Annual Report 2019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED 54 MANAGEMENT DISCUSSION AND ANALYSIS (iv) benefiting from cross-selling through future co-operation with The Star which is synergistic to the gaming platform of the Group; and (v) benefit from cash flow from The Star’s future dividend distribution based on a dividend payout of at least 70% of normalised net profit after tax. During FY2019, revenue from the Group’s investment in The Star was HK$62 million which represented dividend from The Star. 5. Other business As an extension of our property development business, the Group established the BCG Business. BCG specializes in the provision of residential mortgages to non-resident buyers of international properties. The BCG Business is highly synergistic to the Group’s property development business and offers significant growth potential. Assets under management of the BCG Business reached AUD617 million as at 31 March 2019 with an average loan-to-value ratio of 59.3%. Majority of the BCG Business’s mortgage portfolio funding comes from an international investment bank. The Group has also committed AUD75 million of funding, and has funded AUD63 million as at 31 March 2019 which is classified as investment securities. Despite its initial stage of development, the BCG Business contributed HK$36 million to the Group’s profit during FY2019 excluding a gain arising from the value uplift of the Group’s interest in BCG explained below. Including interest income from funding, total contribution from BCG amounted to HK$70 million. The rapid growth of the BCG Business seen for the past year is expected to continue, due to its uniqueness of having the backing of a property developer and its diverse distribution channels. To continue its growth, the Group has introduced two new private equity investors, which collectively manage assets in excess of US$40 billion, into the BCG Business in February 2019. The transaction involves the two new investors subscribing for 25% shares of the investment vehicle which holds the BCG Business at a consideration of AUD15 million, thereby valuing the BCG Business at approximately AUD60 million (post money), and resulted in a gain of HK$176 million recognised by the Group during the year as a result of the value uplift of the Group’s interest in BCG. In addition to purchasing an equity stake in the BCG Business, the new investors are also expected to assist with the expansion of BCG Business’s platform over the next 3 years to grow its mortgage loan assets under management to AUD5 billion. The Group will enjoy good risk-adjusted return with this investment given the quality of asset backing.