Fosun Tourism Group Announces 2020 Interim Results: Dynamic Post-epidemic Recovery with Sufficient Cash Flow

Results Highlights：

• Due to the negative impact brought by the COVID-19 pandemic outbreak, business volume of tourism operation has decreased by 44.1% YOY, to RMB4,311.3 million, adjusted EBITDA has decreased by 76.3% to RMB 471.7 million, and net loss attributable to equity holders of the company is RMB898.7 million
• The Group issued Atlantis Sanya CMBS of RMB6.8 billion, and Club Med has obtained a Term Loan of EUR180.0 million, guaranteed by the French State, both of which have helped preserve cash and enhanced liquidity. Club Med has reduced human resource costs and capital expenditure by approximately 60% and 70%, respectively in the second quarter. During the reporting period, total operation cost of Atlantis Sanya experienced a saving of RMB140.0 million compared to same period of last year, human resources and energy costs have decreased by approximately 43% and 16%, respectively.
• In July, business volume of Atlantis Sanya increased by approximately 18% to RMB147.7 million, and the occupancy rate reached 88.1%, for the first 15 days of August, the occupancy rate was 95%. In the 15 days ended 15 August 2020, average occupancy rate of Club Med has achieved 88% in its Chinese resorts and 95% in its European resorts under the restriction of social distance, respectively, with the resort capacity recovered to approximately 37% compared to the same period of last year, most of its resorts are expected to be under operation by the end of year. Both Taicang and Lijiang FOLIDAY Town projects are proceeding as scheduled.
• The Group adhered to deep plowing in Hainan to build up its tourism ecosystem, and it is already the largest high-end resort provider in Sanya.
• Launched the "Thomas Cook Lifestyle Platform" in July, which integrates the Group’s internal superior resources and takes contents as the core drive. The terminal platform was officially launched on 18 July 2020.

25 August, Fosun Tourism Group (“Fosun Tourism” or “the Group”, Stock code: 1992), as the world’s leading leisure-focused integrated tourism group, is pleased to announce its interim results for the six months ended 30 June 2020 (“the reporting period”).

In the first half of 2020, the outbreak of the COVID-19 pandemic (“epidemic”) has forced all Club Med resorts to be temporary closed for a certain period of time in response to the adoption of public health measures and the enforcement of travel restrictions by countries around the world. During the reporting period, the business volume of the Group’s tourism operation has decreased by 44.1% YOY, to RMB4,311.3 million. Due to the planning adjustment of construction and delivery cycles, tourism-related property sales have decreased by 78.7% to RMB375.5 million, the Group’s revenue has decreased by 50.0% to RMB4,527.8 million, adjusted EBITDA decreased by 76.3% to RMB471.7 million, and net profit/loss attributable to equity holders of the company turned from profit to loss, with a loss of approximately RMB898.7 million.

Strong financing capacity with sufficient cash

During the reporting period, the Group maintained a steady financial position with strong financing capacity and sufficient cash to mitigate the impact brought by the epidemic. In mid-March, the Group issued the Atlantis Sanya CMBS of RMB6.8 billion with a term of 24 years, a coupon rate of 5%. Moreover, in June, Club Med has obtained EUR180.0 million Term Loan guaranteed by the French State.

Additionally, the Group has a relatively sufficient cash reserve and has also paid close attention to business development opportunities to accelerate the Group’s business growth. As of 30 June 2020, the Group has cash and cash equivalents of approximately RMB6.3 billion, and undrawn bank facility of approximately RMB2.3 billion.

Effective implementation of cost-reduction controls

Over the second quarter of the year, The Group has implemented drastic cost reduction to preserve cash and liquidity. On one hand, Club Med has undergone strict cost-control policies, including reducing human resources costs, rental costs adjustments and canceling marketing campaigns and various variable costs and expenses, in which human resources costs have decreased by approximately 60% in the second quarter compared to same period of last year; On the other hand, Club Med reduced capital expenditure by around 70% in the second quarter compared to same period of last year. 

Meanwhile, Atlantis Sanya has implemented strict cost-control measures and policies to optimize operation costs, including reducing human resources costs, optimizing energy cost, and other fixed costs. During the reporting period, total operation costs experienced a decrease of RMB140.0 million compared to the same period of last year, human resources costs and energy costs have decreased by approximately 43% and 16%, respectively.

Core businesses lead industrial recovery, Taicang and Lijiang projects progress as scheduled

As domestic epidemic status has gradually stabilized, core business operations of the group have also recovered well. Atlantis Sanya benefited from the recovery of demands and the unique nature of product competitiveness. In July 2020, business volume of Atlantis Sanya was approximately RMB147.7 million, increased by approximately 18% compared to the same period in 2019 , the average occupancy rate by room was 88.1%, higher than the 81.4% in the same period last year. Strong performance continued from July for the first 15 days of August, with an average occupancy rate by room of 95%.

In regard the Group’s resort business, Henri Giscard d’Estaing, the Vice Chairman and Deputy CEO of Fosun Tourism Group has said:  Club Med entered strong in the COVID-19 crisis thanks to its profitable growth in 2019 which even accelerated during the beginning of this year. Then Club Med had to react swiftly to protect its clients and teams, reinforce its liquidity, reduce massively its cost base and limit the financial impact of this unprecedented sanitary crisis. The successful reopening this summer of its Chinese and European resorts demonstrates the attractiveness of its affluent families holidays offer. With its solid pipeline of new and renovated resorts, it demonstrates the ability of Club Med to rebound when COVID-19 will be under control.

Operation reinstated across the world since July. As of 15 August, Club Med has resumed the operation of 26 resorts globally. After the re-opening, global resorts have reached an average occupancy rate of 61%. For the 15 days ended 15 August 2020, average occupancy rate of Club Med achieved 88% in its Chinese resorts and 95% in its European resorts under the restriction of social distance, respectively, with resort capacity restored to 37% of the same period of last year; most of its resorts are expected to be under operation by the end of 2020.

The construction of project Taicang and Lijiang FOLIDAY Town is progressing as planned. In July 2020, Taicang FOLIDAY Town obtained sales permit for GFA of approximately 100,000 square meters, of which approximately 37,000 square meters that represents 327 sets of salable units started phase one pre-sale activities.

Enhance leading position in global resort industry, diversify resort brand portfolio, and accelerate development 

Meanwhile, Club Med is also developing new resorts, the renovation and extension of beach resort La Palmyre was completed and re-opened in July. New resorts La Rosiere will open by the end of this year, and Club Med Seychelles will newly open in the upcoming winter season. By the end of 2022, Club Med also plans to open 10 new resorts. Since the acquisition of the Casa Cook brand series in November 2019, the group has accelerated its hotel development across China and Europe, and no fewer than 25 hotels are expected to open globally in the next three years.

In-depth layout across the Hainan Free-trade Port

Fosun Tourism adhered to deep plowing in Hainan. The Group’s operation of Atlantis Sanya and Club Med Sanya Resort together makes the group the largest high-end resort provider in Sanya, in terms of the number of guest rooms with an average daily room rate exceeding RMB1,000. The group's business across Hainan not only includes Atlantis Sanya and Club Med Sanya Resorts, but also other services and solutions such as residence show C, Foryou Ski, and travel agency business. In the future, the Group will actively seek further cultivation within the Hainan Free-trade port area to further develop in fields of tourism destination,, resort management, various services and solutions, tourism-related retail and international trade, etc.

Launched Thomas Cook Lifestyle Platform

To intensify the development of FOLIDAY ecosystem, the Group launched the “Thomas Cook Lifestyle Platform” at the beginning of July, which integrates the internal superior resources, takes contents as the core drive, and forms an open internet platform with vacation and lifestyle products. The platform was launched for trial operation on 6 July 2020 and officially launched on 18 July 2020.

Qian Jiannong, Chairman of the Board, Executive Director and Chief Executive Officer of Fosun Tourism, said: “The COVID-19 pandemic broke out unexpectedly and is proved to be a once-in-a-century black swan event for the tourism and leisure industry. The Group has demonstrated a strong anti-risk capability during the epidemic. While the group has substantially consolidated its liquidity in the first half of 2020, ensured the safety and orderly development of its business, and adopted various measures to effectively reduce variable and fixed costs, the Group is also recovering its business with reduced costs. The group’s business model and strong product competitiveness allow the Group’s quick recovery as industry leader. During the summer vacation, Atlantis Sanya and Club Med resorts across China and Europe have both recorded high occupancy rates. At the same time, we have not paused our pioneering pace, as we have released the Thomas Cook lifestyle Platform, and Taicang, and Lijiang FOLIDAY Town projects are proceeding as scheduled.

We believe that after the epidemic, the tourism and leisure industry will experience new development patterns. Both opportunities and crises arise at the same time. We are optimistic about the growth prospects and market restructuring opportunities of the global leisure and vacation industry after the epidemic We will continue to look for opportunities and driving forces for further growth and give back to our shareholders with outstanding operating results.”