Jan 16, 2014

    Looking for a place to park $63m

    ALMOST two years after selling its regional chocolate retail line for a pretty penny, mainboard-listed ABR Holdings, which runs the profitable Swensen's franchise of ice-cream restaurants here, is still hunting for a suitable place to park a sizeable cash stash.

    The group last reported cash and equivalents of $63.5 million on its balance sheet - no mean feat for a company flying under the radar and worth around $150 million on the market.

    "The reality of finding food opportunities of that size is that there are not many options. So, we have been looking beyond the food-and-beverage (F&B) sector," executive chairman Keith Chua, 60, told The Business Times in an interview.

    "Finding alternative investments hasn't been an easy task. We have looked at several, both within and outside the F&B industry. None have been successful or, where we've attempted to negotiate, conclusive.

    "So, efforts continue. We are also being careful. There are many opportunities, but we have also seen many that are not as exciting."

    Meanwhile, the company has become more risk-averse in regard to its operating businesses.

    Its main Swensen's business in Singapore and Season's confectionery in Malaysia are profitable, but minor brands Gloria Jean's Coffees, Oishi Japanese Pizza and Tip Top Curry Puffs are in the red. Caution is thus the word of the day, rather than "being aggressive", Mr Chua said.

    For its third quarter ended Sept 30 last year, ABR had a $12.6-million "deposit for a new project" on its cashflow statement - indicative of a bid for a sizeable project.

    That did not work out, Mr Chua told BT, though he would not be drawn into providing more details of the failed bid.

    "We haven't disclosed it, and don't know if the board would mention it (in the coming annual report). It would have been a significant investment," he said.

    ABR Holdings has been around in Singapore since 1978, holding the franchise for Swensen's. In 1992, it listed on Sesdaq, the precursor to the Catalist board on the Singapore Exchange. It entered the mainboard in 2008.

    In the 1990s, two thirds of ABR's revenue came from Swensen's and one third from Europa Holdings, a chain of pubs and discos that was eventually closed by the early 2000s. Since then, ABR has tried its hand at other businesses.

    Its most notable success was Focus Network Agencies (FNA), known for its chocolate retail chain The Cocoa Trees.

    ABR and partners invested $5 million in FNA in 2003, and divested the firm for $196 million in 2012. This reaped ABR a bonanza of $100 million.

    In September 2012, shareholders enjoyed a payout of $60.3 million, or 30 cents a share, as a special dividend.

    Shares in ABR have continued to climb steadily through the years. But other businesses that ABR entered into have not worked out as well, such as its coffee, curry-puff and Japanese-pizza sidelines here.

    Mr Chua explained: "The food market is a very competitive environment. If you want to establish a new concept, a new brand, there has to be some entrepreneurial dynamic. You have to put in the time, commitment, take a certain level of risk.

    "But when you have a bigger part of ABR (Swensen's) that is steadily growing and profitable, you tend to be more risk-averse, less entrepreneurial in your approach."

    ABR thus decided early last year to park its minor brands in a separate vehicle, a joint venture called All Best Foods.

    "Part of the hope is that it'll bring about better results," he said.

    It is also venturing into the steaks and grills business with its Hippopotamus Restaurant, a Parisian casual-dining outfit.

    ABR had also attempted to break into the China market, without much success.

    Today, its core business remains its Swensen's chain that has grown steadily through the years, with 22 restaurant outlets and two premium outlets under the Earle Swensen's name. Swensen's contributes about 80 per cent of ABR's revenue, Mr Chua said.

    The company has recovered from a dip in 2012. Its nine-month revenue to Sept 30 last year was $71.3 million, up around 6 per cent from a year ago. Net profit from continuing operations for the period has soared to $5.4 million from just $97,000 a year ago.

    Mr Chua's family used to own the Garden Hotel here before divesting it in 2000 and reinvesting the proceeds in ABR, which remains a key business.

    In the meantime, it remains to be seen if, after divesting FNA, ABR will continue its sterling track record - a 10-year return of more than 20 per cent a year on average, according to Bloomberg.