MCK
10/02/2015 15:54
FLLYR
PRICE SENSITIVE
REL: 1554 HRS Millennium & Copthorne Hotels New Zealand Limited
FLLYR: MCK: MCK: 2014 Results Announcement
MCK provides its audited financial statements for the period ended 31
December 2014, Chairman's Review and Press Release, the text of which follows
below:
CHAIRMAN'S REVIEW
Financial Performance & Financial Position
Millennium & Copthorne Hotels New Zealand Limited ("MCK") has reported a
profit attributable to owners of the parent of $30.2 million (2013: $27.1
million) for the year ended 31 December 2014. MCK's revenue and other income
for the year increased to $148.2 million (2013: $123.4 million).
MCK's profit before tax and non-controlling interests was $45.0 million
(2013: $41.1 million). The key contributors to profit were CDL Investments
New Zealand Limited's (CDLI) land development and sales operations, the
company's core New Zealand hotels businesses, and a one-off gain of $17.6
million resulting from the distribution of the Company's shareholding in
First Sponsor Group Limited (FSGL) during the year. There was also an
additional cost of $2.1 million as a result of accelerated depreciation in
respect of Copthorne Hotel Auckland Harbourcity.
Shareholders' funds excluding non-controlling interests as at 31 December
2014 totalled $371.4 million (2013: $466.4 million). This reduction came
about as a result of the capital reduction undertaken as part of the
distribution in specie in relation to the exit from FSGL and which is
outlined in more detail below. Part of the reduction was offset by the issue
of $111.2 million worth of non-voting redeemable preference shares (RPSs) in
March 2014 which allowed the Company to strengthen its balance sheet ahead of
the capital reduction.
Also reflecting the distribution of the stake in FSGL but not any diminution
of value of MCK's core assets, total assets at 31 December 2014 were $585.4
million (2013: $719.2 million).
Net asset backing (with land and building revaluations and before
distributions) as at 31 December 2014 has increased significantly to 234.6
cents per share reflecting, inter alia, the impact of the share cancellation
which occurred in the latter part of July 2014. (2013: 133.4 cents per
share, based on the share capital as at 31 December 2013).
New Zealand Hotel Operations
The past twelve months have seen average room rates and gross operating
profits rise as key properties undertook initiatives to drive revenue and
margins and completed refurbishment works in the company's property
enhancement plans. Revenue for the operating hotels increased by 6.6% to
$83.1 million (2013: $78.0 million) and revenue per available room (REVPAR)
increased by 13.3% over 2013. Occupancy also increased to 73.7% in 2014
(2013: 67.7%). Our hotels in Auckland and Queenstown in particular performed
well. MCK's market development investment in emerging countries notably
China continues to contribute to the group's hotels performance.
Recent statistics show that the number of overseas visitors continues to
increase, notably from China and the United States. With new and increased
air services from Asia and a renewed appetite for travel from key markets, we
expect current demand patterns to continue over the short term.
Preparatory works such as applications for resource consents for the
refurbishment of Copthorne Hotel Auckland Harbourcity are underway and we
anticipate being in a position to commence site works at some point in the
second half of 2015. The project will involve a complete refit of the
building, internal and external services and completely new rooms. Further
details of the refurbished hotel will be provided in 2015 once final designs
and scope have been determined.
Acquisition of remaining shares in Quantum Limited:
As previously stated. on 10 July 2014, MCK announced that it had entered into
a conditional agreement with Te Maori Lodges Limited, a subsidiary of the
Maori Trustee, for the acquisition of the 30% interest in Quantum Limited
which it does not already own.
Quantum Limited is the principal operating subsidiary of MCK and owns or
leases seven hotels including Millennium Hotel Queenstown, Copthorne Hotel
Rotorua and Kingsgate Hotel Dunedin. Completion of the agreement will result
in MCK taking ownership of these hotels through wholly owned subsidiaries.
Completion of the purchase was subject to approval by the Overseas Investment
Office and this approval was received in November 2014 with completion taking
place on 28 November. The financial impact of the acquisition has been
recognized in the second half of 2014 and has added 5.5 cents per share to
MCK's net asset backing. From a practical point of view, this means that save
for its leased and unit title properties, MCK now owns its hotel assets
outright.
We would like to again acknowledge and thank the Maori Trustee, Te Tumu
Paeroa for their support of Quantum Limited and its operations over the past
two decades.
Canterbury Update
No resolution has yet been reached between the landlord of Millennium Hotel
Christchurch and the insurers on the repair or rebuild of this hotel. MCK
will update shareholders and the wider market if there are any further
developments.
The acquisition designation on Copthorne Hotel Christchurch Central was
lifted by the Canterbury Earthquake Recovery Authority in the first half of
2014 and, as stated previously, MCK will look at future plans for the site at
an appropriate time in the near future.
CDL Investments New Zealand Limited ("CDLI")
CDLI continued to perform strongly and announced another increased operating
profit after tax for the year ended 31 December 2014 of $14.7 million (2013:
$13.4 million) and reported an increase in its section sales from 202 in 2013
to 248 in 2014 reflecting continuing positive market conditions across CDLI's
portfolio.
CDLI increased its ordinary dividend to 2.2 cents per share from 2.0 cents
per share in 2013. MCHNZ's stake in CDLI reduced slightly to 67.06% as a
result of MCK taking its dividend in cash and not shares.
Offshore Operations - Australia & China
In Australia, short term leasing of the units at the Zenith Residences
continued during the year with occupancy of over 95% recorded. No sales of
the owned units were made in 2014.
On 24 December, MCK announced that it had entered into a conditional
agreement with the Tai Tak Group (Tai Tak) for the acquisition of the
remaining 38.7% of the shares in KIN Holdings Limited (KIN Holdings) which
MCK did not already own. KIN Holdings is the holding company for MCK's
Australian operations and assets, which include the residential units at the
Zenith Residences in Sydney and a sales office. The price agreed for the
acquisition of the shares was NZ$ 31 million in cash, which is subject to
adjustment in relation to working capital. MCK has now obtained approval
from the Australian Foreign Investment Review Board (FIRB) and this
transaction is expected to settle on the last business day of February 2015.
MCK also applied for, and was granted, a waiver from the requirement under
Rule 9.2.1 of the NZX Main Board Listing Rules to obtain the prior approval
of MCK shareholders in relation to the acquisition of the remaining KIN
Holdings shares. This transaction ends a long established association in
Australia that started in the early 1990s with the Tai Tak Group, a
Singaporean family-owned private investment group. KIN Holdings and its
subsidiaries, which included the formerly listed Kingsgate International
Corporation Limited, owned and developed a number of residential and
commercial mixed-used developments and other assets in Sydney such as the
Birkenhead Point Marina development in Drummoyne and Kingsgate Shopping
Centre in Potts Point. MCK and the Tai Tak Group have been long term
investors together in Australia and more recently in China and the Board has
greatly appreciated their input. MCK appreciates that Tai Tak's investment
focus has shifted to other directions and we thank them for their unqualified
support over the years.
MCK's reasons for the acquisition are straightforward. The Zenith Residences
are a valuable property asset for MCK and the wider group and we have
confidence in the residential property market in Sydney and regional sales
data over recent months supports this view. The acquisition will allow MCK
to manage this asset independently and confirms its intention to invest in
strategic assets in Australia.
The financial impact of the acquisition will be recognized in 2015 as the
acquisition is yet to be completed.
2014 also saw MCK exit its seven-year investment in its associate company
First Sponsor Group Limited (FSGL). In June, MCK shareholders were sent
information relating to a scheme of arrangement under which the company
undertook a distribution in specie of its shareholding in First Sponsor Group
Limited (FSGL) by way of a capital reduction. Shareholders were also sent a
copy of FSGL's preliminary prospectus. At a special meeting held on 19 June,
ordinary and preference shareholders voted to approve the proposed scheme
which took effect on 17 July following final orders from the High Court
received on 10 July.
Under the scheme, for every 1000 ordinary or preference shares held by
shareholders, 698 shares were cancelled and shareholders received 327 FSGL
shares. To arrive at the cancellation ratio, MCK used a volume-weighted
average price of 68 cents per MCK share (ordinary or preference), an exchange
rate of NZ$1.00 / S$1.07 and has assumed a price for each FSGL share of
S$1.55 (being the mid point of the price range set out in the FSGL
preliminary prospectus).
On 22 July, FSGL completed its Initial Public Offering of shares and listed
on the Singapore Exchange. MCK Shareholders were given the option of using a
block sale facility to sell their FSGL shares or have them transferred to an
NZX or ASX broker account or a Singaporean CDP account or sub-account.
Shareholders could also elect to hold their shares and receive share
certificates. The block sale facility was operated by Trustees Executors and
ran for a six week period. Shareholders who participated in the block sale
facility received their sale proceeds in September.
Due to rounding, the Company retained a small shareholding in FSGL after
completion of the scheme. The Company agreed not to sell or deal with these
shares for a minimum period of six months from the listing date but will look
to dispose of this non-core shareholding at some stage at an appropriate
time.
In 2014, MCK recognized a total loss contribution of $0.37 million for the
period to 22 July 2014 (2013 full year: $9.75 million) from FSGL in its
accounts. This reflected the fact that FSGL's trading results during the
period up until 22 July 2014 were a loss of SG$0.78 million which included a
loss of SG$12.42 million for the six month period to 30 June 2014 (2013 full
year: SG$29.4 million profit from First Sponsor Capital Limited). That said,
on completion of the scheme, MCK's net asset value as at 31 December 2014 has
increased from 133.4 cents per share at the same time in 2013 to 234.6 cents
per share.
Dividend Announcement
MCK has resolved to pay a fully imputed ordinary dividend of 2.4 cents per
share (2013: 1.2 cents per ordinary share). The dividend will be paid on 15
May 2015. The record date will be 8 May 2015.
Taking into account the return of capital by way of distribution in specie
which was undertaken in July 2014 as well as the dividend which has been
declared for the 2014 financial year, shareholders will have made a 21% gain
on their shareholding ($139.60 in monetary terms on every 1000 shares [at
$0.68 per share]) in the period from May 2014 to May 2015 on their
shareholding. This is calculated on the current value of FSGL's and MCK's
ordinary shares (being NZ$1.21 per share and NZ$1.34 respectively at 3
February 2015) assuming that shareholders chose to hold both their FSGL and
MCK ordinary shares.
Outlook
2015 will represent a new start and a chance to reevaluate MCK's strategic
priorities over the next two to three years. With the acquisition of its
interests in Quantum Limited and KIN Holdings Limited, to be settled at the
end of this month, MCK will be able to review and simplify its operating
structures. The property improvements made in our three Queenstown hotels,
Copthorne Hotel and Resort Bay of Islands and the successful conversion of
the Kingsgate Hotel Palmerston North to a Copthorne-branded hotel will
contribute to future growth. The refurbishment of Copthorne Hotel Auckland
Harbourcity will also give MCK a landmark property and will also allow MCK to
reposition and rebrand this important hotel. Management will also look at
sustaining increases in revenue and profit that have been seen in 2014. The
Board is therefore positive about MCK's prospects for the medium term.
New Zealand's economic indicators are pointing to growth over the next few
years. MCK must therefore ensure that it can take full advantage of
increased tourism and business activity in all areas of its operations.
Management and staff
On behalf of my fellow directors, I would like to thank the Company's
management and staff for their work and dedication during 2014, a year of
unique challenges and consolidation for MCK.
Wong Hong Ren
Chairman
10 February 2015
[**Media Release**]
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND REPORTS INCREASED 2014 PROFIT AND
DIVIDEND
Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) today reported
its preliminary results for the year ended 31 December 2014 and announced a
profit after tax and non-controlling interests of $30.2 million (2013: $27.1
million) on total revenue and other income of $ 148.2 million (2013: $ 123.4
million).
As well as an increased profit result, MCK also announced an increase in its
fully imputed dividend from 1.2 cents per share for the 2013 financial year
to 2.4 cents per share for 2014. The dividend will be paid to shareholders on
15 May 2015. The record date will be 8 May 2015.
The results capped off what Chairman H R Wong described as a "year of unique
challenges and consolidation for the Company". MCK's challenges included
raising over $110 million worth of new capital before undertaking a return of
capital in the form of an in specie distribution of First Sponsor Group
Limited shares to MCK's shareholders in July 2014.
MCK's core operations in hotels and property development saw improved results
with the land development unit (through NZX-listed CDL Investments New
Zealand Limited) contributing to MCK's overall profit through increased
section sales and resulting profits. MCK's core New Zealand hotel operations
also saw improvements in revenue with an increase of 6.6% percent and
occupancy increasing to 73.7%.
During 2014, MCK consolidated its operations in New Zealand and in Australia.
In November, it completed the acquisition of the 30 percent interest in an
operating subsidiary it did not already own from the Maori Trustee which
means that it now owns outright its freehold hotel interests in New Zealand
and in late December it announced that it had entered into an agreement to
acquire the minority stake in an operating subsidiary which deals with its
Australian operations from the Singaporean-based Tai Tak Group. MCK announced
yesterday that this transaction will settle at the end of February 2015.
MCK also announced that preliminary works for the refurbishment of its key
Auckland hotel Copthorne Hotel Auckland Harbourcity had commenced and that it
was anticipated that site works would commence at some stage in the second
half of this year.
Mr. Wong noted that property improvements and refurbishments had and would
contribute to future growth. With management looking to sustain increases in
revenue and profit, he said that the Board was positive about MCK's
medium-term future prospects.
Summary of results:
Profit after tax and non-controlling interests: $30.2 million (2013: $27.1 m)
Profit before tax and non-controlling interests: $45.0 million (2013: $41.1
m)
Group revenue and other income: $148.2 million (2013: $123.4 m)
Shareholders' funds excluding non-controlling interests: $371.4 million
(2013: $466.4 m)
Total assets: $585.4 million (2013: $719.2m)
ENDS
Issued by Millennium & Copthorne Hotels New Zealand Limited
Enquiries to:
B K Chiu
Managing Director
(09) 353 5058
End CA:00260454 For:MCK Type:FLLYR Time:2015-02-10 15:54:04
