The Hongkong and Shanghai Hotels, Limited (HSH) announced its unaudited interim results. Commenting on the Group's interim results, Managing Director and Chief Executive Officer Mr. Clement K.M. Kwok said: "The Group's two most important assets, The Peninsula Hong Kong and The Repulse Bay, were undergoing major renovation in the first half of 2012. Pursuant to these projects, all of the guestrooms in the Tower of The Peninsula Hong Kong were taken out of inventory for almost the entire six-month period and the de Ricou serviced apartment tower at The Repulse Bay was closed as from 1 February. In the light of the above, we are pleased to announce that the Group's EBITDA and underlying profit both achieved a small increase as compared to the same period last year.”
The total turnover for the period amounted to HK$2,416 million, up 5% over the same period in 2011. EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 2% to HK$521 million.
Turnover in the Hotels Division increased by 5% as compared with the same period last year. This increase was achieved despite revenue at The Peninsula Hong Kong declining by 9% from 2011 due to the renovation. The most significant revenue increase came from The Peninsula Tokyo as it recovered from the March 2011 earthquake and tsunami. Revenue growth also exceeded 10% for the Peninsula hotels in Beijing and Manila.
In the Commercial Properties Division, demand for high end residential apartments and retail premises remained strong in the first half of 2012. Revenue for this Division was 1% lower year-on-year because of the closure of the de Ricou tower for renovation, which accounts for 13% of the net available area at The Repulse Bay. This revenue shortfall was largely offset by an increase of more than 10% in revenue at The Peak Tower, as well as increased revenue in other businesses.
In the Clubs and Services Division, the major revenue growth came from the increased passenger numbers at the re-opened and renovated Cathay Pacific Airways' business class lounges at the Hong Kong International Airport. There was also increased revenue from Tai Pan Laundry and Peak Tramways. The Thai Country Club and Quail Lodge Golf Club managed to maintain their revenue levels, even though the trading environment was challenging at both properties.
After taking into account the increase in fair value of investment properties of HK$630 million (2011: HK$1,784 million) and the current and deferred tax charges of HK$79 million (2011: HK$98 million), the profit attributable to shareholders in the six months amounted to HK$814 million. The Group's underlying profit attributable to shareholders, which was calculated by excluding the post-tax effects of the property revaluation surplus and other non-operating items, amounted to HK$156 million (2011: HK$152 million).
Earnings per share and underlying earnings per share were HK$0.55 (2010: HK$1.29) and HK$0.10 (2011: HK$0.10) respectively.
Shareholders' funds increased to HK$32,194 million or HK$21.43 per share. Net borrowings increased to HK$2,491 million but the Group's gearing ratio remains very low at 7%. The Company has also provided a calculation of the adjusted net assets attributable to shareholders, which after taking into account the fair market valuations of hotel properties and golf courses, amounted to HK$35,355 million or HK$23.54 per share.
The Directors have resolved to pay an interim dividend of 4 HK cents per share (2011: 4 HK cents per share).
Mr. Clement Kwok remarked on the Group's outlook for the next half of 2012: "The key factor that will continue to affect our results in the short term is the impact of the renovations at The Peninsula Hong Kong and The Repulse Bay. As mentioned, the closure of the Tower at The Peninsula Hong Kong will be followed by the closure of the original building until the second quarter of 2013. At The Repulse Bay, closure of the de Ricou tower is expected to last until mid 2013. However, we are confident that completion of these improvements will significantly enhance our future earnings outlook.
"In our other businesses and operations, the general trend of demand was stronger at the beginning of 2012 in the first quarter and we have seen a slowing of momentum as we entered into the second quarter and the summer months. The outlook for the traditional autumn high season for most of our hotels is therefore uncertain although we remain cautiously optimistic especially in some of our Asian markets. Rental yields at our investment properties are generally holding up and we expect this segment to remain stable.
"Overall, our Group remains in a strong financial position, with a very low level of gearing and significant capability to make further investments.”