31 Jan
2002

Ascott Achieves 20 Per Cent Profit Growth

Proforma Full Year Financial Statement And Dividend Annoucement

Singapore Jan 31, 2002 -- The Ascott Group, Asia Pacific’s largest serviced residence company, has reported a 20 per cent increase in profits for its 2001 financial year.

The group’s profit rose to S$41.2 million from S$34.3 million the year before, mainly from higher exceptional gains.

In view of its better performance and stronger balance sheet, its directors are recommending a total gross dividend of 10 per cent per share, which includes a five per cent bonus dividend. This is an after tax dividend of 1.51 cents per share, compared to 0.76 cents in 2000.

Although turnover slipped five per cent to S$282.1 million and EBITDA dropped S$7.4 million due to the winding down of non-core businesses, the group’s core serviced residence sector continued to chalk up a robust 15 per cent growth in turnover to S$139 million.

The group’s chief executive officer, Mr Kee Teck Koon, said: "Our serviced residence business continued to grow strongly. Most of our residences achieved higher occupancies and rental rates, and outperformed their markets. Their overall gross operating profit margin improved three per cent to 62 per cent.

"EBITDA for the serviced residence business increased by 17 per cent to S$40.5 million despite the US September crisis and the deduction of one-off costs from our new ventures in Australia and the UK."

Mr Kee added: "We made good progress in 2001 in strengthening our core serviced residence business and towards our target of growing to 15,000 units by 2005, with market leadership in key regions.

"Last year, we added over 1,900 units to our serviced residence portfolio, which is now the Asia Pacific’s largest at 7,600 units. In Australia, we acquired the Oakford group to become one of Australasia’s top three serviced residence chains.

"In the UK, our joint venture with Crown Dilmun has made Ascott a leading serviced residence operator in the country. In China we launched 730 new units to become one of the country’s largest serviced residence chains."

Mr Kee said that the group has substantially strengthened its financial position last year. It divested 54 per cent of its non-core assets worth S$628.5 million and lowered its gearing to 0.52 from 0.79 the year before.

"The divestment proceeds have been used to pare down debts and we are now well positioned to take advantage of investment opportunities in the current property markets to grow further our core serviced residence business," he added.

The group’s earnings per share rose to 2.66 cents from 2.22 cents the previous year, and net tangible assets per share was 75.5 cents compared to 83.1 cents in 2000.

Outlook

On the group’s outlook, Mr Kee said: "We expect 2002 to be profitable. But attributable profit will not match last year’s, as we do not expect significant exceptional gains from the divestment of our non-core assets this year.

"However, if we exclude exceptional gains in both years, we expect profits this year, to be higher than last year’s.

"In 2002, contributions from our non-core sectors will decline, in line with our decision to wind down these businesses. The divestment of Junction 8, Funan and Orchard Point malls will reduce our revenue by S$45 million and EBITDA by S$35 million. Profits from the sale of our remaining residential units will be marginal," he added.

"However, in our core serviced residence business, we expect double digit revenue growth. We see new contributions from the Oakford and Crown Dilmun properties, and the improved performance and full year contributions from the five new properties we opened last year in Shanghai, Beijing, Bangkok and Kuching," said Mr Kee.

"We see positive contribution from The Ascott Metropolis, with the expiry of its rental guarantee last year. The increased savings from our ongoing clustering of property operations, stepped-up marketing efforts, diversified client base and the low interest rate environment will enhance our bottomline."

On the first quarter 2002 outlook, Mr Kee expects the quarter to be profitable although with lower turnover, compared to last year’s first quarter which recorded a loss due to provisions.

Exceptional Gain

The company’s S$41 million exceptional gain was due to gains from the sale of Orchard Point and Junction 8 retail malls, an investment property in London and overseas retail management contracts.

These were offset by losses from the sale of Funan mall and planned sale of land in China, and provisions for a golf club, diminution in value of investments, and doubtful receivables.

Non-Core Properties

Retail turnover in 2001 rose six per cent to S$82.8 million, while EBITDA increased 11 per cent to S$57.3 million. This was due to additional rentals from the new annexe to Junction 8 mall and higher occupancy at People’s Parade mall in Wuhan, China.

The ‘residential and others’ sector saw a turnover drop of S$38.4 million, with EBITDA decreasing by S$18.8 million. This was due to a S$5.8 million provision for the Nassim condominium in Singapore, and to the group’s condominium projects in Australia being substantially sold in 2000.

Fourth Quarter

The group’s fourth quarter attributable profit rose 114 per cent to S$34.4 million compared to the fourth quarter 2000. Turnover dropped S$63.4 million, and EBITDA slipped by S$19.9 million, largely from the winding down of non-core businesses.

The core serviced residence sector saw a five per cent increase in turnover to S$36.4 million. EBITDA declined by S$9.5 million due to one-off charges, start-up losses in China and weaker operating results in Singapore, London and Sydney.

The weaker performance was due to the slowdown in the Singapore economy, effect of the US September event in London, and price undercutting in Sydney.

This was offset by the continued strength in most of the group’s properties in other cities, which did not experience any appreciable drop in the fourth quarter. The group’s four residences in Shanghai and Auckland continued to chalk up higher revenues.

Current Valuations

Based on latest valuations, the group’s investment properties and properties under development have declined in value by S$66.5 million. The decline has been taken to the capital reserves in the group’s balance sheet.

 


 

About The Ascott Group

The Ascott Group is Asia Pacific’s largest serviced residence company. It owns / manages 7,600 serviced residence units in 19 cities in 10 countries across Asia, Australasia and the United Kingdom.

The group’s The Ascott and Somerset serviced residences are market leaders in the Asia Pacific. Its luxury The Ascott brand projects an elegant lifestyle for top executives. The Somerset brand offers stylish living for the mobile senior to upper management executive.

The Ascott Group is the serviced residence arm of CapitaLand Limited, Southeast Asia’s largest listed property company. Headquartered in Singapore, The Ascott Group’s shares trade as ‘Ascott’ on the Singapore Exchange.

The group was a pioneer in the Asia Pacific when it launched the region’s first branded luxury serviced residence, The Ascott Singapore, in 1984. Today the group boasts an 18-year industry track record and a well diversified global corporate client base.

Ascott has also built a reputation for creating for its guests, residences with communities that are nurturing. It enriches its guests’ living experience with cultural familiarisation, community networking and recreational activities.

 

 

Ida Lim, Vice President, Investor Relations & Corporate Communications
Tel: (65) 65867-230 Hp: (65) 9628-8339 Fax: (65) 62272-220
Email: ida.lim@the-ascott.com

Tay Cheng Cheng, Assistant Manager
Tel: (65) 5867-231 Hp: (65) 9010-0627 Fax: (65) 5867-202
Email: tay.chengcheng@the-ascott.com