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Press Release

BANYAN TREE’s 2nd QUARTER PATMI IMPROVES 2.6 TIMES

Category: Corporate Announcements

2nd QUARTER PATMI IMPROVED 2.6 TIMES. 
 
FINANCIAL HIGHLIGHTS:
 
2Q13:
Revenue increased 3% to S$81.7 million.
Operating Profit increased 2% to S$13.1 million.
PATMI increased 163% to S$1.7 million.
 
Due to:
Favourable performance from Hotel Investments segment.
- Continuing strong contribution from hotels in Thailand and Maldives.
Lower depreciation and interest expense following assets rebalancing.
 
1H13
Revenue increased 10% to S$178.6 million.
Operating Profit increased 14% to S$46.3 million.
PATMI increased 26% to S$15.9 million.
 
Due to:
Favourable performance from Hotel Investments segment.
Gain on sale of Angsana Velavaru hotel.
Lower depreciation and interest expense following assets rebalancing.
 
 
OUTLOOK:
 
The US has shown signs of economic recovery but Europe remains weak.
Favourable performance from hotel operations in Thailand is expected to continue given the resilient tourism industry and absence of events risk.
2nd half performance is expected to be profitable although 3Q may record a loss, in line with the same period last year, as it is also our low season period. 
Overall forward bookings for 3Q13 for owned hotels is 24% above last year.
Property sales momentum continues in 2Q13. Including Laguna shores project, a total of 16 units totalling S$11.4 million were sold as compared to 4 units of S$9.7 million in 2Q12. 
 
 
QUOTE:
 
Mr Ho KwonPing, Executive Chairman -
 
“The performance in 2Q, it being our low season of the year, was in line with our expectation.  For the half year, PATMI was ahead of last year by 26%. Going forward, the continuing favourable performance from our Thai hotel operations given the absence of events risk and the resilient tourism industry should sustain our performance for the next 2 quarters.”
 
 
DETAILED BUSINESS SEGMENTS REVIEW 
 
In 2Q13, the Group registered revenue of S$81.7 million, an increase of S$2.4 million or 3% compared to the same  period  last  year.    This was mainly  attributable  to  Hotel  Investments  and  Fee-based segments, but partially offset by lower revenue from Property Sales segment. EBITDA of S$13.1 million in 2Q13 increased by S$0.3 million or 2% compared to 2Q12, mainly due to higher revenue and higher other income.  Higher other income relates to compensation received for the early termination of a spa management contract in Kuala Lumpur.
 
For 1H13, the Group registered revenue of S$178.6 million, an increase of S$16.3 million or 10% compared to 1H12.   This was mainly  attributable  to  higher  revenue  from  Hotel  Investments  and Fee-based segments, but partially offset by lower revenue from Property Sales segment.  EBITDA of S$46.3 million in 1H13 increased by S$5.5 million or 14% compared to 1H12, mainly due to higher revenue and higher other income.  Higher other income in 1H13 relates mainly to gain on sale of Angsana Velavaru hotel and compensation received for the early termination of a spa management contract in Kuala Lumpur.  In 1H12, other income relates mainly to gain on bargain purchase of Banyan Tree Seychelles.
 
Hotel Investments segment
 
Hotel Investments segment achieved revenue of S$46.2 million in 2Q13, an increase of 17% or S$6.9 million compared to S$39.3 million in 2Q12.  Higher revenue was mainly from Maldives (S$4.4 million) and Thailand (S$2.9 million).
 
Our resorts in Maldives recorded higher revenue in current quarter mainly attributable to higher demand from the leisure market.  Overall revenue per available room (“Revpar”) of our resorts in Maldives increased by 59% from S$220 to S$349.  Better performance in Thailand was mainly from Angsana Laguna Phuket which recorded strong revenue growth due to greater brand awareness as last year it was still in its soft-opening period after a 5-month extensive renovation.  Banyan Tree Bangkok’s performance was also boosted by secured bookings from corporations. Overall Revpar for our resorts in Thailand increased by 8% from S$133 to S$143.   
 
For 1H13, Hotel Investments segment revenue increased by S$23.0 million from S$93.3 million in 1H12 to S$116.3 million in 1H13.  This was mainly due to Thailand (S$12.9 million) and Maldives (S$6.2 million) for reasons mentioned above.  In addition, Banyan Tree Seychelles’ 1H13 revenue included 6 months of revenue as compared to only 3 months in 1H12 as it becomes a wholly-owned subsidiary following our acquisition of the remaining 70% in end March 2012.
 
EBITDA increased by S$1.6 million from S$3.5 million in 2Q12 to S$5.1 million in 2Q13, and against 1H12,  EBITDA increased by S$6.1 million from S$20.0 million in 1H12 to S$26.1 million in 1H13, mainly due to higher revenue.
 
Property Sales segment
 
Property Sales segment revenue decreased by S$5.9 million or 38% from S$15.6 million in 2Q12 to S$9.7 million in 2Q13.  The shortfall was due to lower contribution of property sales units based on revenue recognition upon completion.  In 2Q13, a total of 7 units of Laguna Village villas / townhome, Dusit villas, Banyan Tree Phuket villa and Banyan Tree Bintan villa were completed and recognized, as compared to a total of 13 units of Lofts, Laguna Village villa / townhome / bungalow, Banyan Tree Phuket villa, Banyan Tree Lijiang villa and Banyan Tree Bangkok suites in 2Q12.
 
We continue to sell units under the new Laguna Shores project launched in December 2012 in Phuket.  In 2Q13, a further 7 units of S$2.1 million were sold with deposits received.  For other property types, there were 9 new units sold with deposits received in 2Q13 compared to deposits for 4 units in 2Q12.
 
For 1H13, Property Sales segment revenue decreased by S$8.6 million or 39% from S$21.8 million in 1H12 to S$13.2 million in 1H13.  The shortfall was due to lower contribution of property sales units based on revenue recognition upon completion.  In 1H13, a total of 9 units of Laguna Village villas / townhome, Dusit villas, Banyan Tree Phuket villa and Banyan Tree Bintan villa were completed and recognized as compared to a total of 17 units of Lofts, Laguna Village villas / townhomes / bungalow, Banyan Tree Phuket villa, Banyan Tree Lijiang villa and Banyan Tree Bangkok suites in 1H12.
 
For 1H13, a total of 65 units of S$17.5 million were sold with deposits received under the new Laguna Shores project.  For other property types, there were 15 new units sold with deposits received in 1H13 compared to deposits for 16 units in 1H12.  Overall unrecognised cumulative revenue for all units sold as at 1H13 was S$50.9 million as compared to S$12.4 million in 1H12.
 
EBITDA decreased by S$3.6 million from S$4.5 million in 2Q12 to S$0.9 million in 2Q13 and against 1H12, EBITDA decreased by S$5.8 million from S$4.6 million in 1H12 to a loss of S$1.2 million in 1H13, mainly due to lower revenue.
 
Fee-based segment
 
Fee-based segment revenue increased by S$1.5 million or 6% from S$24.4 million in 2Q12 to S$25.9 million in 2Q13 and increased by S$1.9 million or 4% from S$47.2 million in 1H12 to S$49.1 million in 1H13 mainly due to higher architectural and design fees for new projects in China based on certain milestone achieved and higher hotel management fees mainly from new resorts, Banyan Tree Shanghai on the Bund (opened in October 2012), Banyan Tree Lang Co (opened in December 2012) and Angsana Lang Co (opened in December 2012).  This was however partially offset by lower royalty fees from the sale of condominium units at Banyan Tree Signature Pavilion, Kuala Lumpur, as royalty fees for around 80% of total units were already recognized in prior periods.
 
EBITDA increased by S$0.4 million from S$6.1 million in 2Q12 to S$6.5 million in 2Q13 and increased by S$1.0 million from S$8.0 million in 1H12 to S$9.0 million in 1H13, mainly due to higher revenue coupled with exchange gain.
 
PATMI
 
PATMI increased by S$1.1 million from S$0.6 million in 2Q12 to S$1.7 million in 2Q13.  This was mainly due to higher EBITDA from Hotel Investments and Fee-based segments as a result of higher revenue and higher other income due to compensation received for early termination of spa management contract.  In addition, lower depreciation and lower finance costs were recorded following the sale of Angsana Velavaru hotel.  Non-controlling interests’ share of losses was also higher mainly from LRH and LBTH.  This was however partially offset by higher income tax expense due to higher profits.
 
For 1H13, PATMI increased by S$3.3 million from S$12.6 million in 1H12 to S$15.9 million in 1H13.  This was mainly due to higher EBITDA, higher other income, lower depreciation and lower finance costs as mentioned above.  In addition, other income in 1H13 included gain on sale of Angsana Velavaru hotel.  This was however partially offset by net gain on bargain purchase of HVRS Group as recorded in 1H12, higher income tax expense and higher non-controlling interests’ share of profits arising from net gain on sale of Angsana Velavaru hotel.
 
Cash Flow
 
During 1H13, the Group generated its funds from operations and from sale of Angsana Velavaru hotel.  It made its first instalment payment for the purchase of Banyan Tree Seychelles, paid for the acquisition of the remaining non-controlling interest in Maldives Bay Pvt Ltd (which formerly owned Angsana Velavaru hotel) and fully settled its bank loans in Maldives.  It also expended on property, plant and equipments for the resorts’ operations and continued to invest in the two private equity funds.  In May 2013, the Group paid out dividend of S$5.0 million to its shareholders.
 
As at 30 June 2013, the Group’s cash and cash equivalents was S$131.8 million.
 
OUTLOOK
 
2Q13 results have been in line with our expectation. At the macro level, the US has shown signs of economic recovery while the persistent economic weakness in Europe remains.  Barring any unforeseen events, we expect our Thailand hotel operations to continue to perform well. The second half performance is expected to be profitable although 3Q may record a loss due to it being a low season period.
 
Compared to the same period last year, on a same store basis, the forward bookings for 3Q13 for owned hotels outside of Thailand and within Thailand are ahead by 33% and 16% respectively. Overall, the Group’s forward bookings is ahead by 24%.
 
On the Property sales segment, sales momentum continues in 2Q with 16 units of S$11.4 million sold compared to 4 units of S$9.7 million in 2Q12. This includes another 7 units of Laguna Shores sold during the period.  To date, deposits for 130 units with total sale value of S$33.1 million were received for this project. This represents 57% of total units available for phase 1.  We are hopeful that the momentum will continue in the next few quarters.