The Ascott Group Achieves Improved Third Quarter Results
The Ascott Group's third quarter attributable profit rose by S$1.9 million to S$2.7 million, an increase of 245 per cent from the third quarter last year.
Its third quarter 2001 turnover increased 31 per cent to S$73.6 million, while EBITDA (profit before interest, depreciation and amortisation, exceptional item and tax) grew 23 per cent to S$25.5 million, compared to the same period last year.
For the group's core serviced residence business, third quarter 2001 turnover increased nine per cent or S$2.8 million to S$34.6 million from the same quarter a year ago. EBITDA grew 115 per cent to S$9.4 million.
The Ascott Group's chief executive officer, Mr Kee Teck Koon, said that the company continued to see strong occupancy for its serviced residences despite events following the US September 11 terrorist incident.
"We have proved resilient as our business is built on a well-diversified and mainly corporate client base. As companies cut costs, serviced residences with their flexible stay arrangements and competitive rates, offer value propositions. Our residences' longer lengths of stay and lower cost base have contributed to our greater stability of income," he said.
In the third quarter, turnover for the group's retail sector rose five per cent or S$0.9 million compared to the same quarter last year. The higher revenue was due to rentals from the newly completed annexe to Junction 8 shopping centre. EBITDA grew by S$0.6 million, from the year-ago quarter.
Turnover for the 'residential and others' sector rose 283 per cent to S$18.4 million for the quarter, compared to the same period in 2001. The increase was due to the sale of units in the Colonnades project in Australia. However, EBITDA was lower by S$0.8 million from the third quarter 2000, due to lower margins.
Over Nine Months
The group's turnover for the first nine months of the year jumped 28 per cent to S$215.2 million, from the prior period 2000. EBITDA grew by 17 per cent or S$12.5 million.
Turnover of the core serviced residence sector rose by 19 per cent or S$16 million to S$102.6 million. The sector also registered the highest EBITDA growth of 73.7 per cent to S$36.5 million.
In the first nine months 2001, turnover for the retail sector increased by S$4.4 million, and for the 'residential and others' sector, by S$26.8 million, compared to the same period last year.
However, the group's attributable profit for the first nine months this year, was S$6.8 million compared to S$18.3 million for the same period 2000. The difference of S$11.5 million was due to an S$8.9 million exceptional gain last year, compared to a S$2.4 million exceptional loss for the first nine months this year.
The exceptional gain a year ago, was from an investment property in London and food court in Kuala Lumpur.
The group's exceptional loss of S$2.4 million this year, was from its provision for The Masters Golf and Country Club, off-set by gains from the sale of its Orchard Point retail centre, overseas retail management contracts and a London investment property.
However, the fourth quarter will see the recognition of the group's S$86.5 million pre-tax exceptional gain from the sale of its non-core Funan and Junction 8 commercial centres.
On prospects for the rest of the year, Mr Kee said: "We do not expect our operating performance to be substantially affected by the global economic slowdown. Marginal revenue loss in the fourth quarter would be cushioned by our lower interest expenses, and the vigorous cost control and productivity drive that we had put in place since June."
Mr Kee said that the group will soon commence the annual valuation exercise for its portfolio of properties, and cautioned that weaker property prices could lead to write-downs or provisions for drops in market value for some of its properties. This could reduce the group's full-year earnings and consolidated net asset value.
However, the impact on the consolidated net asset value is not expected to be significant, and the group expects this year's fourth quarter and full year earnings, inclusive of exceptional gains, to be better than last year's fourth quarter profit of S$14.5 million and full year profit of S$32.8 million.
Mr Kee added that the group is on target in its strategy to improve further the quality of its income by increasing its investment allocations in the less volatile markets of developed countries such as Australia and Europe.
Earlier this month, it announced its acquisition of the Oakford Group in Australia, with potentially 874 units, making it the third largest serviced residence company in Australasia.
The acquisition also expands the group's collection of leased / managed properties from 25 to 31 per cent of its total portfolio. This is in line with its drive to become more asset light, to increase its capital productivity.
About The Ascott Group
The Ascott Group is Asia Pacific's largest serviced residence company with over 6,400 units in 17 cities in 10 countries. Its The Ascott and Somerset serviced residence brands are market leaders in the region.