29 Jul

Ascott’s Net Profit Surges 76 Per Cent In Second Quarter

First Half Year Financial Statement

A. Group Q2 04 S$ m Q2 03 S$ m change IH 04
S$ m
1H 03
S$ m
Revenue 54.9 45.8 20% 105.4 101.2 4%
EBITDA 29.4 24.5 20% 53.3 48.4 10%
Profit Before Tax 19.5 11.8 65% 29.6 24.0 24%
Net Profit 12.8 7.3 76% 17.6 14.5 22%
Earnings Per Share (diluted) 0.82 cts 0.47 cts 74% 1.13 cts 0.93 cts 22%
Net Asset Value Per Share       79.7 cts
at end June 2004
80.1 cts
at end Dec 2003
 B. Core Serviced Residence Sector  
Revenue 41.8 34.1 22% 83.1 71.6 16%
EBITDA 24.1 19.6 23% 43.4 35.7 22%
Net Profit 9.2 4.7 96% 11.0 4.6 139%

The Ascott Group's net profit surged 76 per cent to S$12.8 million in the second quarter compared to the same period last year. Its revenue rose 20 per cent to S$54.9 million.

This was due to substantially stronger performance from Ascott's core serviced residence business which contributed a net profit of S$9.2 million.

The serviced residence profit was 96 per cent higher than in the same period last year because of higher occupancies at the group's residences in Singapore, China and Europe. The quarter also saw a higher divestment gain of S$2.2 million compared to the second quarter 2003.

For the first half of the year, Ascott's net profit increased 22 per cent to S$17.6 million compared to the first half 2003. Revenue was up four per cent to S$105.4 million.

The increases were due to significantly better performance from Ascott's core serviced residence business where net profit jumped 139 per cent to S$11.0 million.

Mr Lim Chin Beng, Ascott's chairman, said that rising occupancies and rental rates, vigorous sales and marketing activities, and tighter cost management contributed to the higher earnings.

Good Performance in Asia and Europe
Mr Lim added that Ascott's serviced residences in Asia and Europe benefited from the recovery in the global economy and hospitality industry.

In Singapore and China, its occupancies improved significantly over those in the second quarter last year, which were depressed by the SARS outbreak. Its Singapore residences saw occupancies rise to 85 per cent in the second quarter compared to 55 per cent at their lowest point last year. In China, its occupancies were at 80 per cent compared to over 65 per cent in the second quarter 2003.

The group's UK residences, which experienced low occupancies last year due to the Iraq war, chalked a 10 percentage point rise in occupancies in the second quarter. In Europe, occupancies also improved.

Improving Outlook
Mr Eugene Lai, Ascott's chief executive officer, said that Ascott is well positioned to benefit from improvements in the global economy and hospitality industry which are expected to continue into the second half of the year. Measures taken to date will enable the group to capitalise on the increasing market activity to achieve higher profitability.

He added that 2004 net profit is expected to be higher than last year's. In the third quarter, profit will be higher than in the prior quarter, and third quarter 2003, due to the expected gain of S$29.5 million from the divestment of Scotts Shopping Centre and The Ascott Singapore. The group's acquisition of the remaining 50 per cent interest in Citadines will complete in the fourth quarter.

Major Initiatives
Mr Lai said that a priority is to integrate Citadines with the rest of Ascott's operations to achieve greater economies of scale, and to leverage the combined larger customer base to accelerate sales growth. He expects Citadines to contribute significantly to group profitability in the future.

The group will also work to strengthen further its customer base of multinational companies and enhance its product and service consistency.

Ascott will also continue to refine its asset structure and increase its fee-based income. Proceeds from asset divestments will be reinvested to grow its serviced residence business and entrench its position as a market leader in Asia Pacific and Europe.

Ascott targets to expand to 22,500 serviced apartments by 2008. It currently has 13,800 serviced apartments in 115 properties in 39 cities in Europe and Asia Pacific. The group will grow its global portfolio through a mix of equity participation, leases and management contracts. It expects to divest most of its non-core assets by 2005 to focus on its serviced residence business.

New Markets
Mr Lai said that Ascott plans to enter Indian cities such as Mumbai and Bangalore, Seoul in South Korea, and more European cities in the next few years. In Europe, Ascott currently has serviced residences in London, Paris, Brussels, Berlin and Barcelona.

In China, the group is looking to expand into secondary cities such as Qingdao, Suzhou, Ningbo, Nanjing, Guangzhou, Shenzhen and Hongkong. Ascott is now the largest international serviced residence operator in the country with 1,600 serviced apartments in Shanghai, Beijing, Tianjin and Dalian.

In Dubai, Ascott will open its first serviced residence in the city, the 90-unit Somerset Al Majarah, in the first quarter next year. The property is part of Dubai Marina, slated to be one of the world's largest waterfront developments. The group will also launch the 181-unit The Ascott Burj Dubai in 2006.

In May, Ascott announced a marketing alliance to provide upper-tier serviced apartments in over 100 US cities. The alliance with the serviced residence arm of Equity Residential, the largest publicly-traded apartment company in the US, gives Ascott the widest global coverage among international serviced residence companies.

Earlier this week, Ascott launched the 107-unit Somerset Bencoolen, its sixth serviced residence in Singapore. The property is enjoying over 90 per cent occupancy, just weeks after its soft opening.




The Ascott Group is a leading international serviced residence company with 13,800 serviced residence units in the key cities of Europe and Asia Pacific.

Ascott's global presence spans 39 cities in 16 countries. These include London, Paris, Brussels, Berlin and Barcelona in Europe; Singapore, Bangkok, Hanoi, Kuala Lumpur, Tokyo, Shanghai and Beijing in Asia; Sydney, Melbourne and Auckland in Australia and New Zealand; and Dubai in the Gulf region.

Through its marketing alliance with Equity Corporate Housing, the group also offers upper-tier serviced apartments throughout the US. 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 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.

Recent awards the group has clinched include the Number One position in the 2004 China's Top 100 Serviced Residences ranking for its eight properties in China, 2004 Best Service in Serviced Apartments awards in Hanoi and Ho Chi Minh City, and Best Annual Report and Best Operating and Financial Review awards at Singapore's 2004 Annual Report Awards.

Listed on the mainboard of the Singapore Exchange, Ascott is the serviced residence arm of CapitaLand Limited, one of Asia's largest listed property companies. 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.

For reservations on Ascott properties, call Central Reservations on (65) 6272-7272 or visit www.the-ascott.com.

Ida Lim, VP, Investor Relations & Corporate Communications
Tel: (65) 6586 7230         Hp: (65) 9628 8339     Email: ida.lim@the-ascott.com

Lilian Goh, Manager
Tel: (65) 6586 7231         Hp: (65) 9795 5225    Email: lilian.goh@the-ascott.com