Global Investments Limited FY2013 Financial Results...2017/12/07  · Global Investments Limited...

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Global Investments Limited FY2013 Financial Results

Transcript of Global Investments Limited FY2013 Financial Results...2017/12/07  · Global Investments Limited...

Page 1: Global Investments Limited FY2013 Financial Results...2017/12/07  · Global Investments Limited FY2013 Financial Results 2 DISCLAIMER Information contained in this presentation is

Global Investments Limited

FY2013 Financial Results

Page 2: Global Investments Limited FY2013 Financial Results...2017/12/07  · Global Investments Limited FY2013 Financial Results 2 DISCLAIMER Information contained in this presentation is

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DISCLAIMER

Information contained in this presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change

without notice, its accuracy is not guaranteed and it may not contain all material information concerning Global Investments Limited (“GIL”) or ST Asset

Management Ltd (“STAM”). Neither GIL, STAM nor any of their respective affiliates, advisors or representatives make any representation regarding, and none

of them assumes any responsibility or liability whatsoever (whether arising out of tort, contract or otherwise) for, the accuracy or completeness of, or any errors

or omissions in, any information contained herein nor for any loss howsoever arising from any use of this presentation. The recipient should consult with their

own legal, tax and accounting advisers as to the accuracy and application of the information contained in this presentation and should conduct their own due

diligence and other enquiries in relation to such information. By attending this presentation, you are agreeing to be bound by the restrictions set out below.

Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

The information contained in this presentation has not been independently verified. No representation or warranty, expressed or implied, is made as to, and

no reliance should be placed on the fairness, accuracy, completeness or correctness of, the information or opinions contained herein. It is not the intention to

provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of GIL’s financial or trading position or prospects. The

information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice.

In addition, the information contained herein contains projections and forward-looking statements that reflect GIL’s current views with respect to future events

and financial performance. These views are based on a number of estimates and current assumptions which are subject to business, economic and

competitive uncertainties and contingencies as well as various risks and these may change over time and, in many cases, are outside the control of GIL,

STAM, their associates and all their directors. No assurance can be given that future events will occur, that projections will be achieved, or that assumptions

underpinning expectations are correct. Actual results may differ materially from those forecasted, projected or guided.

This presentation is not and does not constitute or form part of any financial product advice, offer, invitation or recommendation to purchase or subscribe for

any securities and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto.

This presentation does not carry any right of publication. This presentation may not be used or relied upon by any other party, or for any other purpose, and

may not be reproduced, disseminated or quoted without the prior written consent of GIL or STAM.

This presentation is not for distribution, directly or indirectly, in or into the United States.

This presentation is not an offer of securities for sale into the United States. The securities may not be offered or sold in the United States or to, or for the

account or benefit of, US persons (as such term is defined in Regulation S under the US Securities Act of 1933, as amended) unless they are registered or

exempt from registration.

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AGENDA

1. Key Financial Data for 2013

2. 2013 Overview

3. Portfolio Composition

4. Outlook

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1. Financial Highlights

FY 2013 FY 2012 % Change

Net Profit after Tax S$28.8M S$19.1M Net profit after tax grew by 51.0% on a year-on-year basis to

S$28.8 million from S$19.1 million.

Total Revenue S$35.9M S$18.4M Revenue surged 95.3% to S$35.9 million for the full year

2013 due to the one-off sale of the aircraft, sale of listed

equities and higher interest income received.

Total Expenses S$11.8M S$5.4M Increase in total expenses was mainly due to impairment

expenses, net foreign exchange losses, higher management

fee and the first time incentive fee payable to the Manager.

51.0%

95.3%

118.8%

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1. Financial Highlights

FY 2013 FY 2012 % Change

Return on Equity 12.5% 11.2% Return on Equity rose to 12.5% in FY2013 (based on average Total

Equity of S$229.84 million) from 11.2% in FY2012 (based on average

Total Equity of S$169.79 million)

Earnings per Share S$0.0282 S$0.0245 Earnings per share increased by 15.1% to 2.82 Singapore cents in

FY2013 (based on the weighted average number of shares of

1,020,153,378 after taking into account the additional shares issued

pursuant to the scrip dividend scheme and rights issue exercise) from

2.45 Singapore cents (based on the weighted average number of

shares of 776,469,132) in FY2012.

Net Asset Value S$269.7M S$190.1M Net Asset Value (“NAV”) increased by 41.9% to S$269.7 million in

FY2013. If the dividend was paid and the shares relating to the scrip

dividend scheme and rights issue had been issued before 31

December 2012, the increase in NAV would be 14.1% for the year

ended 31 December 2013.

Dividend Distribution S$17.9 M S$12.4 M Dividend distribution per share totalled 1.5 Singapore cents (based on

larger 1,191,982,617 shares) in FY2013. The total amount of dividend

to be paid increased by 44.4% to S$17.9 million in FY2013 from

S$12.4 million in FY2012.

11.6%

41.9%

15.1%

44.4%

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1. Financial Highlights

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13.3%

10.3%

29.7%

7.4%

23.4%

15.9%

Expenses Composition for the Year ended

31 December 2013

Management fees (13.3%)

Management incentive fee (10.3%)

Net foreign exchange losses (29.7%)

Others (7.4%)

Net impairment expenses (23.4%)

Other operating expenses (15.9%)

6.6%

37.8%

4.4%

39.2%

12.0%

Revenue Composition for the Year ended 31 December 2013

Dividend income (6.6%)

Interest income (37.8%)

Rental income (4.4%)

Net gain on sale of investments (39.2%)

Others (12.0%)

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Consolidated Statement of Comprehensive Income

Income Statement

For the Year ended

31 December 13

S$’000

For the Year ended

31 December 12

S$’000

Change

%

Revenue

Dividend income 2,368 1,435 65%

Interest income 13,543 8,772 54%

Rental income 1,577 4,724 (67%)

Net foreign exchange gains - 100 n.a

Net gain on sale of investments 14,065 3,307 325%

Net gain on financial assets designated as fair value through profit or loss 472 27 1,648%

Other income 3,847 - n.a

Total Revenue 35,872 18,365 95%

Expenses

Management fees (1,573) (1,065) 48%

Incentive fees (1,216) - n.a

Net foreign exchange losses (3,512) - n.a

Depreciation (429) (1,286) (67%)

Finance costs (448) (1,165) (62%)

Net impairment expenses (2,770) - n.a

Other operating expenses (1,876) (1,887) (1%)

Total Expenses (11,824) (5,403) 119%

Reversal of impairment in associate - 4,936 n.a

Share of profit of associate (net of tax) 5,224 1,654 216%

Profit before tax 29,272 19,552 50%

Income tax expense (498) (495) 1%

Profit after tax 28,774 19,057 51%

Other comprehensive income / (loss)

Items that may be reclassified subsequently to profit or loss

Available-for-sale financial assets

- Fair value gains 9,417 4,329 118%

- Reclassification to profit or loss (9,066) (2,105) 331%

Currency translation differences arising from consolidation

- Gains/(losses) 4,289 (5,400) 179%

Other comprehensive income/(loss) for the period after tax 4,640 (3,176) 246%

Total comprehensive income for the period attributable to shareholders 33,414 15,881 110%

Basic earnings per share (cents per share) 2.82 2.45 15%

Diluted earnings per share (cents per share) 2.82 2.45 15%

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Statement of Financial Position (Group) As at 31 December

2013

S$’000

As at 31 December

2012

S$’000

Change

%

Assets

Cash and cash equivalents

20,346 24,508 (17%)

Financial assets at fair value through profit or loss 54,867 8,777 525%

Available-for-sale financial assets 102,983 58,753 75%

Loans and receivables 92,410 79,925 16%

Investment in associate 9,393 4,555 106%

Aircraft - 28,707 n.a

Other assets 1,063 257 314%

Total Assets 281,062 205,482 37%

Liabilities

Interest bearing liabilities

- 14,037 n.a

Other liabilities 11,317 1,361 732%

Total Liabilities 11,317 15,398 (27%)

Net assets attributable to shareholders 269,745 190,084 42%

Shareholders equity 269,745 190,084 42%

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AGENDA

1. Key Financial Data for 2013

2. 2013 Overview

3. Portfolio Composition

4. Outlook

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2. 2013 Overview

Scrip Dividend Scheme

On 7 February 2013, the Company announced that the Scrip Dividend Scheme will be applied to the final

dividend of 0.75 Singapore cents per share for FY 2012.

The Company allotted and issued 26,103,375 new ordinary shares at an issue price of 15.22 Singapore

cents for each new share.

The proportion of the total final dividend amount issued as new shares pursuant to the Scrip Dividend

Scheme was approximately 64.18%.

New shares were listed on 15 April 2013.

Renounceable Non-underwritten Rights Issue

A 2 for 5 Rights Issue was announced on 6 May 2013 at an issue price of 14.3 Singapore cents for each

rights share.

Total rights subscribed and excess shares application was 100.2%.

New rights shares were listed on 15 July 2013.

The net proceeds of S$48.50 million from the Rights Issue have been fully utilised.

Dividend Distribution Frequency

Change of frequency of dividend distribution from semi-annual to annual basis.

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2. 2013 Overview

Investment Activities

Invested the full amount of S$48.50 million from the Rights Issue proceeds in global bonds, listed equities

and Collateralised Loan Obligation (“CLO”) Securities.

The equity portfolio generated realised profits and dividend income of approximately S$12.76 million in

2013.

Purchased three new issue Australian Residential Mortgage-Backed Securities.

Acquired two USD and eight Euro denominated CLOs, reinvesting proceeds from the sale of three USD

denominated CLOs.

Completed the divestment of two Boeing 757-200 aircraft, with net gain recorded of S$7.0 million.

Continued sale of FLY Leasing Limited shares.

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2. 2013 Overview

2013 Dividend Distribution

Dividend of 1.5 Singapore cents per share is declared on 7 February 2014.

Based on closing share price of 16.0 cents on 31 December 2013, the full year dividend distribution of 1.5

Singapore cents per share represented an annual dividend yield of 9.4%.

The Scrip Dividend Scheme will be applied to the dividend of 1.5 Singapore cents per share for FY2013.

Corporate Governance

The Governance and Transparency Index 2013 (“GTI 2013”) was released in The Business Times on 2

August 2013. GIL’s ranking improved from 82 in 2012 to 25 in 2013. The Company’s base GTI score was

68 points and was given a further 10 bonus points, totalling up to a final score of 78 points in comparison

to last year’s final score of 47 points. GTI is jointly launched by The Business Times and the National

University of Singapore’s Centre for Governance, Institutions and Organisations. Sponsored by CPA

Australia and supported by the Investment Management Association of Singapore, it assesses the

financial transparency of companies based on their annual announcements.

Outsourcing of Administrative Services

ST Asset Management Ltd. (the “Manager” or “STAM”) has delegated further services such as risk

management, compliance and corporate secretarial services to Allgrace Investment Management Private

Limited.

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2. 2013 Overview

2013 Annual General Meeting

All resolutions put to the vote at the annual general meeting held on 29 April 2013 were duly approved

and passed by the Company’s shareholders.

Change of Manager Nominated Director

Ms Tan Mui Hong (“Ms Tan”) has retired as Manager Nominated Director and Deputy Chairman of the

Company on 5 November 2013.

Pursuant to the proposal of the Manager, Mr See Yong Kiat (“Mr See”) has been appointed as the

Manager Nominated Director to replace Ms Tan with effect from 5 November 2013.

Mr Ng Kuan Chow who is an executive director of Allgrace Investment Management Private Limited has

been appointed as an alternate director to Mr See on the same date.

These changes are part of the Manager’s succession planning process in relation to the appointment of

the Manager Nominated Director. There is no other change to the composition of the Board and the

Board Committees.

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2. 2013 Overview

Litigation

The Company has on 19 December 2013 filed writs in the Supreme Court of Victoria, Australia and New

York County Supreme Court against Babcock & Brown LP, Babcock & Brown Rail North America LLC,

Babcock & Brown Global Investments Management Pty Ltd among others, for, inter alia, false and

misleading representations made to the Company in respect of its investments in railcar portfolios through

Babcock & Brown Rail North America LLC (the “Investments”), breaches of fiduciary duties, and breaches

of duty and contract.

The Company will be claiming for the losses suffered by the Company from the Investments such as the

amount of Investments and costs and fees paid in connection with the making of the Investments. The

Investments were fully written off as at 31 December 2009.

The litigation did not have any significant impact on the financial performance of the Company for the

financial year ended 31 December 2013.

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2. 2013 Overview

Manager Incentive Fee

On 8 January 2014, the Company announced that the Manager is entitled to the Manager Incentive Fee

as the Share Value has exceeded the Threshold Amount as at 31 December 2013. The Share Value was

S$0.2157 per Share and the Threshold Amount was S$0.2106 per Share as at 31 December 2013.

The amount payable to the Manager as at 31 December 2013 would be S$1,215,822.27.

This is the first time the Manager will be receiving the Manager Incentive Fee since its appointment on 25

November 2009.

Henceforth, the Manager Incentive Fee will be 20% of any excess Share Return over the Benchmark

Return of 8% per annum.

Appointment of Custodian Bank

The Company has appointed Standard Chartered Bank Singapore (“SCB”) as its custodian bank with

effect from 24 October 2013. The transfer of the Company’s investments from the existing custodian

accounts to the new custodian accounts with SCB will take place in phases.

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AGENDA

1. Key Financial Data for 2013

2. 2013 Overview

3. Portfolio Composition

4. Outlook

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10%

28%

7%

43%

12%

Portfolio Composition for the Year ended 31 December 2012 (Restated)

Operating Lease Assets (10%)

Listed Equities (28%)

Bonds (7%)

Loan Portfolio & Securitisation Assets (43%)

Cash & Other Assets (12%)

3. Portfolio Composition - By Carrying Value

3%

36%

22%

35%

4%

Portfolio Composition for the Year ended 31 December 2013

Operating Lease Assets (3%)

Listed Equities (36%)

Bonds (22%)

Loan Portfolio & Securitisation Assets (35%)

Cash & Other Assets (4%)

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AGENDA

1. Key Financial Data for 2013

2. 2013 Overview

3. Portfolio Composition

4. Outlook

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4. Sector Outlook

Rail

The end of 2013 saw the rollout of a new EU budget and a revised infrastructure policy which included a

threefold increase in transport infrastructure funding for the EU. The new policy lays the groundwork for a

unified trans-Europe rail system by 2030 that would augur well on the future demand outlook for railway

equipment.

Residential

The housing market in Australia rebounded strongly in 2013, ending the year with a 9.8% gain, according to the

RP Data-Rismark Home Value Index for capital city.

Unemployment rate in Australia has remained relatively stable and ended the year at 5.8%, up just 0.4% since

the start of 2013. The Reserve Bank of Australia is expected to maintain interest rates at low levels that will

lend support to the housing market by keeping loan costs affordable.

Corporate Loans

Prices of global corporate loans have continued to increase in 2013, supported by a benign credit environment,

and strong demand from CLOs as well as other loan funds.

The Moody's Global Speculative-Grade Corporate default rate has declined from 2.8% at end 2012 to 2.6% at

end 2013. Citing strong balance sheet fundamentals, supported by a somewhat more robust economic growth

outlook for the developed market, Moody’s expects global corporate default rates to end 2014 slightly lower.

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4. Sector Outlook

Listed Equities

Overall, equities in the developed markets rose in 2013 as central banks in the US, Japan and Europe

continued their quantitative easing policy in an effort to stimulate economic recovery.

However, the emerging equity markets underperformed, weighed down by concerns over the timing of the Fed's

tapering on its asset purchasing program and the slowdown in the Chinese economy. Currencies of some

emerging countries with high current account imbalances and inflation depreciated rapidly as global liquidity

withdrew and moved to the developed markets.

The near term outlook for equities is expected to be cautious and volatile due to lingering worries over the

earlier than expected Fed's tapering as well as the economic slowdown and banking problems in China.

Improved prospects of recovery in the major economies such as Europe, US and Japan, in the generally low

interest rate environment should be supportive to equity markets in the long term.

Bonds

The performance of the global bonds ended the year much weaker than the start on tapering fears.

With the Fed’s decision to begin tapering, the outlook for global credits are likely to remain muted. The possible

headwinds include a possible rise in US Treasury yield, currency volatility as well as political uncertainty in many

countries.

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4. Company Outlook

Future Direction and Growth Strategy of GIL

To grow its assets and seek new investment in assets that will generate steady income and potential

appreciation in capital to deliver regular dividends and achieve capital growth.

Active management of GIL’s assets with focus to protect and grow value.

Investment Objective

Investment opportunities in high yield bond, hybrid instruments and public equity investments, operating

lease assets, and single loans and loan portfolio assets.

To be selective in the current environment, focusing on fundamental bottom-up analysis, with preference

for assets with defensive characteristics, and good cashflow generating ability.

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