Hong Kong, March 4, 1999 - The severity of the Asian economic
crisis and the effect of the prolonged downturn on Hong Kong's fundamentals
impacted the performance of The Hongkong and Shanghai Hotels, Limited which
today announced a group operating profit of HK$766 million for the year
to 31st December 1998, compared to HK$1,049 million in 1997.
The group result after taxation and minority interests was a loss of
HK$1,820 million in 1998 compared to a profit of HK$114 million in 1997.
The 1998 loss arose principally from provisions made against the carrying
value of existing investments and continuing projects, and from revaluation
adjustments in excess of relevant existing revaluation reserves.
Because of the 1998 loss attributable to shareholders, the directors
propose that the total distribution for the year be maintained at the level
of the interim dividend of 5 cents per share already paid in September
1998. The directors, therefore, do not recommend the payment of a final
dividend.
Commenting on the results, Chairman The Hon. Michael D. Kadoorie said,
"To have made a reasonable operating profit in the prevailing 1998 economic
climate was an achievement in itself. There is no disguising our disappointment,
therefore, at the results that have been mainly driven by asset revaluation
which we are treating as an exceptional item.
"However, we are a long-term player. We have a strong brand name and
underlying quality assets. We intend to manage these carefully whilst we
weather the next two years."
Reviewing the group's operations, Pierre Boppe, Chief Executive Officer,
said, "The difficult economic climate notwithstanding, the group has continued
to upgrade existing products and introduce new ones to maximise the shareholder
value of a premier brand. This puts us in a competitive position to take
advantage when the operating environment improves."
Regarding
the hotels' performance, the group had held to its strategy in Hong Kong
of not chasing occupancy at the expense of yield.
The Peninsula Bangkok opened for business on November 19, 1998 and has
already begun to take its place as one of the city's leading hotels. All
rooms, suites and major facilities including the heli-lounge are scheduled
to be fully operational this month. The Grand Opening of the hotel is set
for May, 1999.
In the United States, The Peninsula New York re-opened on November 1,
1998, achieving an average room rate of US$595. The hotel is now repositioned
in the industry's top tier of city properties following a major internal
upgrade of all guestrooms, public areas, and function rooms. The Peninsula
Beverly Hills improved its yield and recorded its highest occupancy and
room rates of US$384 and 81 per cent respectively since it opened seven
years ago, and although occupancy dipped slightly at Quail Lodge Resort
in California, this was balanced by a much improved average room rate of
US$251.
In the group's commercial/residential properties, renewals of retail
and residential tenancies are being achieved at market rate, assisted by
the constant investment to upgrade the premises and total commitment to
professional management. The Repulse Bay maintained its rental income at
approximately 1997 levels, and occupancy levels were variously 90 per cent
for the unfurnished apartments and 84 per cent for the serviced apartments.
Renovation of the older apartments was 90 per cent complete by end 1998.
The Sutton in New York has performed well; The Landmark in Ho Chi Minh
City has held near capacity occupancy of the commercial space with an expected
dip in the serviced apartments; occupancy and rental rates fell as expected
at 208 Wireless Road in Bangkok although overall revenue decreased by only
3 per cent.
Turning to projects, Mr Boppe reported that sales of the Bennelong apartment
complex, which began in 1998, have achieved results in line with the sales
plan, at prices slightly in excess of budgeted levels. The first tenants
are expected to move into the completed Phase 1 building by April, whilst
Phases 2, 3 and 4 should be completed on schedule by end 1999.
The Kota Ciputra project in Jakarta and the Giang Vo Lake project in
Hanoi remain on hold.
"These have been unprecedented times for the Hong Kong and Asian economies,
and for the business sectors in which we operate. We are prepared, however,
for the long haul. Prepared not just to maintain our brand and the quality
of our assets, but to invest in their future and in so doing, enhance long-term
shareholder value. And we are prepared for strategic growth," concluded
Mr Boppe.
Incorporated in 1866, The Hongkong and Shanghai Hotels, Limited, formerly
The Hongkong Hotel Company, Limited, was one of the first stocks to be
listed on the Hong Kong stock exchange. Its principal business comprises
the ownership and management of prestigious hotel, commercial and residential
properties in key destinations in Asia, Australia and the USA; its hotel
management arm is The Peninsula Group.
Corporate
Profile
The Hongkong and Shanghai Hotels, Limited,
formerly The Hongkong Hotel Company, Limited
Established |
The Hongkong and Shanghai Hotels, Limited (HSH) was originally
incorporated as The Hongkong Hotel Company, Limited in 1866 and was one
of the first companies in the territory to be granted a listing on the
Hong Kong stock exchange. It remains one of thirty-three constituent stocks
making up the Hang Seng Index. |
Major Shareholders |
The major shareholders of HSH are members of the Kadoorie
family who have held shares in the company since the turn of the century.
Their current holding amounts to approximately 60% of the shares in issue
and after the conversion of outstanding bonds would amount to at least
55%. They regard their interest as a long term core investment. |
Philosophy |
The delivery of high-quality products and services in
each of its businesses, remains the cornerstone of HSH's philosophy. This
has translated into continuing growth and the very valuable Peninsula hotel
brand name. |
Existing Business Interests |
HSH is principally engaged in the ownership and management
of prestigious hotel, commercial and residential properties in Asia and
the USA. |
Hotels |
The Peninsula Hong Kong (100%)
The Peninsula New York (100%)
The Kowloon Hotel (100%)
Quail Lodge Resort, Carmel (100%)
The Peninsula Bangkok (50%)
The Peninsula Beverly Hills (20%)
The Palace Hotel, Beijing (20%)
The Peninsula Manila (16%)
The hotels are managed under long-term contracts by The
Peninsula Group, the operations and marketing division of HSH. |
Property |
The Repulse Bay complex (100%)
The Peak Tower (100%)
St. John's Building (100%)
The Sutton, New York (100%)
The Landmark, Ho Chi Minh City (70%)
208 Wireless Road, Bangkok (50%) |
Miscellaneous |
Quail Lodge Golf Club, Carmel (100%)
Quail Meadows, Carmel (100%)
The Peak Tram (100%)
The Peak Experience (100%)
Tai Pan Laundry (100%)
Peninsula Clubs and Consultancy Services (100%)
Thai Country Club, Bangkok (50%)
Ripley's Believe It or Not!, Hong Kong (50%) |
Developments |
Bennelong, Sydney (95%) completion 1999
Giang Vo, Hanoi (65%) on hold
Kota Ciputra, Jakarta (20%) on hold |
Strategy for the Future |
HSH is strategically focused on establishing signature
developments in commercial gateway cities around the globe, and is committed
to repositioning of existing products and controlled expansion. The company's
policy is either to own or to have a substantial equity share in the properties
it manages and to identify joint-venture partners with compatible corporate
philosophy. Currently, the company is actively looking at opportunities
for consolidating its presence in the USA and adding key European destinations
to its portfolio. |
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