BBR Holdings

(03-11-2014, 11:04 PM)ksir Wrote:

(03-11-2014, 09:34 PM)idyllic_yawster Wrote: http://infopub.sgx.com/FileOpen/BBR_Redu...eID=321755

25% to 1% - smart move!

The max losses are already recognized. I don't see any financial impact by doing this.

The keyword is unincorporated joint venture (UJV). This development shall substantially reduce BBR share of costs in respect of the JV (however liability to the public unchanged due to several and unlimited nature (of unincorporation))

Joint Venture
http://www.minterellison.com/A_201104_OSe/
A joint venture (JV) can be structured in two ways - as an unincorporated joint venture (UJV) or an incorporated joint venture (IJV). The fundamental difference between the two is that an IJV creates a separate legal entity and the UJV does not. As an UJV does not create a separate legal entity, the participants will usually govern their relationship using the terms of an unincorporated joint venture agreement.

Liability
UJV - The JV Agreement usually states the parties will be severally liable proportionate to their interest during the JV. However, the parties liability to the public at large is joint and several and unlimited. Accordingly, full recovery can be sought from any one or more of the parties.
IJV - The parties' liability is limited to the assets held by the IJC.

Profits & Costs
UJV - The UJV itself makes no profit – each party shares in the 'production' and may market its share to make a profit as it chooses. This may include competing against the other party in the market for sale of the product.
Each party is liable for the operating costs proportionate to their interest.
IJV - Usually, the parties receive dividends and interest representing the income of the IJV. Operating costs are payable by the IJV.

PS: IMO Though the writeup is for the resource sector, the same principles shall apply to UJV for other sectors.

(04-11-2014, 10:22 AM)Yoyo Wrote:

(03-11-2014, 11:04 PM)ksir Wrote:

(03-11-2014, 09:34 PM)idyllic_yawster Wrote: http://infopub.sgx.com/FileOpen/BBR_Redu...eID=321755

25% to 1% - smart move!

The max losses are already recognized. I don't see any financial impact by doing this.

The keyword is unincorporated joint venture (UJV). This development shall substantially reduce BBR share of costs in respect of the JV (however liability to the public unchanged due to several and unlimited nature (of unincorporation))

Joint Venture
http://www.minterellison.com/A_201104_OSe/
A joint venture (JV) can be structured in two ways - as an unincorporated joint venture (UJV) or an incorporated joint venture (IJV). The fundamental difference between the two is that an IJV creates a separate legal entity and the UJV does not. As an UJV does not create a separate legal entity, the participants will usually govern their relationship using the terms of an unincorporated joint venture agreement.

Liability
UJV - The JV Agreement usually states the parties will be severally liable proportionate to their interest during the JV. However, the parties liability to the public at large is joint and several and unlimited. Accordingly, full recovery can be sought from any one or more of the parties.
IJV - The parties' liability is limited to the assets held by the IJC.

Profits & Costs
UJV - The UJV itself makes no profit – each party shares in the 'production' and may market its share to make a profit as it chooses. This may include competing against the other party in the market for sale of the product.
Each party is liable for the operating costs proportionate to their interest.
IJV - Usually, the parties receive dividends and interest representing the income of the IJV. Operating costs are payable by the IJV.

PS: IMO Though the writeup is for the resource sector, the same principles shall apply to UJV for other sectors.

Thanks for sharing this.
Yea the "unincorporated" portion jumped out at me. It's rather unique: most JVs would be incorporated as a separate company.
It's good that BBR negotiated down to 1%, although the losses have already been recognised (and BBR is protected from losses more than 5million i think), there may be further operating costs involved which would be proportional.
I am hoping that the JV gets wound down soon though, it's been a losing venture and it'll be even better if it gets disolved soon.

<vested>

This is interesting. We always assume JV are incorporated.

What is the incentive for going UJV? tax or credit in exchange for unlimited liability??

(04-11-2014, 10:41 PM)specuvestor Wrote: This is interesting. We always assume JV are incorporated.

What is the incentive for going UJV? tax or credit in exchange for unlimited liability??

If you are interested, you may read up on
http://www.tved.net.au/index.cfm?SimpleD...tages.html

How does a contractual joint venture operates?
CJV/UJV
In a contractual joint venture (CJV), the participants each hold their interests in the joint venture directly and in agreed proportions, for example as tenants in common.

However, a nominee is often used to hold the joint venture property as a bare trustee. This is done in order to facilitate dealings with third parties by the joint venture, which otherwise has no legal identity. The nominee often also serves as the operator of the joint venture.

Each participant pays its share of the production costs to the operator, usually according to an agreed budget. The completed product is divided up by the operator and delivered to each participant, who then sells their own product to the market.


Generally speaking, the some of the advantages of UJV as follow:

1. The ability of each party to finance its participation in the joint venture in the manner most convenient to it. This is particularly useful where the respective participants have different levels of assets and financial sophistication;
2. The possibility of offsetting losses against the assessable income of each party;
3. The absence of the need to agree on a common dividend policy as in the case of an incorporated joint venture; and
4. The ability of each party to separately take and dispose of the product produced by the joint venture.

Agreed that tax consideration is a major factor (Point 2).

Hope this helps.

Thanks Yoyo. I was thinking that it sounds like the Samsung production sharing agreement with Sony in a G8 LCD plant (that has since expired) but we don't really call it a JV as Samsung technically owns the plant.

Probably also because they each want to retain control of certain assets rather than inject into an entity ie mistrust. Thanks for the clarifications. It's useful to know

(05-11-2014, 03:09 PM)Yoyo Wrote:

(04-11-2014, 10:41 PM)specuvestor Wrote: This is interesting. We always assume JV are incorporated.

What is the incentive for going UJV? tax or credit in exchange for unlimited liability??

If you are interested, you may read up on
http://www.tved.net.au/index.cfm?SimpleD...tages.html

How does a contractual joint venture operates?
CJV/UJV
In a contractual joint venture (CJV), the participants each hold their interests in the joint venture directly and in agreed proportions, for example as tenants in common.

However, a nominee is often used to hold the joint venture property as a bare trustee. This is done in order to facilitate dealings with third parties by the joint venture, which otherwise has no legal identity. The nominee often also serves as the operator of the joint venture.

Each participant pays its share of the production costs to the operator, usually according to an agreed budget. The completed product is divided up by the operator and delivered to each participant, who then sells their own product to the market.


Generally speaking, the some of the advantages of UJV as follow:

1. The ability of each party to finance its participation in the joint venture in the manner most convenient to it. This is particularly useful where the respective participants have different levels of assets and financial sophistication;
2. The possibility of offsetting losses against the assessable income of each party;
3. The absence of the need to agree on a common dividend policy as in the case of an incorporated joint venture; and
4. The ability of each party to separately take and dispose of the product produced by the joint venture.

Agreed that tax consideration is a major factor (Point 2).

Hope this helps.

Thanks for this explanation.
Aside from this, I think since its unincorporated and the liability is unlimited, any loans taken up by the JV comes with the backing of each of the entities that make up the JV.
BBR is smart enough to have a private agreement to limit its liability. It's almost like they predicted potential losses right from the start.

Quote:95% of Jurong EC snapped up on first day of sales

SINGAPORE: The first executive condominium (EC) project in Jurong in 17 years opened for booking on Saturday (Nov 8), and it has already sold 95 per cent of its units - 521 units. This makes Lake Life EC the project that sold the most number of units on the first day of sales since June last year.

Source: http://www.channelnewsasia.com/news/sing...61522.html

Margins might be razor thin, still, great news and sure helps to resolve some of the uncertainty on the sales performance of this very expensive EC project.

unbelievble..demand for property is still underlying strong..

(09-11-2014, 09:37 AM)vested Wrote:

Quote:95% of Jurong EC snapped up on first day of sales

SINGAPORE: The first executive condominium (EC) project in Jurong in 17 years opened for booking on Saturday (Nov 8), and it has already sold 95 per cent of its units - 521 units. This makes Lake Life EC the project that sold the most number of units on the first day of sales since June last year.

Source: http://www.channelnewsasia.com/news/sing...61522.html

Margins might be razor thin, still, great news and sure helps to resolve some of the uncertainty on the sales performance of this very expensive EC project.

I am also very tempted to go and have a look at this lakeville project.. 2brms of 685k upwards. . Not sure if it's value buy?

FY14Q3 results are not good.
Again BBR had to book in losses for some of the projects
It's only barely profitable because of the 2 divestments
Without that, it'll b awash in red.

Somehow BBR tends to get losses in some projects from time to time
I suspect it's cos the margins factored in is pretty low, so once something crops up there's no leeway in terms of cost projections
Perhaps in their desire to secure more and more projects, they competed too heavily on price.
This is definitely a negative to consider for BBR
Management has a problem controlling profitability of individual projects. Losses from time to time is to b expected