Kingdom Hotel Investmentsfiles.investis.com/khi/docs/KHI_2009_Results-March_10.pdf · 2010. 3. 15. · Kingdom Hotel Investments 15 March 2010 6 2009 Financial Summary – 27% Increase

Four Seasons Langkawi, Malaysia

Four Seasons Nile PlazaCairo, Egypt

Mövenpick Bur Dubai, UAE Four Seasons Marrakech. Morocco (new development)

Mövenpick Karon BeachPhuket. Thailand

Mövenpick Royal PalmDar es Salaam. Tanzania

Four Seasons DamascusSyria

InterContinentalLusaka. Zambia

Fairmont & Raffles Manila. Philippines(new development)

Kingdom HotelKingdom HotelInvestmentsInvestments

2009 results2009 results

15 March 2010

Mara Tented CampKenya (renovated)

Safe harbor statement

This material contains certain statements that are “forward-looking” including management’sexpectations and analysis. These statements are based on management’s currentexpectations and are naturally subject to uncertainty and changes in circumstances. Actualresults may vary materially from the expectations contained herein and readers and listenersare cautioned not to place undue reliance on any forward-looking comments. Please see ourregulatory filings including our Annual Report for a discussion of specific risks that mayaffect our performance. KHI undertakes no obligation to update or alter its forward-lookingstatements, whether as a result of new information, future events, or otherwise.

15 March 2010Kingdom Hotel Investments 2


Suite at the Four Seasons Beirut

Agenda

• Executive Summary

• System Performance

• Financial Overview

• Development Update

• Cash offer for KHI at $5 per share

۔ 25% premium to closing share price on 14 March 2010

۔ 37% premium to rolling weighted average of share price for last three months

• Recommended by the Independent Committee of the Board of KHI

• “Limited liquidity and low trading volumes have affected and are likely tocontinue to affect the share price” – Independent Committee

• Irrevocable undertakings received in respect of almost 70%

• Full offer documentation to be posted to shareholders in 21 days


Outline of Offer Received

• Company remains profitable and cash generative

۔ Strong performance in core asset management business; retention rates of 61% and maintenance of EBITDA margins at 29%

۔ G & A defensive actions resulted in savings of $6.8m or 30% below previous year levels

۔ Recognised $20m from ancillary real estate sales

• Hotel System RevPAR fell 11% (ex-forex -9%)

۔ Consolidated RevPAR fell 7% (ex-forex -6%)

• Portfolio rationalisation progressed in line with Company strategy

- Asset sales of $87m generated $37m to reported profit

• KHI spent $181m in 2009 advancing its development projects

• Includes delivery of Four Seasons Beirut ($147m excluding contractor claim)

• Company completed a share buy-back of 3.5% of outstanding shares


Resilient Performance Despite Challenging Markets


2009 Financial Summary – 27% Increase in Net Profit

• Group revenues decreased 12% to $246.4m

۔ Operations in Beirut and Kenya lifted comparable portfolio performance while revenues from the newly opened Four Seasons Mauritius and the Movenpick Residence Bur Dubai mitigated revenue decline to5% over 2008 levels

• KHI EBITDA fell 2% (+7% excluding real estate sales) to $ 50.3m

۔ KHI’s share of hotel results and real estate income from associates decreased by $12.8 million and by $9.0 million respectively

۔ There was a one-off impact of US$4.6 million attributable to the pre-opening expenses of the Four Seasons Beirut

• KHI Adjusted EBITDA decreased 24% to US$ 71.4 m. Excluding real estatesales, KHI Adjusted EBITDA fell 13% to US$61.6 m

• Net profit before non-recurring items dropped 53% to $17.3m

۔ Net interest expenses increased by $4.2m

• Reported net profit increased 27.4% to $21.8m

۔ Net gain on disposal of four assets of $37.5m

۔ Goodwill impairment charges of US$ 36.6m ascribed against the Mövenpick Mauritius, Mövenpick Karon Beach and Swissôtel Kunshan

• Conservative balance sheet at 15% gearing and net debt of $177.1m

2010 Outlook

• Cautious Optimism

۔ KHI will continue to benefit from its diversified portfolio and expects to register mid single digit growth in System RevPAR

• Ongoing Integration of Development Pipeline

۔ The Company will focus on The Four Seasons Beirut ramp up in operations

۔ Advance developments and enter pre-opening phases for Accra, Marrakesh and Seychelles

• Net profit to be impacted due to pre-opening costs, increase in interestand depreciation

• KHI will execute $20-30m of value enhancing CAPEX across selectproperties within a 24 month period

۔ The Company is targeting ROCE in excess of 15%

• Net debt will increase as committed funds are drawn-down and cashspent on developments (circa $220m in 2010 and a further $80m in 2011)

Kingdom Hotel Investments 715 March 2010 7


Rendering of Raffles Praslin, Seychelles (new development)

Agenda

• 2009 Highlights




$MM 2009A 2008A $vs PY % vs PY

Occupancy 59% 63% (396bp)

Average Rate (US$) 242 255 (13) (5%)

RevPar (US$) 144 161 (17) (11%)

Margins 33% 35% (227bp)

Retention 47%

Drivers of 2009 Performance – SYSTEM Hotels

RevPar decline subsides; Africa, Asia and Europe show signs of recovery in H2

-25%-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%40%45%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008

Q2 Q3 Q4Q1

18% 19% 9% -6%

-25%-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%40%45%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009

Q2 Q3 Q4Q1

-21% -16% -10% 3%

2008 v 2007 Monthly System RevPar delta 2009 v 2008 Monthly System RevPar delta 2009 v 2008 System RevPar delta by Region

H1

H1

H1

H1

H1

H2 H2

H2H2

H2

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

MENA ASIA Africa Europe System


Drivers of 2009 Performance – SYSTEM Hotels

Occupancy (%) Average Rate (USD) RevPAR (USD)

2009 2008 Change Pts 2009 2008 % Change 2009 2008 % Change

Middle East/ North AfricaMövenpick Beirut 74.5 57.3 17.2 263.0 230.8 13.9% 196.0 132.3 48.1%Mövenpick Bur Dubai 69.0 74.7 -5.8 138.0 213.0 -35.2% 95.2 159.2 -40.2%Four Seasons Nile Plaza 56.4 65.5 -9.1 357.9 406.0 -11.9% 202.0 266.1 -24.1%Mövenpick El Gouna 74.3 86.4 -12.1 89.3 92.4 -3.3% 66.3 79.8 -16.9%Mövenpick El Quseir 71.5 77.2 -5.8 72.3 78.3 -7.7% 51.6 60.4 -14.5%Four Seasons Damascus 56.5 68.6 -12.1 334.7 291.2 14.9% 189.0 199.7 -5.3%

Total Middle East/ North Africa 67.4 73.1 -5.7 192.7 201.3 -4.3% 129.9 147.1 -11.7%

Sub-Saharan AfricaFairmont Kenya (4 Hotels) 37.2 20.6 16.6 151.8 145.9 4.1% 56.5 30.1 88.0%Mövenpick Dar Es Salaam 63.5 78.7 -15.2 139.2 130.4 6.7% 88.4 102.6 -13.8%Mövenpick Mauritius 51.6 66.8 -15.2 115.0 136.9 -16.0% 59.3 91.4 -35.1%Intercontinental Lusaka 55.5 56.7 -1.2 132.7 128.6 3.1% 73.6 73.0 0.9%

Total Sub-Saharan Africa 49.6 49.5 0.1 136.8 134.0 2.1% 67.8 66.4 2.3%

AsiaMövenpick Karon Beach 57.9 52.4 5.5 102.5 146.6 -30.1% 59.4 76.8 -22.8%Four Seasons Langkawi 57.4 60.3 -2.9 593.2 682.5 -13.1% 340.7 411.5 -17.2%Swissotel Kunshan 46.1 54.3 -8.3 98.8 103.2 -4.2% 45.5 56.1 -18.8%Four Seasons Jakarta 55.6 61.0 -5.4 100.3 106.7 -6.0% 55.8 65.2 -14.3%Raffles Phnom Penh 56.7 63.7 -7.0 123.6 124.4 -0.7% 70.1 79.2 -11.6%Raffles Siem Reap 41.7 53.6 -11.9 181.9 187.4 -2.9% 75.8 100.5 -24.6%

Total Asia 52.7 56.8 -4.1 142.3 161.9 -12.1% 75.0 91.9 -18.4%

EuropeFour Seasons - George V , France 75.0 81.2 -6.1 1310.9 1342.9 -2.4% 983.8 1090.1 -9.8%

Total KHI System 59.4 63.4 -4.0 241.9 254.7 -5.0% 143.8 161.5 -11.0%



Suite at the Four Seasons Langkawi resort

Agenda

• Executive summary

• System performance


• Development update

$MM 2009A 2008A vs PY % vs PY

Consolidated

RevPar ($) 92 99 (7) (7%)

Revenues 208.4 227.8 (19.4) (9%)

Hotel EBITDA 57.8 65.4 (7.6) (12%)

Margins 28% 29% (93bp)

Retention 61%

Drivers of 2009 Performance – Consolidated Hotels

Beirut and Kenya lifted portfolio with profit protection measures underpinning margins

Best Performers (RevPar) 2009 2008 Change Worst Performers (RevPar) 2009 2008 Change

US$ US$ US$ US$

Movenpick Beirut 196 132 +48.1% Movenpick Dubai 95 159 -40.2%

Increased visitor volumes particularly from S Arabia enhance strong market Market reaction drove rate down by 35%

Fairmont Kenya 57 30 +88.0% Movenpick Mauritius 59 169 -35.1%

Benefits of capex but profitability requires increased occupancy Weak market further affected by reduced air lift

Intercontinental Lusaka 74 73 +0.9% Movenpick Phuket 59 77 -22.8%

Hold up in RevPar offset by fall in other revenues HI political instability factors


Drivers of 2009 Performance – Real Estate

Generated $15m in physical sales through 2009

$MM 2009 2008 vs PY

Revenues - RE 20.0 39.9 (19.9)

Revenues – Lease 6.2 6.0 0.2

EBITDA – RE 5.1 9.3 (4.2)

EBITDA – Lease 4.9 4.5 +0.4

Sales & Marketing Costs 1.7 6.4 (4.7)

Deposits (US$MM) 2009A 2008A TOTAL

Marrakech 15.8 25.3 50.3

Manila 10.2 7.6 17.8

Total 26.0 32.9 68.1

Sales (US$MM) 2009A 2008A TOTAL

Marrakech 0.0 6.5 64.0

Manila 12.2 36.0 48.2

Total 12.2 42.5 112.2

Collections (sales value) 61%

Collections (invoiced - Nov 09) 96%

Collections (invoiced - Jan 10) 85%

NB. Seychelles not having been marketed in 2009

2009 Sales Recognised Units Units

Marrakech 0 0.0 0.0 16 22.1 5.0

Mauritius (KHI Share) 9 19.1 4.8 8 16.4 3.4

Phuket 2 0.7 0.1 0 0.0 0.0

Consolidated 11 19.8 4.9 24 38.5 8.4

Nile Plaza (KHI Share) 11 7.6 4.5 0 0.0 0.0

Total (including Associates) 22 27.4 9.4 24 38.5 8.4

2009 Physical-sales Units

Manila 30 12.2

Marrakech 0 0.0

Mauritius * 1 2.1 * Presented as 100%

Phuket 2 0.7

Nile Plaza * 11 17.5 * Presented as 100%

44 32.5

2009A 2009P

Value

$mm

Profit

$mm

Value

$mm

Profit

$mm

Value

$mm


Performance Metrics


USD'mm vs. 2008 PY

2009A 2008A USD'mm %

Hotel EBITDA 60.6 65.9 -5.3 -8%

RE Sales EBITDA 5.1 9.3 -4.2 -45%

RE Leases/Other EBITDA 6.1 6.4 -0.3 -4%

Pre-opening expenses -4.6 -1.7 -5.1 294%

RE Sales & Marketing -1.7 -6.4 4.7 -74%

G&A (before HO Depreciation) -15.8 -22.6 6.8 -30%

Dividends 0.5 0.5 0.0 -1%

KHI EBITDA 50.3 51.4 -1.1 -2%

Excl. Real Estate Sales 45.1 42.0 3.1 7%

Share of Associates’ Hotel EBITDA 23.5 36.3 -12.8 -35%

Share of Associates’ Real Estate Sales 4.6 13.6 -9.0 -66%

Minority Interest’s share in KHI EBITDA -7.0 -7.3 0.2 -3%

Adj. KHI EBITDA 71.4 94.1 -22.7 -24%

Adj. KHI EBITDA excl Real Estate Sales 61.6 71.1 -9.5 -13%

Profit & Loss Summary



Movement between Clean and Reported Net Income

Clean Income $ 17.3mmCash Movement $ 38.4mmNon Cash Movement $ (33.9 mm)Reported Net Income $ 21.8 mm

Balance Sheet

As at As at $MM %

31-Dec-09 31-Dec-08 Change Change

US$MM US$MM

Non-current assets 1,646 1,573 73 4.6%

Other current assets 87 65 22 34.3%

Cash and short term deposits 351 256 95 37.0%

TOTAL ASSETS 2,084 1,894 190 10.0%

TOTAL EQUITY 1,310 1,292 18 1.4%

Interest-bearing loans andborrowings 477 334 143 42.7%

Other non current liabilities 82 99 (17) (17.1%)

Non-current liabilities 559 433 126 29.0%

Trade and other payables 163 97 66 68.3%

Short term Interest-bearing loansand borrowings 51 71 (20) (27.9%)

Current liabilities 214 168 46 27.5%

TOTAL LIABILITIES 774 601 172 28.6%

TOTAL EQUITY AND LIABILITIES 2,084 1,894 190 10.0%

- Valuations of Movenpick / Fairmontinvestments written down from $43.8mto$35.6m through the cancellation of $8.2mrevaluation reserve balance.

- Development projects added $181m toProperty, Plant & Equipment

- Sale of Sharm El Sheikh stake for $ 41mand George V dividend declaration of$32MM reduced investment in associatesby $73m

- Goodwill impairment of $36.6m reducedintangibles assets

- $17m development related increase inVAT receivables lifted non-cash currentassets

- Change in equity due to $21m Net Profit,$13m positive impact from forextranslations less the $6m cost of the sharebuy-back

- Trade and other payables increasedmainly due to $51m transfer of real estateadvances from LT to ST, a $4m advancefrom an associate and against a $3mincrease in contractors’ retentions


18

2009 Movement in Total Debt and Cash Positions

KHI’s drive to convert noncore assets to cash andrestrict replacementCAPEX to essential onlyresulted in total cashgeneration of $95m during2009 and a year-endgearing ratio of just 15%

Despite bankingchallenges, KHIdevelopment pipeline is ontrack and funded

* Includes non-cash settlement of George V $27.5MM loan

11Kingdom Hotel Investments 15 March 2010 18

Debt Maturities

19Kingdom Hotel Investments 15 March 2010 19

2011 peak year for refinancing of corporate facility


Construction proceeding on schedule at the Raffles Seychelles

Agenda

• 2009 Highlights




4 Consolidated Developments & 3 Capex ProjectsInvesting for future growth: $600MM in pipeline consolidated projects

Marrakech

Manila

Seychelles


$MM Estimates

KHI % 2007 2008 2009 2010 2011TotalSales

Revenue

SalesValue to

sell

Cash toreceive

100% Mövenpick Phuket 12 3 3

50% Four Seasons Mauritius (100%) 121 9 10

78% Four Seasons Marrakech 60 5 21

91% Raffles Seychelles 59 59 59

80% Raffles Makati., Manila 109 60 93

Ancillary real estate inventory atsubsidiaries

361 136 186

44% Four Seasons Cairo5 9

Real Estate remaining/ development inventory 141 195

Ancillary real estate to generate circa $200m – Seychelles Challenge

45 villas (41 sold)

43 villas (40 sold)

14 villas

236 Apts (141 sold)

Off-plan sales & marketing activities

Post-completion sales & marketing

Ancillary Real Estate Current & Future Inventory

30 Apts. (22 sold)

5 Apts remain.


Four Seasons – Beirut Completed

Four Seasons - Marrakech

Raffles - Seychelles

Fairmont / Raffles - Manila

Mövenpick - Accra

• Resilient performance despite challenging markets

• Company remains profitable and cash generative

۔ Reported net profit up 27.4% to US$21.8m۔ KHI Adjusted EBITDA fell 13% to US$61.6m

• Cautious optimism for 2010

۔ Mid, single-digit growth on System RevPAR

• Recommended cash offer by KHC at US$5 a share


Conclusion

Documents

Kingdom Hotel Investmentsfiles.investis.com/khi/docs/KHI_2009_Results-March_10.pdf · 2010. 3. 15. · Kingdom Hotel Investments 15 March 2010 6 2009 Financial Summary – 27% Increase