Succession at Hiap Hoe Ltd.: Love and Fairness

Abstract

Hiap Hoe is a family-controlled property group, with its flagship company, Hiap Hoe Ltd., listed on the Singapore Exchange since 2003. Teo Guan Seng, the founder, involved several of his children in the business and tried to share his love and wealth with his expanding family as much as he could. However, in 2012, he found himself in the midst of a divisive family feud. Eventually, he saw no other option than to break up the family holding company, give up his ownership, resign as Chairman, and to withdraw from the group he had so painstakingly built in the course of six decades. Even worse, his family’s squabbles were widely discussed in Singapore’s newspapers, and he was personally criticized in the media and in court. Where did this remarkable success story go wrong?

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Resources
Appendix 1: Timeline of Key Events for the Hiap Hoe Companies

Business

Family

Teo Guan Seng founded Hiap Hoe and Co.

1950s

Teo Guan Seng marries Mdm Tian Ah Poon

1960s

Teo starts relationship with Mdm Tan

Hiap Hoe Holdings incorporated

1983

Teo Guan Seng appointed Managing Director

Teo Ho Beng appointed as Director

1980s

Teo starts relationship with Mdm Loh

Expansion into sports and leisure complex development through SuperBowl

1987

SuperBowl was incorporated to become SuperBowl Holdings Ptd Ltd.

1994

1998

First family discovers existence of Mdm Loh’s family

1999

Roland Teo appointed as Director

2002

Mdm Tian divorces Teo

Hiap Hoe listing on the Singapore Exchange to form Hiap Hoe Limited

2003

Teo Guan Seng appointed Chairman of Hiap Hoe Ltd.

Teo Ho Beng and Roland Teo appointed to the Board of Directors of Hiap Hoe Ltd.

Hiap Hoe Limited achieved record profit of $34.6 million

2010

Introduction of Teo Ho San into the company

Teo requests additional loans from Hiap Hoe Ltd.

2011

Teo Ho Beng’s son, Marc Teo, joins the company

2012

Teo Guan Seng’s files lawsuit to wind up the company and retires

Teo Ho Beng appointed as Chief Executive Officer and Executive Chairman of Hiap Hoe Ltd. and SuperBowl

Ronald Teo appointed as Managing Director of Hiap Hoe Ltd. and SuperBowl

2013

Family agrees on a settlement whereby Teo exits Hiap Hoe Holdings and resigns from his positions in the group

SuperBowl Holdings delisted and privatized by Hiap Hoe Ltd.

Hiap Hoe Ltd. posts profits of S$ 321 million, its highest on record

2014

Teo Ho Kheong (Andrew) involved as key management in Hiap Hoe Ltd. (previously in SuperBowl)

Hiap Hoe Ltd. posts a loss

2015

2016

Teo Ho Beng’s daughter, Mabel Teo, appointed as Head of Investment

2017

Teo Ho Beng’s daughter, Marc Teo, appointed as Executive Director

Sources: company annual reports and announcements, and Tian v Teo court documents.

Appendix 2: 2003–2016 Hiap Hoe Performance Summary

S$ 000

2016

2015

2014

2013

2012

2011

2010

Group income statements

Revenue

82,726

107,780

136,422

240,795

145,668

136,414

106,580

Profit before taxation

54,713

(10,776)

331,978

96,502

66,855

54,527

39,577

Net profit attributable to owners of the parent company

45,435

(6,874)

321,283

79,953

57,870

47,436

34,661

Group balance sheet

Non-current assets

930,221

975,585

1,082,847

174,649

29,058

16,668

10,001

Current assets

335,480

378,413

484,280

652,305

557,717

575,509

517,533

Current liabilities

374,723

322,555

376,944

245,853

200,218

246,534

180,424

Non-current liabilities

172,165

354,711

501,019

208,231

84,757

94,200

140,118

Equity attributable to owners of the parent company

715,230

673,067

685,076

374,537

305,595

251,387

206,870

Per share data (cents)

Earnings after tax (basic)

9.66

(1.46)

68.28

16.99

12.30

10.06

7.33

Financial ratios

Return on average shareholders’ funds (%)

6.55

(1.01)

59.67

23.51

20.78

20.70

18.16

Debt equity ratio (times)

0.56

0.76

0.84

1.00

0.67

1.08

1.34

S$ 000

2009

2008

2007

2006

2005

2004

2003

Group income statements

Revenue

110,480

29,729

92,220

50,566

22,763

38,179

35,128

Profit before taxation

41,622

8,252

22,966

16,831

(2,294)

562

(8,438)

Net profit attributable to owners of the parent company

34,350

8,291

19,452

12,588

(2,596)

948

25,752

Group balance sheet

Non-current assets

11,687

10,933

10,273

9,616

14,238

14,786

15,696

Current assets

590,206

523,399

205,256

129,073

102,870

82,032

104,920

Current liabilities

89,597

20,921

27,375

28,649

13,485

38,976

28,506

Non-current liabilities

337,343

371,793

72,512

41,043

46,919

60

35,439

Equity attributable to owners of the parent company

174,766

141,360

115,271

68,997

56,705

57,782

56,671

Per share data (cents)

Earnings after tax (basic)

9.08

2.46

6.95

1.11

(0.23)

0.09

2.37

Financial ratios

Return on average shareholders’ funds (%)

21.73

6.46

21.11

18.24

(0.05)

0.02

0.45

Debt equity ratio (times)

2.28

2.69

0.77

0.87

1.00

0.59

1.01

Source: Hiap Hoe Limited Annual Reports

Appendix 3: The Hiap Hoe Ownership Structure
Simplified Ownership Structure in 2010

Figure

Simplified Ownership Structure in 2014

Figure

Sources: Hiap Hoe Ltd. Annual Reports 2010 and 2014, Superbowl Annual Report 2010, and Accounting and Corporate Regulatory Authority of Singapore company profile of Hiap Hoe Holdings, 2014.

Appendix 4: Board of Directors of Hiap Hoe Ltd.: Before and After the Feud

Board of Directors (2010)

Teo Guan Seng

Non-Executive Chairman

Teo Ho Beng

Managing Director and Chief Executive Officer

Roland Teo

Executive Director

Cindy Lim

Director of Hiap Hoe Limited

Chan Wah Tiong

Independent and Non-Executive Director

Wang Kai Yuen

Independent and Non-Executive Director

Chan Boon Hui

Independent and Non-Executive Director

Board of Directors (2014)

Teo Ho Beng

Executive Chairman and Chief Executive Officer

Roland Teo

Managing Director

Tracy Wun

Executive Director

Chan Wah Tiong

Lead Independent and Non-Executive Director

Chan Boon Hui

Independent and Non-Executive Director

Kwok Chui Lian

Independent and Non-Executive Director

Appendix 5: Family Tree

Figure

Sources: Hiap Hoe Group Announcements and Annual Reports, The Straits Times, and Tian v Teo.

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