The Ascott Group, CapitaLand's serviced residence subsidiary, made good progress in 2000, achieving a turnaround to profitability and improved positioning for global leadership.

The subsidiary was created in November last year, through the merger of The Ascott Limited and Somerset Holdings Limited. The Ascott Group rationalises its products under two global brands – The Ascott luxury serviced residences for top executives, and the Somerset brand for middle to upper management executives.

FINANCIAL SUMMARY

For its combined results, The Ascott Group recorded a significantly improved attributable profit of S$32.8 million, compared to a loss of S$178.4 million the previous year. Its turnover increased 52% to S$298.3 million and profit from operations rose by S$61.0 million to S$78.4 million.

It recorded an extraordinary gain of S$28 million from the sale of an investment property in London and write-back on provisions for several projects due to improved market conditions.

The Ascott Group achieved a pre-tax profit of S$21.6 million compared to a pre-tax loss of S$11.9 million in 1999. The turnaround was due to its improved overall performance across all its major areas of operations, which spanned the serviced residence, retail and residential development sectors.

Profit before interest and tax surged 142% to S$25.6 million. Occupancies and rental rates were higher for most of its properties, especially in Singapore, Kuala Lumpur and London.

Earnings per share after extraordinary gain rose to 2.1 cents from a loss of 19.7 cents in 1999, and net tangible assets per share grew to 82 cents from 79 cents the previous year.

Given the healthy performance, its directors recommended a first and final dividend of five per cent per share (less 24.5% tax) or 0.75 cent per share. This is the first dividend payment since 1997.

BUSINESS REVIEW

In 2000, The Ascott Group made excellent progress on its strategy to build critical mass in the gateway cities of Asia. In Manila, it opened the 138-unit Somerset Millennium and the 150-unit Stamford Court Salcedo Makati (to be renamed Somerset Salcedo).

In Bangkok, it acquired Somerset Lake Point serviced residence and won a contract to manage the 101-unit Somerset Riverton. In Beijing, it clinched a 10-year contract to manage the 254-unit Somerset Fortune Garden, while in Shanghai, it opened the 167-unit Stamford Court Xu Hui (to be renamed Somerset Xu Hui).

In implementing its strategy to divest its non-core assets, The Ascott Group sold a substantial part of its Stanhope Gardens residential project in London, and its office property in Penang. It also secured the conditional sale of Ventura Place, an eight-storey office building in Singapore.

About 75% of the The Ascott Group's serviced residence portfolio are currently operational, of which 10% are in their first year of operation. The rest are expected to open in 2001 and 2002. In terms of rental and occupancy rates, The Ascott Group achieved or exceeded the market performance in most of the cities it operates in. In 2000, a number of its properties in cities such as Manila and Bangkok were in their start-up phases. The overall average occupancy is expected to improve in 2001 when occupancy rates of such start-ups stabilise.