THE HONGKONG AND SHANGHAI HOTELS, LIMITED THE HONGKONG AND SHANGHAI HOTELS, LIMITED
To: All Finance/Business/Travel Editors
FOR IMMEDIATE RELEASE 16 MARCH, 2016 THE HONGKONG AND SHANGHAI HOTELS, LIMITEDANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER, 2015
HIGHLIGHTS
Revenue and EBITDA amounted to HK$5,741 million (2014: HK$5,838 million) and HK$1,440 million (2014: HK$1,528 million) respectively
Underlying profit attributable to shareholders amounted to HK$688 million (2014: HK$804 million). The earnings of the Company were affected by partial closure of The Peninsula Beijing and The Peninsula Chicago due to extensive renovations
Profit attributable to shareholders amounted to HK$1,000 million (2014: HK$1,146 million), inclusive of property revaluation gains
Earnings per share and underlying earnings per share of HK$0.65 (2014: HK$0.76) and HK$0.45 (2014: HK$0.53) respectively
Final dividend of 15 HK cents per share (2014: 18 HK cents per share), making a total dividend of 20 HK cents per share for 2015 (2014: 23 HK cents per share)
Shareholders' funds as at 31 December 2015 amounted to HK$36,427 million (2014: HK$35,901 million) or HK$23.61 per share (2014: HK$23.67 per share)
Key developmentsThe grand opening of The Peninsula Paris was held in April 2015. In its first full year of operation, The Peninsula Paris has achieved tremendous international recognition and is becoming noted as one of the finest hotels in Europe
In December 2015, an agreement was reached between the Myanmar Ministry of Rail Transportation and Yoma, our partners in Yangon, for the extension of the land lease that is required for the development of a mixed-use project located in the Yangon business district in Myanmar. The former Myanmar Railway Headquarters forms part of this development and will be renovated to become The Peninsula Yangon
In July 2015, together with our partners Doğuş Holding and BLG, we entered into a conditional shareholders' agreement to form a joint venture partnership, of which HSH has a 50% share, for a proposed hotel development in Istanbul, Turkey
In December 2015, Westminster City Council's planning committee resolved to grant in principle planning consent for the redevelopment of 1-5 Grosvenor Place into The Peninsula London
In December 2015, the Group restructured the lease agreement for The Peninsula Tokyo with our Japanese partner, MEC, which previously owned the hotel building and granted our Group a 50-year lease which commenced in 2007. We were delighted to reach an agreement to purchase the hotel building from MEC and to enter into a new Land Lease Agreement for a fixed term of 70 years from December 2015, for a cash consideration of JPY10.3 billion (excluding acquisition and transfer taxes). We therefore extended our tenure of The Peninsula Tokyo by 28 years
We were pleased to reach an agreement with the Hong Kong Government for the renewal of the operating right to The Peak Tram, commencing 1 January 2016
HSH'S 2 01 5 ANNUAL RESULTS
Hong Kong, 16 March 2016
The Hongkong and Shanghai Hotels, Limited today announced its annual financial results for 2015. Mr Clement K.M. Kwok, Managing Director and Chief Executive Officer of The Hongkong and Shanghai Hotels, Limited (HSH) commented on the results announcement:
"I am pleased to report that we delivered a satisfactory set of financial results in spite of a challenging year for our company, with intense competition and a difficult operating environment in many of our key markets.
The satisfactory results achieved by the Group in the face of many challenges emphasises the importance of having a diversified portfolio of assets to weather the cyclical nature of the hotel industry. We continued to work hard to improve revenues and increase shareholder value through asset value appreciation and operational earnings, while doing business in a high cost environment.
Our long-term strategic mission is to build, maintain and create the highest quality assets that become legacies in their time. At 150 years old, we are the oldest registered company in Hong Kong, but one that is still at a youthful stage in its development and growth strategy. We are still building for the future and it is an exciting time for us as a group.
The highlight of the year was the grand opening of The Peninsula Paris in April 2015. In its first full year of operation, The Peninsula Paris has achieved tremendous international recognition and is already becoming noted as one of the finest hotels in Europe. The grand opening party was a spectacular display of traditional Peninsula hospitality with thousands of international and local guests and celebrities in attendance.
In December 2015, we were pleased that Westminster City Council's planning committee resolved to grant in principle planning consent for a new 190-room hotel, to be known as The Peninsula London, located at 1-5 Grosvenor Place, Hyde Park Corner, Belgravia in central London. London is one of the world's most dynamic capital cities and we are excited to move another step closer to introducing The Peninsula brand to London.
Also in December 2015, we were pleased to move another step forward with The Peninsula Yangon project. An agreement was reached between the Myanmar Ministry of Rail Transportation and Yoma, our partners in Yangon, for the extension of the land lease that is required for the development of a mixed-use project located in the Yangon business district in Myanmar. The former Myanmar Railway Headquarters forms part of this development and will be renovated to become The Peninsula Yangon.
In July 2015, together with our partners Doğuş Holding A.Ş. and BLG Gayrimenkul Yatırımları ve Ticaret A.Ş., we entered into a conditional shareholders' agreement to form a joint venture partnership, of which HSH will have a 50% share, for a proposed hotel development in Istanbul, Turkey. The location of our project is truly exceptional, with views across the Bosphorus to the Topkapi palace, and despite short-term security concerns we remain optimistic for the development of the high-end tourism market in Istanbul.
We are working through the challenges of these three exciting hotel projects and it is our focus to make these projects work in commercial and financial reality. Our cashflow strategy is to keep our existing business generating sufficient levels of cash to support our new projects while maintaining a robust financial position, and to ensure that we have a healthy interest rate cover despite our project commitments.
We were pleased to reach an agreement with the Hong Kong Government for the renewal of the operating right to The Peak Tram, commencing 1 January 2016. As one of Hong Kong's most popular tourist attractions that has been in operation since 1888, it is a much-loved and important asset for our company and I am delighted that we can continue to provide our services to tourists and the local community.
In December 2015, the Group restructured the lease agreement for The Peninsula Tokyo with our Japanese partner, MEC, which previously owned the hotel building and granted our Group a 50-year lease which commenced in 2007. We were delighted to reach an agreement to purchase the hotel building from MEC and to enter into a new Land Lease Agreement for a fixed term of 70 years from December 2015, for a cash consideration of JPY10.3 billion (excluding acquisition and transfer taxes). We therefore extended our tenure of The Peninsula Tokyo by 28 years.
We reported in 2014 that our business would be impacted in the short term by the renovations at The Peninsula Chicago and The Peninsula Beijing. This impact will continue into 2016 as the commencement of the renovation of The Peninsula Beijing was delayed due to the additional time required to achieve the necessary permits. We are confident that when these renovations are complete in 2016 for The Peninsula Chicago and 2017 for The Peninsula Beijing, we will see increased revenue and earnings from the improved product offering. These renovations are in line with our philosophy of improving existing assets to deliver long-term value for our shareholders.
As a Hong Kong company with the majority of our assets located in Hong Kong, we are concerned about the short-term outlook for the tourism industry in Hong Kong. Overall tourist arrivals declined 2.5% year-on-year and Chinese mainland arrivals declined by 3% year-on-year. As a result, average room rates have been under pressure, not just for The Peninsula Hong Kong, but also for our competitive set and across the industry. Retail sales have inevitably suffered as a result of lower tourist arrivals, and the tenants in our shopping arcades are reporting a challenging environment.
Unfortunately the tragic terrorist events in Paris in January and November shocked the world and placed a shadow over the city, with tourism heavily impacted in the short term. Our businesses in Paris and Bangkok were impacted by the terrorist attacks in these cities during 2015, and we continue to be concerned about the global terrorist threat and its impact on tourism.
The Group's revenue in 2015 amounted to HK$5,741 million, representing a slight decrease of 2% over 2014. The EBITDA for the year of HK$1,440 million, a decrease of 6% over the previous year, reflects the challenging situation that we faced in many of our key markets, as well as the impact of the renovations in The Peninsula Beijing and The Peninsula Chicago.
Profit attributable to shareholders amounted to HK$1,000 million, after including property revaluation gains, net of tax and non-controlling interests. The Group's underlying profit attributable to shareholders for the year ended 31 December 2015 decreased by 14% to HK$688 million.
We believe that if we had not commenced the major renovations at The Peninsula Beijing and Chicago and the earnings of those projects had been the same as last year, the underlying profit of the Group in 2015 would have been flat to last year, which we consider to be a very creditable result in the light of the market environment especially in our main market of Hong Kong. Although revenue was down, we have worked hard to control costs. Despite general inflation in labour and operating costs, the Group's total operating costs and overheads were maintained at a level similar to last year, partly helped by reduced operating costs during the renovations of The Peninsulas in Beijing and Chicago as well as a weaker foreign currency.
The Board has recommended a final dividend payable on 24 June 2016 of 15 HK cents per share. Together with the 2015 interim dividend of 5 HK cents per share paid on 30 October 2015, the total dividend in respect of the 2015 financial year will be 20 HK cents per share, a decrease of 13% compared to 2014.
A detailed review of our business performance is below.
Our Group comprises three key divisions - hotels, commercial properties and clubs and services.
2015 | 2014 | Variance | |
HK$m | HK$m | (4%) | |
Revenue | |||
Hotels | 4,073 | 4,260 | |
Commercial Properties | 937 | 901 | 4% |
Clubs and Services | 731 | 677 | 8% |
5,741 | 5,838 | (2%) | |
EBITDA | (13%) | ||
Hotels | 713 | 818 | |
Commercial Properties | 596 | 582 | 2% |
Clubs and Services | 131 | 128 | 2% |
1,440 | 1,528 | (6%) | |
The Hongkong and Shanghai Hotels Ltd. issued this content on 16 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 16 March 2016 05:32:56 UTC
Original Document: http://www.hshgroup.com/en/~/media/Files/HSHGroup/Latest_News/2016/2015 AR press release_English_15 Mar.ashx
