Kosmopolito Hotels Int. Reports 190% Increase in Full-Year Net Profit

Kosmopolito Hotels International (and its subsidiaries) has reported encouraging financial performance for the financial year ended 31 March 2012 with Hong Kong remaining the key driver.

The group’s gross profit for the year grew by 37.8% to HK$650.7 million and gross margin jumped to 59.4%, primarily driven by the strong revenue growth in Hong Kong and moderate improvement in operating margins.

Financial Highlights:

- Revenue for the year was HK$1,096.1 million, up 26.4% from last year, mainly driven by 38.3% year-on-year increase in the room revenue in Hong Kong.

-  Net profit of HK$605.1 million was recorded for the group for the year, representing an increase of 190.3% from last year.

-  Adjusted EBITDA reached HK$509.4 million for the year, representing 40.5% year-on year increase driven by 23.9% growth in RevPAR and 11.5% growth in the number of available room nights and compounded by 4.7% point increase in adjusted EBITDA margin.

-  One-off gain of HK$380.3 million was recorded on the disposal of Central Park Hotel, located at Hollywood Road, Hong Kong, during the year.

-  Hotel revaluation surplus as of 31 March 2012 of HK$7,749.9 million, increased from HK$5,978.8 million, predominantly attributable to the appreciation of the Hong Kong assets.

-  Adjusting for revaluation surplus, net assets attributable to shareholders per share increased by 25.8% to HK$5.58 as at 31 March 2012.

-  The Board proposed a final dividend of HK 10 cents per share, together with the interim dividend of HK 2 cents per share, bringing the total dividend payout for the year to HK 12 cents per share. This represents 39.7% of total distributable profit, which compares with 38.5% last year.

In addition to recording strong operational performance for the existing hotels, the Group has also completed several significant transactions, namely the acquisition of Shepherd’s Bush Pavilion, London in September 2011, the acquisition of the industrial building “Big Orange” in Hong Kong in April 2012, and the disposal of Central Park Hotel located at Hollywood Road, Hong Kong in November 2011.

Shepherd’s Bush Pavilion will be converted into the Dorsett Regency London with 322 rooms; and “Big Orange” will be converted into the Silka Tsuen Wan with 420 rooms.

The global economic conditions are expected to become more challenging in the coming year in view of the European economic crisis and the expected slowdown of economic growth in China.

According to the latest Pacific Asia Travel Association’s (PATA) forecasts, it is projected that there will be additional 8.7 million arrivals from Europe to Pacific Asia by 2013, increasing from 34.5 million in 2009 to over 43 million arrivals. Overall, arrivals growth in the Asia Pacific region is expected to be close to double that of the world average.

For KHI, over 60% of the group’s customers are from Asia. Therefore KHI is in a relatively good position to capture this continually growing Asia travel market. The group will continue with its “Chinese Wallet Strategy” driving further growth.

Ms. Winnie Chiu, President and Executive Director of KHI, said, “Construction is actively underway for Grand Dorsett Chengdu, Dorsett Regency Singapore and Dorsett Regency Tsuen Wan. Together with the newly acquired Silka Tsuen Wan and Dorsett Regency London, the group is scheduled to grow its total room number to over 7,000 in the upcoming years. The expansion of its portfolio of operating hotels is expected to generate significantly larger cash flow stream for the group.”

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