Hk&S Hotels (00045.HK) announced mid-year results. For the first six months ended June 30, 2024, the group's total income increased by 82% to 4.9 billion Hong Kong dollars, mainly from London Peninsula Residence apartment sold four units to obtain HKD 1.7 billion in income.

The financial performance of the Group for the first half of 2024 did not meet expectations. In the first half of 2024, comprehensive income increased by 89% to HKD 4.6 billion, and comprehensive operating profit before comprehensive interest, tax, depreciation and amortization excluding pre-operating and project expenses increased by 16% to HKD 0.58 billion, of which income from the completed sale of London peninsula residential apartments during the period was recorded. Overall, the group recorded a shareholder loss of HKD 0.448 billion (including a property revaluation loss of HKD 0.139 billion) in the review period, compared to a profit of HKD 94 million (including a property revaluation gain of HKD 0.222 billion) in the same period last year. The group recorded a basic loss of HKD 0.257 billion, compared to a basic profit of HKD 25 million recorded last year.

The main reasons for the group's poor performance in the first six months of the year are as follows: the group's total comprehensive operating profit before interest, tax, depreciation and amortization (excluding interest, tax, depreciation and amortization before operating London Peninsula Residence apartments) decreased by HKD 97 million, due to the renovation of the New York Peninsula Hotel and the newly opened London and Istanbul Peninsula Hotels need time to reach a stable operating stage, as well as weak market conditions in several other Peninsula Hotels. Depreciation expenses increased by HKD 0.1 billion, mainly due to the opening of London Peninsula Hotel in September 2023. Net financing costs increased to HKD 237 million, due to the group no longer capitalizing on the borrowing interest related to the hotel project of the London Peninsula Hotel after its opening, and high interest rates. As of June 30, 2024, the group recorded a property revaluation loss of HKD 0.139 billion for the six months ended, compared to a revaluation gain of HKD 0.222 billion in the same period last year.

Due to the lower-than-expected operational performance of multiple hotels, the increase in interest rates has led to an increase in interest costs, and the income from the sale of London Peninsula Residence apartments has taken longer to recover than expected. In addition, the property revaluation also recorded unexpected losses. Despite the poor profit performance in the review period, the group's financial position is still solid, with a shareholder's net asset value of HKD 35.9 billion (HKD 21.53 per share) compared to an external net loan of HKD 14.1 billion, and a net external debt-to-total asset ratio of 25%. The group recently received an A credit rating from a Japanese credit rating agency for long-term foreign currency- and local currency-denominated debts.