or special situations and structured
transactions.
In addition, while the Company's
temporary investments will be relatively conservative compared to
its longer-term investments or special situations and structured
transactions, they are nevertheless subject to the risks associated
with any investment, which could result in the loss of all or a
portion of the capital invested.
The Investment Manager has
identified but has not yet contracted to make further potential
investments. The Company cannot guarantee shareholders that any or
all of these prospective investments will take place in the
future.
The market price of the Company's
shares may fluctuate significantly and shareholders may not be able
to resell their shares at or above the price at which they
purchased them.
The Company's shares are currently
trading, and have in the past traded, and could in the future
trade, at a discount to NAV for a variety of reasons, including due
to market conditions. The only way for shareholders to realise
their investment is to sell their shares for cash. Accordingly, in
the event that a shareholder requires immediate liquidity, or
otherwise seeks to realise the value of his investment through a
sale, the amount received by the shareholder upon such sale may be
less than the underlying NAV of the shares sold.
The Company could be materially
adversely affected by the widespread outbreak of infectious disease
or other public health crises (or by the fear or imminent threat
thereof). Public health crises such as SARS, H1N1/09 flu, avian
flu, Ebola and COVID-19 pandemic, together with any related
containment or other remedial measures undertaken or imposed, could
have a material and adverse effect on the Company including by (i)
disrupting or otherwise materially adversely affecting the human
capital, business operations or financial resources of the Company,
the Company's portfolio companies, the Investment Manager or
service providers and (ii) adversely affect the ability, or the
willingness, of a party to perform its obligations under its
contracts and lead to uncertainty over whether such failure to
perform (or delay in performing) might be excused under so-called
"material adverse change," force majeure and similar provisions in
such contracts that could cause a material impact to the Company,
the Company's portfolio companies, the Investment Manager or
service providers and (iii) severely disrupting global, national
and/or regional economies and financial markets and precipitating
an economic downturn or recession that could materially adversely
affect the value and performance of the Company's
shares.
Our business could be materially
affected by conditions in the global capital markets and the
economy generally. Geopolitical issues, including the
Russian-Ukraine war, conflicts in the Middle East and related
international response measures may have a negative impact on
regional and global economic conditions, as a result of disruptions
in foreign currency markets and increased energy and commodity
prices. This could in turn have a spill-over effect on our
portfolio companies, such as reducing demand for products or
services offered by our portfolio companies and/or cause for
example, higher operating and financing costs.
Directors' Responsibility
Statement
We, the directors of Symphony
International Holdings Limited, confirm that to the best of our
knowledge:
(a) the condensed
interim financial statements, which have been prepared in
accordance with IAS 34 - Interim Financial Reporting,
give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
as required by DTR 4.2.4R; and
(b) the interim
financial results include a fair review of information required
by:
(i) DTR 4.2.7R of
the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of
the financial year and their impact on the financial statements,
and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(ii) DTR 4.2.8R of the
Disclosure and Transparency Rules, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the Company during that period, and any
changes in the related party transactions described in the last
annual report that could do so.
For and on behalf of the Board of
Directors
Georges Gagnebin
Chairman, Symphony International
Holdings Limited
Anil Thadani
Chairman, Symphony Asia Holdings
Pte. Ltd.
Director, Symphony International
Holdings Limited
Symphony International Holdings
Limited
Notes to the condensed interim
financial statements
Period from 1 January
2024 to 30 June
2024
These notes form an integral part of the condensed interim
financial statements.
1
REPORTING ENTITY
Symphony International Holdings
Limited (the "Company") is a company
domiciled in the British Virgin Islands.
The financial statements of the
Company as at and for the year ended 31 December
2023 are available upon
request from the Company's registered office at Vistra Corporate
Services Centre, Wickhams Cay II, Road Town, Tortola VG1110 British
Virgin Islands.
2
STATEMENT OF COMPLIANCE
These condensed interim financial
statements have been prepared in accordance with IAS 34
Interim Financial
Reporting. They do not include all of the information
required for full annual financial statements, and should be read
in conjunction with the financial statements of the Company as at
and for the year ended 31 December 2023.
These condensed interim financial
statements were approved by the Board of Directors on 24 September
2024.
3
MATERIAL ACCOUNTING POLICIES
The accounting policies applied by
the Company in these condensed interim financial statements are the
same as those applied by the Company in its financial statements as
at and for the year ended 31 December 2023. The Company qualifies as
an investment entity, as a result of which all immediate
investments are carried at fair value through profit or
loss.
4
Estimates
The preparation of interim financial
statements in conformity with International Financial Reporting
Standards requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and
expense. Actual results may differ from these
estimates.
In preparing these condensed interim
financial statements, the significant judgements made by management
in applying the Company's accounting policies and the key sources
of estimation uncertainty were the same as those that applied to
the condensed financial statements as at and for the year ended 31
December 2023.
Uncertain economic
environment
The uncertain economic environment
has increased the estimation uncertainty in developing significant
accounting estimates, predominantly related to financial assets at
fair value through profit or loss ('FVTPL').
The estimation uncertainty is
associated with:
·
the extent and duration of the expected economic
downturn and subsequent recovery. This includes the impacts
on liquidity, increasing unemployment, declines in consumer
spending and forecasts for key economic factors;
·
the extent and duration of the disruption to
business arising from the expected economic downturn;
and
·
the effectiveness of government and central bank
measures that have and will be put in place to support businesses
and consumers through this disruption and economic
downturn.
The Company has developed accounting
estimates based on forecasts of economic conditions which reflect
expectations and assumptions as at 30 June 2024 about future events that
management believes are reasonable in the circumstances.
There is a considerable degree of
judgement involved in preparing forecasts. The underlying
assumptions are also subject to uncertainties which are often
outside the control of the Company. Accordingly, actual
economic conditions are likely to be different from those forecast
since anticipated events frequently do not occur as expected, and
the effect of those differences may significantly impact accounting
estimates included in these condensed financial
statements.
The impact of the uncertain economic
environment on financial assets at FVTPL is discussed further in
Note 7.
5
financial risk management
The Company's financial risk
management objectives and policies are consistent with those
disclosed in the financial statements as at and for the year ended
31 December 2023.
6
Financial assets at fair value through profit or loss
During the financial period ended on
30 June 2024:
i. The
Company recognised a fair value gain in financial assets at FVTPL
of US$3,894,000 (30 June 2023: loss of
US$73,217,000).
ii. During
the six-month period ended 30 June
2024, the Company's wholly owned
subsidiary, Symphony (Mint) Investment Limited, sold
approximately 3.03
million warrants held in Minor International PCL in the market
through a series of transactions.
iii. On 12 April
2024, the Company's wholly owned subsidiary, Dynamic Idea
Investments Limited, made a follow-on investment in Liaigre
Hospitality Ventures Pte. Ltd. The associated cost of this
investment was less than 1% of the Company's NAV.
iv. On 26 January
and 25 June 2024, the Company's wholly owned subsidiary, Symphony
Assure Pte. Ltd., subscribed to securities in Mavi Holding Pte.
Ltd. The associated cost of this investment was less than 1%
of the Company's NAV.
v.
On 5 February and 20 June 2024, the Company's
wholly owned subsidiary, Stravinsky Holdings Pte. Ltd., funded
capital calls from the Good Capital Fund I as part of its
commitment as an anchor investor. The capital call amounted to less
than 1% of the Company's NAV.
vi.
On 12 March, 2 May and 20 June 2024, the Company's
wholly owned subsidiary, Stravinsky Holdings Pte. Ltd., funded
capital calls from the Good Capital Fund II as part of its
commitment as an anchor investor. The capital call amounted to less
than 1% of the Company's NAV.
vii. On 13 March 2024, the Company's wholly owned subsidiary,
Wynton Holdings Pte. Ltd., completed a follow-on investment in
Catbus Infolabs Private Ltd. The investment amounted to less than
1% of the Company's NAV.
viii. On 4 March 2024, the Company's wholly owned subsidiary, Thai
Education Holdings Pte. Ltd., completed a follow-on investment in
WCIB International Co. Ltd. The investment amounted to less than 1%
of the Company's NAV.
ix.
On 20 June 2024, the Company's subsidiary, Shadows
Holdings Pte. Ltd. completed a follow-on investment in August
Jewellery Pvt. Ltd. The investment amounted to less than 1% of the
Company's NAV.
7
financial instruments
Accounting classification and fair values
The carrying amounts and fair values
of financial assets and financial liabilities are as follows.
It does not include fair value information for financial assets and
financial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
|
|
Carrying
amount
|
|
|
|
Fair value through
profit or loss
|
Amortised
cost
|
Other
financial
liabilities
|
Total
|
Fair value
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
30
June 2024
|
|
|
|
|
|
|
Financial assets measured at fair value
|
|
|
|
|
|
|
Financial assets at fair value
through profit or loss
|
378,162
|
-
|
-
|
378,162
|
378,162
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
Other
receivables1
|
-
|
*
|
-
|
*
|
|
|
Cash and cash equivalents
|
-
|
1,041
|
-
|
1,041
|
|
|
|
378,162
|
1,041
|
-
|
379,203
|
|
|
Financial liabilities not measured at fair
value
|
|
|
|
|
|
|
Other payables
|
-
|
-
|
(362)
|
(362)
|
|
|
31
December 2023
|
|
|
|
|
|
|
Financial assets measured at fair value
|
|
|
|
|
|
|
Financial assets at fair value
through profit or loss
|
372,655
|
-
|
-
|
372,655
|
372,655
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
Other
receivables1
|
-
|
5
|
-
|
5
|
|
|
Cash and cash equivalents
|
-
|
9,093
|
-
|
9,093
|
|
|
|
372,655
|
9,098
|
-
|
381,753
|
|
|
Financial liabilities not measured at fair
value
|
|
|
|
|
|
|
Other payables
|
-
|
-
|
(425)
|
(425)
|
|
|
|
|
|
|
|
|
1 Excludes prepayments
*
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, and other payables) the notional amounts are
assumed to approximate their fair values because of the short
period to maturity/repricing.
The objective of valuation
techniques is to arrive at a fair value measurement that reflects
the price that would be received to sell the asset or paid to
transfer the liability in an orderly transaction between market
participants at the measurement date.
Fair value hierarchy for
financial instruments
The table below analyses financial
instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
·
Level 1: Inputs that are
quoted market prices (unadjusted) in active markets for identical
instruments.
·
Level 2: Inputs other than
quoted prices included within Level 1 that are observable, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices). This category includes instruments valued using:
quoted market prices in active markets for similar instruments;
quoted prices for identical or similar instruments in markets that
are not considered active; or other valuation techniques in which
all significant inputs are directly or indirectly observable from
market data.
·
Level 3: Inputs that are
unobservable. This category includes all instruments for
which the valuation technique includes input not based on
observable data and the unobservable inputs have a significant
effect on the instruments' valuation. This category includes
instruments that are valued based on quoted prices for similar
instruments but for which significant unobservable adjustments or
assumptions are required to reflect differences between
instruments.
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
30
June 2024
|
|
|
|
|
|
Financial assets at fair value through profit
or loss
|
-
|
-
|
378,162
|
378,162
|
|
|
|
|
|
|
|
31
December 2023
|
|
|
|
|
|
Financial assets at fair value through profit
or loss
|
-
|
-
|
372,655
|
372,655
|
|
|
|
|
|
|
The fair value hierarchy table
excludes financial assets and financial liabilities such as cash
and cash equivalents, other receivables and other payables because
their carrying amounts approximate their fair values due to their
short-term period to maturity/repricing.
Level 3 valuations
The following table shows a
reconciliation from the beginning balances to the ending balances
for fair value measurements in Level 3 of the fair value
hierarchy.
|
|
30 June
2024
|
31 December 2023
|
|
|
Financial assets at fair value through
profit or loss
|
|
|
US$'000
|
US$'000
|
|
|
|
|
|
Balance at 1 January
|
372,655
|
478,226
|
|
Fair value changes in profit or
loss
|
3,894
|
(103,410)
|
|
Net proceeds (provided to)/received from
unconsolidated subsidiaries
|
1,613
|
(2,161)
|
|
Balance at 30 June/31 December
|
378,162
|
372,655
|
Significant unobservable inputs used in measuring fair
value
This table below sets out
information about significant unobservable inputs used at 30
June 2024 in
measuring the underlying investments of the financial assets
categorised as Level 3 in the fair value hierarchy excluding
investments purchased during the year that are valued at
transaction prices as they are reasonable approximation of fair
values and ultimate investments in listed entities.
|
Description
|
Fair value at 30
June
2024
US$'000
|
Fair value
at
31 December
2023
US$'000
|
Valuation
technique
|
Unobservable
input
|
Range (Weighted
average)
|
Sensitivity to changes in
significant unobservable
inputs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land related investments
|
74,312
|
58,938
|
Comparable valuation
method
|
Price per
square meter
for comparable land
|
US$253 to
US$5,426 per square meter
(Dec 2023:
US$260 - US$7,516 per square
meter)
|
The estimated fair value would
increase if the price per square meter was higher.
|
|
Description
|
Fair value at 30
June
2024
US$'000
|
Fair value
at
31 December
2023
US$'000
|
Valuation
technique
|
Unobservable
input
|
Range (Weighted
average)
|
Sensitivity to changes in
significant unobservable
inputs
|
|
Operating business
|
193,135
|
187,031
|
Enterprise value using comparable
traded multiples
|
Earnings before interest, tax,
depreciation and amortisation ('EBITDA') multiple
(times)
|
6.0x - 52.4x, median 12.7x
(Dec 2023:
3.6x - 35.2x, median
9.3x)
|
The estimated fair value would
increase if the EBITDA multiple was higher.
|
|
|
|
|
|
|
|
|
|
|
|
Revenue multiple (times)
|
0.4x -
12.8x,
Median
2.8x
(Dec 2023:
0.3x - 10.5x, median 3.4x)
|
The estimated fair value would
increase if the revenue multiple was higher
|
|
|
|
|
|
|
|
|
|
|
|
Discount for lack of marketability
('DLOM')
|
25%
(Dec 2023:
25.0%)
|
The estimated fair value would
increase if the discount for lack of marketability was
lower.
|
|
|
|
|
|
|
|
|
|
|
|
|
Option pricing model*
|
Volatility
|
31.5% -
56.8%
(Dec 2023:
29.8% - 65.5%)
|
The estimated fair value would increase or decrease if the
volatility was higher depending on factors specific to the
investment.
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free rate
|
4.4% -
6.7%
(Dec 2023:
3.7% - 6.8%)
|
The estimated fair value would increase or decrease if
risk-free rate was lower depending on factors specific to the
investment
|
|
|
|
|
|
|
|
|
|
Greenfield business held for more
than 12-months
|
38,976
|
41,916
|
Discounted cash flow
method
|
Revenue growth
|
2.8% -
36.6%
(Dec 2023:
2.8% - 19.6%)
|
The estimated fair value would
increase if the revenue growth increases, expense ratio decreases,
and WACC was lower.
|
|
|
|
|
|
|
|
|
|
|
Expense ratio
|
61.5% - 85.9%
(Dec 2023:
59.0% -
84.9%)
|
|
|
|
|
|
|
|
|
|
|
Weighted average cost of capital
('WACC')
|
10.7% -
15.1%
(Dec 2023:
11.3% - 15.5%)
|
* The option pricing
model is used as a secondary valuation technique for certain
investments to allocate equity value where the capital structure of
the investment consists of instruments with significantly different
rights/terms.