The Ascott Group Divests Its Golf Course in China
The Ascott Group has divested its interest in The Masters Golf and Country Club in Guangzhou, China accelerating the divestment of its non-core businesses.
It has sold its stake to Simplex Capital Asia Limited, a Hongkong-based investment company, for US$16.3 million in cash, and 150 transferable country club memberships valued at US$2.3 million.
The Ascott Group's chief executive officer, Mr Kee Teck Koon, said: "The golf course development has been a drag on the company’s cashflow and profitability.
"Although we have managed to break even at the operating level this year, it is in the best interest of our group to divest it, and focus our resources and management expertise on our core serviced residence business, in which we are clear regional leaders with significant competitive advantage."
He added: "Although the sale price is below the golf development's book value of S$45.5 million, and will thus result in a loss of S$10.5 million for the current financial year, going forward, this divestment is financially positive for the group. We will no longer be saddled with further losses from the golf course business. We estimate that the sale will save the company S$5.2 million per annum in further operating costs, interest and depreciation."
The Masters Golf and Country Club is a joint venture started in 1993 between the then Liang Court Holdings (subsequently renamed Somerset Holdings) with 70 per cent stake, and the Guangzhou Fangcun District Government with 30 per cent stake.
Located in the Fangcun district, the golf club has a world class 18-hole golf course designed by the UK Professional Golfers' Association, a 64-bay public driving range, and a 6,000 square metre Mediterranean-style club house.
Under the agreement, Simplex Capital Asia will honour the existing terms and conditions in the club's founder and ordinary memberships.
The sale of its golf course business forms part of The Ascott Group’s strategy to dispose its non-core businesses and S$1.4 billion worth of non-core assets over the next two to three years.
Moving rapidly on its divestment programme, the group last month sold its Orchard Point retail podium for S$91 million; and last week assigned all its retail property management contracts to CapitaLand Commercial for S$8.5 million. The company has also announced plans to dispose another S$400 to S$500 million of its retail properties in Singapore in the next few months.
Together with cash generated from operations, the proceeds from the sale of its non-core properties will be used to retire debts and fund the expansion of its serviced residence business in Europe, North Asia, Australia and the US.
The Ascott Group, which is today the Asia Pacific’s largest serviced residence company, aims to transform from a regional leader into a global leader in serviced residences. It targets to expand its network of serviced residences to 15,000 units by 2005, from its current 6,000 units.
Last month, it announced a S$5 million brand rationalisation and promotion exercise to develop its leading regional serviced residence brands - ‘The Ascott’ and ‘Somerset’ brands -- into global brands.
The sale of the Masters golf course project will result in a decrease of 0.68 Singapore cent in the company's earnings per share and net tangible assets per share for the current financial year.
However, this will be partially offset by the net gain of S$5.9 million from the divestment of Orchard Point, which positively contributes to earnings per share of 0.37 Singapore cent and an increase of 0.48 Singapore cent in net tangible assets per share for the current financial year. Payment for the Orchard Point transaction will be received in August this year, although the sale will complete in August 2002.
About The Ascott Group
The Ascott Group is the Asia Pacific’s largest serviced residence company. Its 'The Ascott' and 'Somerset' serviced residence brands are dominant market leaders in the region. Created through the merger between The Ascott Limited and Somerset Holdings Limited in November 2000, the group owns and / or manages over 6,000 serviced residence units in 16 cities in 10 countries.
Headquartered in Singapore, The Ascott Group’s shares are listed on the Singapore Exchange as "Ascott". The group is the serviced residence arm of CapitaLand Limited, Southeast Asia's largest listed property company.
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