Symphony International : Final Results

Not for Distribution, directly or indirectly, in or into the United States or any jurisdiction in which such distribution would be unlawful.

6 March 2019

Symphony International Holdings Limited

Financial Results for the year ended 31 December 2018

Symphony International Holdings Limited ('Symphony' or the 'Company') announces results for the year ended 31 December 2018. The condensed financial statements of the Company has 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 and lifestyle ('HH&L') sectors (including education and branded real estate developments) 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.

As at 31 December 2018, the issued share capital of the Company was US$409.70 million (31 December 2017: US$382.80 million) consisting of 513,366,198 (31 December 2017: 488,221,592) ordinary shares.

Symphony's Investment Manager is Symphony Asia Holdings Pte. Ltd. ('SAHPL' or the 'Investment Manager'). The Company has an Investment Management Agreement with SAHPL as the Investment Manager.

Net Asset Value

The NAV attributable to the ordinary shares on 31 December 2018 was US$0.9598 per share (US$0.9598 per share on a fully diluted basis). This represents a 24.3% decreaseover the NAV per share of US$1.2672at 31 December 2017 (US$1.2345 per share on a fully diluted basis).

Chairmen's Statement

Following a strong start to 2018, we are now beginning to see slower growth in many economies as less accommodative fiscal policies begin to take effect. Although the weaker investor sentiment in late 2018 and early 2019 have reduced market valuations, we do not view this negatively. Aside from more interesting opportunities coming to market, the gradual removal of excess liquidity is reducing imbalances across the global economy and therefore also the risk of a more dramatic downward cycle.

There are a number of economic and geopolitical risks that could further impact the global business environment in 2019, such as the ongoing trade tensions between the US and China and the possibility of a disorderly exit by the United Kingdom from the European Union. There is also political uncertainty surrounding the elections in Thailand, where Symphony has material investments, which may have an impact on the perception of businesses operating there. From experience, governments tend to lean towards pro-market policies, so we feel that the effect of these risks will be short-term in nature. Nevertheless, economies, particularly in Asia, will continue to grow. Increasing consumption from a growing middle class, market liberalisation and growing intra-regional trade is shifting the economic power increasingly towards the east.

Our portfolio companies continued to grow however, the weaker growth and growth expectations that compressed market valuations during the latter half 2018 impacted Symphony's Net Asset Value ('NAV'). Symphony's key measures of performance, NAV and NAV per share at 31 December 2018, were US$492.71 million and US$0.96 per share, respectively. Excluding the impact of the US$71.54 million dividend paid (12 cents per share on the distribution date) in 2018, NAV and NAV per share would have been US$564.24 million and US$1.10 per share on the same date or 8.8% and 13.3% lower than a year earlier, respectively. The NAV change excluding the impact of dividends was predominantly due to a weaker share price of Minor International Holdings Limited ('MINT'), which was partially offset by other net positive movements in the value of other investments.

During the first three quarters of 2018, we were able to take advantage of the higher market valuations to partially exit some of our listed investments. We sold 30.3 million shares of IHH Healthcare Berhad ('IHH') and 8.1 million shares of MINT, which cumulatively generated US$57.69 million in proceeds. The net annualised return and multiple of the original cost for these divestments were 9.6% and 1.8 times for IHH, and 19.2% and 5.6 times for MINT. During 2018, Symphony also received principal shareholder loan repayment of US$15.07 million related to the sale of some land held by Minuet Limited.

Aside from the realisations, we made follow-on investments in WCIB International Co. Ltd ('WCIB'), which operates the Wellington College International Bangkok; the property joint ventures in Desaru, Malaysia; Niseko, Hokkaido, Japan and the Liaigre Group ('Liaigre') that offers bespoke luxury furniture and accessories and interior architecture services. The cumulative amount of these follow-on investments amounted to less than 2% of NAV.

We have paid out attractive dividends in recent years because the deals we were seeing were overpriced and returning excess capital to shareholders seemed the prudent thing to do. The environment today has changed, and we are beginning to see good value in many potential transactions where we feel we could deploy additional capital to earn attractive risk adjusted returns. We are in advanced stages of exploring several opportunities, some of which we hope to close during the first half of 2019. As mentioned before, a significant benefit of our permanent capital structure is not having to invest at inopportune times within business cycles.

With regards to the operations of our portfolio companies, there were a number of new developments during 2018. We mentioned in earlier updates that MINT successfully completed a tender offer in October 2018 for the NH Hotel Group SA ('NH Group') that increased its shareholding to 94.1%. This investment greatly expands MINT's global footprint and hotel portfolio from 164 hotels and serviced suites in 26 countries prior to the consolidation to 513 hotels and serviced suites in 51 countries with a total of 75,241 rooms at 31 December 2018. The investment is value accretive and the benefits from the consolidation of the NH Group's earnings will become more visible in 2019. MINT funded the acquisition by debt without the issue of any new equity. MINT also expanded its restaurant operations with the acquisition of the non-US operations of Benihana, which added 19 restaurants in twelve countries. At 31 December 2018, MINT had a total of 2,270 owned and managed restaurants in its portfolio.

On the healthcare front, IHH also expanded its business in 2018 with the acquisition of a controlling stake in Fortis Healthcare Limited ('Fortis'). IHH holds a 31.1% interest in Fortis, which it hopes to increase to 57.1% in the future if a cash open offer is approved by the Indian Supreme Court and successful. Fortis operates 34 hospitals across India and internationally with over 4,600 beds and 2,600 doctors. IHH also increased its interest in 2018 in Acibadem Saglik Yatirimlari Holding AS ('Acibadem'), which operates 21 hospitals in Turkey, Macedonia and Bulgaria, from 60% to 90%.

Our unlisted operating investments that include Liaigre, the Wine Connection Group ('WCG'), Chanintr Living Ltd ('Chanintr') and WCIB continued to grow their businesses. Liaigre saw year-over-year sales growth of 14.8% in 2018, which was driven by strong sales related to design architectural projects and the US showrooms. The Asian business has also seen strong momentum albeit from a low base of sales. During 2018, we announced that Liaigre opened two new showrooms; a second showroom in New York on Madison Avenue and the flagship showroom on Rue du Faubourg St-Honorè in Paris. Sales at the new flagship have been promising in recent months. Subsequent to 2018 year-end, a new investor, the Pierre Chen family, joined our consortium and provided new capital to further develop the Liaigre brand into new business lines.

WCG continued to expand its footprint by opening its first outlet in South Korea, its fourth market in Asia. Despite a very difficult operating environment in Singapore and Thailand, WCG has been able to grow overall revenue. However, cost and pricing pressures did have some impact on EBITDA margins. We expect new markets to be a key source of new growth for this business.

The buoyant luxury housing market in Thailand has benefited Chanintr that primarily distributes high-end US and European furniture brands through retail outlets and through the provision of furniture, fixture and equipment solutions to property developers. Large project-related orders that were delayed in the third quarter 2018 were delivered before year-end, which has been a primary driver for year-over-year sales and EBITDA growth of 16.6% and 34.1%, respectively. Chanintr also operates two food and beverage outlets under the Clinton Street Bakery brand; one in each of Singapore and Bangkok.

We mentioned earlier in the year that WCIB had commenced operations in August 2018. The management team have achieved a remarkable feat by developing a world class education facility, hiring a strong international and domestic faculty and achieving the budgeted enrollment figures in a short time frame. We look forward to WCIB growing its operations in the coming years with its phased expansion plans. As part of the arrangement with Wellington College, WCIB has the right to open additional schools under the Wellington brand in Myanmar, Cambodia, Laos and Vietnam. The management team are beginning to explore opportunities in some of these markets. We continue to see the education sector as being attractive and we are actively looking to increase our exposure to it.

Our property related investments continue to mature, and we aim to continue to monetise some of these holdings. In Bangkok, Thailand, we have our largest real estate investment through Minuet that currently holds over 40 hectares of land that is available for sale and/or development. Symphony has received cumulative returns from Minuet of US$46.19 million (including amounts paid in 2018) that relate to land sales. The immediate area around Minuet's land holdings is developing at a very fast pace with a number of new residential and commercial projects being launched. Together with the opening of WCIB, we expect land valuations in the area to continue to rise. Our other property related investment in Thailand is SG Land Co. Ltd ('SG Land'), which owns two leasehold office towers in central Bangkok. These building provide a stable yield that will continue for the leasehold periods that ranges from approximately five to seven years.

The beachfront and private villa development in Desaru, Malaysia that will be managed by One & Only will be launched later this year. Pre-marketing initiatives have begun, and we expect to begin generating returns from operations and the sale of villas. The beachfront resort is located on the east coast of Malaysia and is in close proximity to Singapore and benefits from two adjacent championship golf courses.

We continue to hold a prime development site in Niseko, Hokkaido, Japan. Niseko has developed into a key all round tourist destination in Asia with annual foreign tourist arrivals more than doubling since we acquired the site. We continue to explore potential options for this asset that include a potential development and a partial or full sale.

Overall our portfolio is well positioned to benefit from the economic growth and rising consumption in Asia. We look forward to adding to our portfolio in the current environment and to continue to generate value with respect to our existing investments. We would like again to thank our shareholders and partners for their continued support.

Pierangelo Bottinelli

Chairman, Symphony International Holdings Limited

Anil Thadani

Chairman, Symphony Asia Holdings Pte. Ltd.

4 March 2019

Investment Manager's Report

This 'Investment Manager's Report' should be read in conjunction with the financial statements and related notes of the Company. The financial statements of the Company were prepared in accordance with the International Financial Reporting Standards ('IFRS') and are presented in U.S. dollars. The Company reports on each financial year that ends on 31 December. In addition to the Company's annual reporting, NAV and NAV per share are reported on a quarterly basis being the periods ended 31 March, 30 June, 30 September and 31 December. The Company's NAV reported quarterly is based on the sum of cash and cash equivalents, temporary investments, the fair value of unrealised investments (including investments in unconsolidated subsidiaries, associates and joint ventures) and any other assets, less any other liabilities. The financial results presented herein include activity for the period from 1 January 2018through 31 December 2018, referred to as 'the year ended 31 December 2018'.

Our Business

Symphony is an investment company incorporated under the laws of the British Virgin Islands. The Company's shares were listed on the London Stock Exchange on 3 August 2007. Symphony's investment objective is to create value for shareholders through longer term strategic investments in high growth innovative consumer businesses, primarily in the healthcare, hospitality and lifestyle sectors (including education and branded real estate developments), which are expected to be fast growing sectors in Asia, as well as through investments in special situations and structured transactions.

Symphony's Investment Manager is Symphony Asia Holdings Pte. Ltd. ('SAHPL'). The Company entered into an Investment Management Agreement with SAHPL as the Investment Manager. Symphony Capital Partners Limited ('SCPL') is a service provider to 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.

Investments

At 31 December 2018, the total amount invested by Symphony since admission to the Official List of the London Stock Exchange in August 2007 was US$453.50 million (2017: US$444.81 million). SIHL's total cost of investments after taking into account shareholder loan repayments, partial realisations and the cost of fully realised investments was US$118.55 million at 31 December 2018, down from US$183.68 million a year earlier. The change is due to (i) the partial realisation of MINT shares that generated net proceeds for US$10.87 million, which increased cumulative proceeds in excess of total cost for this investment to US$64.55 million at 31 December 2018, (ii) the partial realisation of IHH shares that generated net proceeds of US$46.82 million, which brought cumulative proceeds to US$25.22 million in excess of total cost at 31 December 2018, which compares to a net cost of US$21.60 million a year earlier, (iii) shareholder principal loan repayments related to property investments in Thailand of US$16.27 million and (iv) new investments of US$8.66 million and other minor movements of US$0.16 million that increased cost.

As at 31 December 2018, the healthcare, hospitality, lifestyle, lifestyle/real estate sectors and other investments accounted for -21.1%, -54.4%, 95.8%, 67.6%, and 12.1% (2017: 11.8%, -29.2%, 57.8%, 51.8%, and 7.8%) of total cost of investments, respectively. Other investments include a structured investment and a global listed portfolio of securities. The negative net cost in the healthcare and hospitality sectors is due to partial realisations related to certain investments that have generated proceeds in excess of cost for that sector.

The fair value of investments, excluding temporary investments (but including other investments), held by Symphony was approximately US$502.69 million at 31 December 2018down from US$624.12 million a year earlier. This change is comprised of a decrease in the value of investments by US$56.16 million, new investments of US$8.69 million and realisations (including shareholder loan principal repayments) of US$73.96 million.

As at 31 December 2018, we had the following investments:

Minor International Public Company Limited

Minor International Public Company Limited ('MINT') is a diversified consumer business and is one of the largest hospitality and restaurant companies in the Asia-Pacific region. Anil Thadani (a Director of the Company) currently serves on MINT's board of directors. Sunil Chandiramani (a Director of the Company) currently serves as an advisor to MINT's board of directors. MINT is a company that is incorporated under the laws of Thailand and is listed on the Stock Exchange of Thailand.

MINT owns 369 hotels and manages 144 other hotels and serviced suites with 75,241 rooms. MINT owns and manages hotels in 51 countries predominantly under its own brand names that include Anantara, Oaks, NH Collection, NH Hotels, nhow, Elewana, AVANI, Per AQUUM and Tivoli in 51 countries.

As at 31 December 2018, MINT also owned and operated 2,270 restaurants (comprising 1,159 equity-owned outlets and 1,111 franchised outlets) under the brands The Pizza Company, Swensen's, Sizzler, Dairy Queen, Burger King, Beijing Riverside, Thai Express and The Coffee Club amongst others. Approximately two-thirds of these outlets are in Thailand with the remaining number in other Asian countries, the Middle East and the United Kingdom. MINT's operations also include contract manufacturing and an international lifestyle consumer brand distribution business in Thailand focusing on fashion, cosmetics through retail (490 outlets), wholesale and direct marketing channels under brands that include Anello, Bossini, Brooks Brothers, Esprit, Charles & Keith, Zwilling J.A. Henckels and Bodum amongst others.

MINT reported core revenue, EBITDA and net profit growth (before non-recurring items) of 34%, 28% and 10% in 2018 year-over-year, respectively. The growth was predominantly driven by the consolidation of the NH Hotel Group S.A. ('NH Group'), organic growth from hotel operations excluding the NH Group, retail trading and manufacturing and the Anantara Vacation Club. The slower EBITDA and net profit growth relative to revenue is due to the lower profitability of the restaurant business.

MINT's hotel and mixed-use business had core revenues (excluding non-recurring items) of THB50.6 billion during 2018, which is 63% higher than the same period a year earlier. The growth is primarily from the consolidation of the NH Group in October 2018 and stronger performance of the hotel portfolio excluding the NH Group. MINT reported management income from hotels increased by 19% in 2018.

At the end of 2018, MINT's total number of restaurants reached 2,270 comprising 1,159 equity-owned outlets and 1,111 franchised outlets. Approximately 66% were in Thailand with the remaining number in 26 other countries in Asia, Oceania, Europe and Canada. Approximately 206 restaurants were added during 2018. Due to a challenging market, total system sales increased by only 0.2% and same-store-sales declined by 3.3% (local currency terms) that resulted in flat revenue growth and a 15% decline in EBITDA for this business segment. Management is employing a number of strategies focused on delivering positive same-store-sales growth in 2019.

The retail trading and contract manufacturing businesses grew core revenue by 9% with revenues of THB4.4 billion during 2018.

Symphony's gross and net investment cost in MINT was approximately US$74.0 million and (US$64.55 million) (2017: US$74.02 million and (US$53.68 million)), respectively, at 31 December 2018. The negative net cost is due to the proceeds from partial realisations being in excess of cost for this investment. On the same date, the fair value of Symphony's investment in MINT was US$257.79 million, down from US$340.33 million a year earlier. The change in value of approximately US$82.53 million was due to the sale of 8.1 million shares during the year that generated proceeds of US$10.87 million and a weakening of MINT's share price by 21.8% from THB43.5 per share to THB34.0 per share. The annualised return and times the original cost of investment on the partial sale of shares in 2018 was 19.2% and 5.6 times, respectively. Subsequent to 31 December 2018 and at the time of this report, MINT's share price had partially recovered to THB38.75 and the Thai baht had strengthened to 31.645 per US dollar, which increased the value for this investment to US$302.19 million.

Minuet Limited

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 31 December 2018, Minuet held approximately 252 rai (40 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 31 December 2018, the Company's investment cost (net of shareholder loan repayments) was approximately US$32.12 million (31 December 2017: US$47.19 million). The fair value of the Company's interest in Minuet on the same date was US$73.55 million (31 December 2017: US$83.08 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 by US$9.53 million was less than the US$15.07 million of principal shareholder loan repayments received due to incremental value generated from the land sales above the fair value of the land and other minor movements in the net assets of Minuet.

IHH Healthcare Berhad

IHH Healthcare Berhad ('IHH') is one of the largest healthcare providers in the world by market capitalisation. Its portfolio of healthcare assets includes Parkway Holdings Limited, Pantai Holdings Berhad, International Medical University ('IMU'), Acibadem Saglik Yatirimlari Holding A.S. ('Acibadem') and Fortis Healthcare Limited ('Fortis'). IHH has a broad footprint of assets in Asia as well as Turkey, Abu Dhabi, Central and Eastern Europe that employs 55,000 people and operates over 15,000 licensed beds in 82 hospitals worldwide.

IHH reported revenue and EBITDA growth of 3% and 9%, respectively, in 2018 year-over-year. On a constant currency basis during the same period, revenue and EBITDA increased by 19% and 21%, respectively. The growth was driven by an increase in inpatient volumes, revenue intensity per patient, contributions from Fortis and higher student intake at IMU. Net profit, excluding exceptional items, increased by 73% to reach MYR1.03 billion in 2018.

Excluding the effects of the strengthening of the Malaysian ringgit, Parkway Pantai's revenue and EBITDA increased by 13% and 15%, respectively, in 2018 year-over-year. Parkway Pantai saw in-patient admissions increase by 0.6% and 3% in Singapore and Malaysia in 2018, respectively, compared to a year earlier. Average revenue per inpatient admission also increased by 7.7% in Singapore and 6.1% in Malaysia during the same period. The organic revenue growth from Parkway Pantai was driven by a continued ramp up in operations of Pantai Hospital Manjung, Gleneagles Kota Kinabalu Hospital, Gleneagles Medini Hospital in Malaysia and Gleneagles Hong Kong Hospital. Fortis contributed to MYR217.1 million to the Group's revenue since acquisition.

Acibadem saw admissions and revenue per inpatient admission increase by 7.4% and 24.4% in 2018, respectively, year-over-year. Excluding the effects of a strengthening Malaysian ringgit in 2018, Acibadem's revenue and EBITDA increased by 32% and 38%, respectively, during the same period.

The Company's gross and net investment cost in IHH was US$50.11 million and (US$25.22 million) (31 December 2017: US$50.11 million and US$21.60 million), respectively at 31 December 2018. The negative net cost at 31 December 2018 is due to proceeds from partial realisations being in excess of cost for this investment. The fair value on the same date was US$11.04 million (31 December 2017: US$56.13 million). The change in value is predominantly due to the sale of 30.3 million shares that generated net proceeds of US$46.82 million. The net annualised return and multiple of the original cost from the sale was 9.6% and 1.8 times, respectively.

Investment in the Liaigre Group

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 25 showrooms in 11 countries across Europe, the US and Asia, Liaigre undertakes exclusive interior architecture projects for select yachts, hotels, and restaurants and private residences.

Liaigre saw year-over-year sales growth of 14.8% in 2018, which was driven by strong sales related to design architectural projects and the US showrooms. However, the delay of the placement of certain orders in December resulted in a slightly smaller order book at end of 2018 compared to 2017. Subsequent to the year-end, many of these orders were placed, which has provided strong momentum to the start of 2019. We would also like to note that sales at the two new showrooms, the flagship on Rue du Faubourg St-Honorè in Paris and the second showroom in New York on Madison Avenue have been promising in recent months.

The investment in the Asian business over the past eighteen months is beginning to yield results. The team is working on a number of large projects and has also received several large orders, which has increased total orders in Asia by more than 200% compared to 2017.

Symphony announced that the Pierre Chen family became a partner and co-owner in Liaigre following an investment in February 2019. The new capital from the Pierre Chen family will facilitate expanding Liaigre into new complementary businesses to fully realise the brand's potential. The Pierre Chen family are involved in a number of industries and have a strong network and presence in and outside of Asia.

Symphony, together with Navis Capital Partners and management, acquired Liaigre in June 2016 for an undisclosed sum. Symphony's investment is more than 5% of NAV and due to strategic concerns, specific valuation information has not been disclosed publicly.

Property Joint Venture in Malaysia

The Company has a 49% interest in 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 is developing a beachfront country club and private villas on the south-eastern coast of Malaysia.

The development is planned to be launched during the second half of 2019 and will include a Club, 46 club suites and prototype villas. When fully developed the site will have a total of 52 villas.

The Company invested approximately US$29.05 million in January 2012 for its interest in Desaru and made follow-on investments in October 2017 and September 2018 of US$4.97 million and US$1.20 million, respectively. Based on an independent third party valuation, the investment was valued at US$33.58 million at 31 December 2018(31 December 2017: US$31.72 million). The change in value reflects the follow-on investment in 2018 and a marginal increase in the value of the land, which was partially offset by a weakening of the Malaysian ringgit by 2.2% during 2018.

Other Investments

In addition to the investments above, Symphony has seven additional non-material investments, at 31 December 2018. Pending investment in suitable opportunities, Symphony has placed funds in certain temporary investments. As at 31 December 2018, cash and cash equivalents that comprised bank deposits and cash at bank amounted to US$11.54 million (31 December 2017: US$15.69 million).

Capitalisation and NAV

As at 31 December 2018, the Company had US$409.70 million (31 December 2017: US$382.80 million) in issued share capital and its NAV was approximately US$492.71 million (31 December 2017: US$618.67 million). 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.

Symphony was admitted to the Official List of the London Stock Exchange ('LSE') on 3 August 2007 under Chapter 14 of the Listing Manual of the LSE. The proceeds from the IPO amounted to US$190 million before issue expenses pursuant to which 190.0 million new shares were issued in the IPO. In addition to these 190.0 million shares and 94.9 million shares pre-IPO, a further 53.4 million shares were issued comprising of the subscription of 13.2 million shares by investors and SIHL's investment manager, the issue of 33.1 million bonus shares, and the issue of 7.1 million shares to SIHL's investment manager credited as fully paid raising the total number of issued shares to 338.3 million.

The Company issued 4,119,490 shares, 2,059,745 shares, 2,059,745 shares and 2,059,745 shares on 6 August 2010, 21 October 2010, 4 August 2011 and 23 October 2012, respectively, credited as fully paid, to the Investment Manager, Symphony Investment Managers Limited. The shares were issued as part of the contractual arrangements with the Investment Manager.

On 4 October 2012, SIHL announced a fully underwritten 0.481 for 1 rights issue at US$0.60 per new share to raise proceeds of approximately US$100 million (US$93 million net of expenses) through the issue of 166,665,997 million new shares, fully paid, that commenced trading on the London Stock Exchange on 22 October 2012.

As part of the contractual arrangements with the Investment Manager in the Investment Management Agreement, as amended, the Investment Manager was granted 82,782,691 and 41,666,500 share options to subscribe for ordinary shares at an exercise price of US$1.00 and US$0.60 on 3 August 2008 and 22 October 2012, respectively. The share options vest in equal tranches over a five-year period from the date of grant. As at 31 December 2018, 41,666,500 share options with an exercise price of US$0.60 had been exercised and all the 82,782,691 options had lapsed and expired. There were no share options outstanding at 31 December 2018.

During 2017, 43,525,000 shares were bought back and cancelled, as part of a share buyback programme announced on 16 January 2017. Together with the shares issued to the Investment Manager, the shares issued pursuant to the rights issue, shares issued pursuant to the exercise of options and shares cancelled pursuant to the share buyback programme, the Company's fully paid issued share capital was 513.4 million shares at 31 December 2018 (2017: 488.2 million shares).

Revenue and Other Operating Income

Management concluded during 2014 that the Company meets the definition of an investment entity and adopted IFRS 10, IFRS 12 and IAS 27 standards where subsidiaries are de-consolidated and their fair value is measured through profit or loss. As a result, revenue, such as dividend income, from underlying investments in subsidiaries is no longer consolidated.

During 2018, Symphony recognised other operating income of US$26.14 million, which mainly comprised interest income from bank deposits, loan interest and dividends from unconsolidated subsidiaries (predominantly relating to intercompany transactions). This compares to other operating income of US$118.77 million in 2017 that comprised the same items, but also foreign exchange gains relating to intercompany transactions.

Expenses

Other Operating Expenses

Other operating expenses include fees for professional services, interest expense, insurance, communication, travel, Directors' fees and other miscellaneous expenses and costs incurred for analysis of proposed deals. For the year ended 31 December 2018, other operating expenses amounted to US$4.16 million and also included non-cash foreign exchange losses of US$2.78 million. Excluding the foreign exchange losses, other operating expenses were US$1.37 million, which is lower than the US$1.75 million of operating expenses in 2017. The difference is predominantly due to lower interest expense relating to interest bearing borrowings.

Management Fee

The management fee amounted to US$12.25 million for the year ended 31 December 2018(2017: US$14.18 million). The management fee was calculated on the basis of 2.25% of NAV (with a floor and cap of US$8 million and US$15 million per annum, respectively).

Share-based Payment Transactions

Under the terms of the Investment Management and Advisory Agreement, the Investment Manager was granted share options to subscribe for shares of the Company. On 3 August 2008, the Investment Manager was granted 82,782,691 share options to subscribe for shares at US$1.00 each and on 22 October 2012, the Investment Manager was granted 41,666,500 share options to subscribe for shares at US$0.60 each. The share options vest in five equal tranches over a period of five years. All the share options were fully vested and expensed at 31 December 2017. During the year ended 31 December 2018, the 82,782,691 share options granted on 3 August 2008 that were exercisable on or before 2 August 2018 have lapsed unexercised. This compares to the non-cash expense of US$0.51 million in 2017 that relate to the 41,666,500 share options with an exercise price of US$0.60 each.

Liquidity and Capital Resources

At 31 December 2018, Symphony's cash balance was US$11.54 million (2017: US$15.69 million). Symphony's primary uses of cash are to fund investments, pay expenses and to make distributions to shareholders, if and when declared by our board of directors. Taking into account current market conditions, it is expected that Symphony has sufficient liquidity and capital resources for its operations. The primary sources of liquidity are capital contributions received in connection with the initial public offering of shares, related transactions and a rights issue (See description under 'Capitalisation and NAV'), in addition to cash from investments that it receives from time to time and bank facilities.

This cash from investments is in the form of dividends on equity investments, payments of interest and principal on fixed income investments and cash consideration received in connection with the disposal of investments. Temporary investments made in connection with Symphony's cash management activities provide a more regular source of cash than less liquid longer-term and opportunistic investments, but generate lower expected returns. Other than amounts that are used to pay expenses, or used to make distributions to our shareholders, any returns generated by investments are reinvested in accordance with Symphony's investment policies and procedures. Symphony may enter into one or more credit facilities and/or utilise other financial instruments from time to time with the objective of increasing the amount of cash that Symphony has available for working capital or for making opportunistic or temporary investments. At 31 December 2018, the Company had total interest-bearing borrowings of US$5.33 million (2017: US$5.17 million) associated with our property related investment in Niseko, Hokkaido, Japan.

Principal Risks

Described below are some of the risks that the Company is exposed to:

The Company's and the Company's investment management team's past performance is not necessarily indicative of the Company's future performance and any unrealised values of investments presented in this document may not be realised in the future.

The Company is not structured as a typical private equity vehicle (it is structured as a permanent capital vehicle), and thus may not have a comparable investment strategy. The investment opportunities for the Company are more likely to be as a long term strategic partner in investments, which may be less liquid and which are less likely to increase in value in the short term.

The Company's organisational, ownership and investment structure may create certain conflicts of interests (for example in respect of the directorships, shareholdings or interests, including in portfolio companies that some of the Directors and members of the Company's investment management team may have). In addition, neither the Investment Manager nor any of its affiliates owes the Company's shareholders any fiduciary duties under the Investment Management Agreement between, inter alia, the Company and the Investment Manager. The Company cannot assume that any of the foregoing will not result in a conflict of interest that will have a material adverse effect on the business, financial condition and results of operations.

The Company is highly dependent on the Investment Manager, the Key Persons (as defined in the Investment Management Agreement) and the other members of the Company's investment management team and the Company cannot assure shareholders that it will have continued access to them or their undivided attention, which could affect the Company's ability to achieve its investment objectives.

The Investment Manager's remuneration is based on the Company's NAV (subject to minimum and maximum amounts) and is payable even if the NAV does not increase, which could create an incentive for the Investment Manager to increase or maintain the NAV in the short term (rather than the long-term) to the potential detriment of Shareholders.

The Company's investment policies contain no requirements for investment diversification and its investments could therefore be concentrated in a relatively small number of portfolio companies in the Healthcare, Hospitality and Leisure ('HH&L') sectors (including education and branded real estate developments) within the Asia-Pacific region.

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 there is a risk that such portfolio companies may take decisions, which do not serve the Company's interests.

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.

ANIL THADANI

Chairman, Symphony Asia Holdings Pte. Ltd.

4 March 2019

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 adopts 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 adopts 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 adopts 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.

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.

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$'000	US$'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

Sensitivity analysis

Although the Company believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3 assets, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on the profit or loss:

	‹----- 31 December 2018 -----›		‹----- 31 December 2017-----›
	Effect on profit or loss		Effect on profit or loss
	Favourable	(Unfavourable)	Favourable	(Unfavourable)
	US$'000	US$'000	US$'000	US$'000
Level 3 assets	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%.

10 Earnings per share

		2018	2017
		US$'000	US$'000
Basic and diluted earnings per share are based on:
Net(loss)/profitfor the year attributable to equity holders of the Company		(69,516)	90,179

Basic earnings per share

		Number of shares 2018	Number of shares 2017
Issued ordinary shares at 1 January		488,221,592	528,838,811
Sharesissued		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

For the purpose of calculation of the diluted earnings per share, the weighted average number of shares in issue is adjusted to take into account any potential dilutive effect arising from the dilutive warrants, share options and contingently issuable shares, with the potential shares weighted for the period outstanding.

The effect of the exercise of warrants and issue of contingently issuable shares on the weighted average number of shares in issue is as follows:

		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

At 31 December 2017, there were 107,927,297 outstanding share options to subscribe for ordinary shares at no par value. At 31 December 2017, 107,927,297 of the unexercised share options had fully vested, of which 82,782,691 of these share options had an exercise price of US$1.00 and were not included in the computation of diluted earnings per share as their effect would have been anti-dilutive. At 31 December 2017, 25,144,606 of the share options had an exercise price of US$0.60 and were included in the computation of diluted earnings per share. At 31 December 2018, there were no share options outstanding.

11 Operating segments

The Company has investment segments, as described below. Investment segments are reported to the Board of Directors of Symphony Asia Holdings Pte. Ltd., the Investment Manager, who review this information on a regular basis. 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. and the Wine Connection Group (WCG)and Liaigre Group (Liaigre) and WCIB International Co. Ltd. (WCIB)
Lifestyle/Real Estate	Includes investments in Minuet Ltd, SG Land Co. Ltd. and 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 on reportable segments

	Healthcare	Hospitality	Lifestyle/ education	Lifestyle/ real estate	Cash and temporary investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
31 December 2018
Investment income
- Dividend income	-	25,841	-	-	-	25,841
- Interest income	-	-	24	-	277	301
	-	25,841	24	-	277	26,142
Investment expenses - Exchange loss, net	186	*	(2,447)	(483)	(41)	(2,785)
-- 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	(325)	(82,019)
Net investment results	596	(68,952)	7,111	5,416	(48)	(55,877)

* Less than US$1,000

	Healthcare	Hospitality	Lifestyle/ education	Lifestyle/ real estate	Cash and temporary investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
31 December 2017
Investment income
- Dividend income	49,250	61,000	-	-	-	110,250
- Exchange gain, net	(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 expenses
- - Fair value changes of financial assets at fair value through profit or 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
31 December 2018
Segment assets	11,399	257,951	84,651	118,191	26,136	498,328
Segment liabilities	-	-	-	5,327	-	5,327
31 December 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

The reportable operating segments derive their revenue primarily by achieving returns, consisting of dividend income, interest income and appreciation in fair value. The Company does not monitor the performance of the investments by measure of profit or loss.

Reconciliations of reportable segment profit or loss and assets

		31 December 2018	31 December 2017
		US$'000	US$'000
Profit or loss
Net investments results		(55,877)	106,615
Unallocated amounts:
- Other corporate expenses		(13,639)	(16,436)
(Loss)/profitfor 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
		31 December 2018	31 December 2017
		US$'000	US$'000
Liabilities
Total liabilities for reportable segments		5,327	5,166
Other payables		368	385
Bank overdraft		*	-
Total liabilities		5,695	5,551

12 Significant related party transactions

For the purposes of these condensed financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or entities.

Dividend income

During the financial 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 tofour 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

During the financial year ended 31 December 2018, the Company recognised interest income from its unconsolidated subsidiaries totalling US$24,000(31 December 2017: US$82,000).

Pursuant to the Investment Management Agreement, the Investment Manager will provide investment management and advisory services exclusively to the Company. Details of the remuneration of the Investment Manager are disclosed in the financial statements as at and for the year ended 31 December 2017. During the financial year ended 31 December 2018, management fee amounting to US$12,248,000(31 December 2017: US$14,176,000) paid/payable to the Investment Manager has been recognised in the condensed financial statements.

Pursuant to the Investment Management Agreement and on 3 August 2008, the Company granted 82,782,691 share options to subscribe for ordinary shareswith an exercise price of US$1.00 to the Investment Manager, which had been previously deferred. These share options fully vested in five tranches over a period of five years and were exercisable on or before 2 August 2018 and lapsed unexercised. These lapsed options cannot be reissued to the Investment Manager.

On 22 October 2012 and pursuant to the Investment Management Agreement, the Company granted to the Investment Manager 41,666,500 share options to subscribe for ordinary shareswith an exercise price of US$0.60 that have fully vested in five equal tranches over a period of five years and which have an expiration on the tenth anniversary of the date of grant. The Investment Manager exercised share options amounting to 4,054,970, 4,278,330, 4,538,197, 742,616, 621,902, 2,285,879, 2,514,465 and 22,630,141on 5 May 2014, 10 June 2014, 14 April 2015, 28 June 2016, 26 June 2017, 3 November 2017, 20 June 2018 and 23 August 2018, respectively, at the exercise price of US$0.60 per share. There were no share options outstanding at 31 December 2018.

As at 31 December 2018and 31 December 2017, the Investment Manager had not been issued any management shares.

Other than as disclosed elsewhere in the condensed unaudited financial statements, there were no other significant related party transactions during the years ended 31 December 2018and
31 December 2017.

13 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) (2017: US$4,300,000 equivalent) to the joint venture in accordance with the terms as set out therein. As at 31 December 2018, US$3,700,000(THB120,000,000) (2017: US$3,700,000 equivalent) has been drawn down. The Company is committed to grant the remaining loan amounting to US$619,000 (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.