Ascott Records Net Profit of S$18.5 million. Serviced Residence EBITDA Grows 33% Despite Difficult Conditions
Full Year Financial Statement
Serviced Residence EBITDA Grows 33% Despite Difficult Conditions
|A. Core Serviced Residence Sector||FY 2003
|Profit Before Tax||39.5||61.3||-36%|
|Earnings Per Share (diluted)||1.19 cents||2.58 cents||-|
|Net Asset Value Per Share||80.1 cents||81.1 cents||-|
|Dividend||First and final gross dividend of 6%0.94 cents per share after tax|
|Gross Dividend Yield||2.9% @ 42.0 cents per share on Dec 31, 2003|
The Ascott Group recorded net profit of S$18.5 million in 2003, from continued growth in its core serviced residence business, despite more difficult operating conditions.
Net profit was 54 per cent lower than the previous year due to higher asset divestment gains in 2002, a S$3.2 million revaluation deficit from its UK properties, and S$3.9 million one-off charges from a lease rental adjustment in Singapore and pre-opening expenses in Australia.
Excluding these items, the group's net profit was S$3.1 million lower than in 2002, due mainly to lower contributions from its non-core retail sector.
Ascott's core serviced residence business improved its performance in 2003. Serviced residence EBITDA increased by 33 per cent to S$74.4 million compared to 2002. This included new contributions from the Citadines serviced residence chain in Europe, after the group acquired a 50 per cent stake in the company in February 2003, and improved performance in China, Vietnam, Thailand and Indonesia.
Ascott's directors are recommending a first and final gross dividend of six per cent per share. This represents a gross dividend yield of 2.9 per cent based on Ascott's share price of 42.0 cents at end December 2003. Dividend after tax would be 0.94 cents per share.
Challenging Operating Conditions
Mr Eugene Lai, Ascott's chief executive officer, said that the SARS outbreak and Iraq war negatively impacted the global hospitality industry, and Ascott's performance in Singapore, UK, China and Philippines, particularly in the first half of 2003.
However, the group's overall serviced residence business continued to grow. 2003 serviced residence EBITDA rose by a third, proving the resilience of Ascott's business model, with longer stay corporate clients and diversification across various countries, compared to the traditional hotel model. In most cities in Asia, Ascott continued to outperform the market in occupancy and rates, and grow its brand penetration.
In 2003, Ascott significantly expanded its global reach. With the Citadines acquisition, the group became the largest serviced residence operator in Europe and Asia Pacific, and the largest outside the US. Ascott's portfolio today spans 13,800 serviced residence units in 39 cities in 16 countries.
In December, Ascott entered the Gulf region by securing two prime serviced residence management contracts with 250 units in Dubai city. The group also opened eight serviced residences with 1,065 units in China, Thailand, Australia, Japan and the UK. It grew fee income by securing six new serviced residence management contracts with 730 units.
In line with its asset light strategy, it divested its interest in three serviced residences in Thailand and UK, and disposed a non-core food court in Kuala Lumpur.
Mr Lai added that Ascott made significant progress in becoming a pure play international serviced residence operator. In 2003, EBITDA from its serviced residences constituted 77 per cent of total group EBITDA, up from 67 per cent a year ago. Overseas EBITDA from its serviced residences constituted 86 per cent of total serviced residence EBITDA, up from 71 per cent a year ago.
Mr Lai said that in 2004, Ascott's priorities will be to strengthen its customer base, increase occupancy and rates, and enhance product and service consistency. The group will also restructure its assets in order to increase returns, and strengthen its infrastructure and human resource.
He said that the outlook for the major cities in which the group operates is improving and net profit for 2004 is expected to be higher than for 2003.
Mr Lai added that Ascott will continue to seek growth opportunities globally, particularly in China, South Korea, Japan and Europe.
ABOUT THE ASCOTT GROUP
The Ascott Group is a leading international serviced residence company with serviced residence units spanning the key cities of Europe, Southeast Asia, North Asia, and Australia and New Zealand.
Ascott's global presence comprises 13,800 serviced residence units across 39 cities in 16 countries. These cities include London, Paris, Brussels, Berlin and Barcelona in Europe; Singapore, Bangkok, Ho Chi Minh City, Kuala Lumpur, Tokyo, Shanghai and Beijing in Asia; Sydney, Melbourne and Auckland in Australia and New Zealand; and Dubai in the Gulf region.
Headquartered in Singapore, The Ascott Group pioneered the Asia Pacific's first branded luxury serviced residence in 1984. Today, it boasts a 20-year industry track record and serviced residence brands that enjoy strong recognition worldwide.
The Group's flagship The Ascott luxury serviced residence brand projects an elegant lifestyle appealing to top executives. Its Somerset upper-tier brand offers stylish, contemporary living for senior to upper management executives. The mid-tier Oakford brand in Australia and Citadines brand in Europe provide corporate executives with comfortable city residences.
Listed on the mainboard of the Singapore Exchange, the Group is the serviced residence arm of CapitaLand Limited, one of the largest listed property companies in Asia.
Headquartered in Singapore, CapitaLand's core businesses in property, hospitality, property services and real estate financial services are focused in gateway cities in Asia, Australia and Europe. The company's hospitality businesses in hotels and serviced residences span more than 60 cities around the world. CapitaLand also leverages on its significant real estate asset base and market knowledge to develop fee-based products and services in Singapore and the region.
For reservations on Ascott properties, call Central Reservations on (65) 6272-7272 or visit the Group's website at www.the-ascott.com.