MCK
31/07/2014 15:54
HALFYR
REL: 1554 HRS Millennium & Copthorne Hotels New Zealand Limited
HALFYR: MCK: MCK: 2014 Interim Financial Statements and Releases
MCK's 2014 results for the period ended 30 June 2014 are attached to this
announcement. These include:
-NZX Appendix 1
-(Unaudited) financial statements for the period ended 30 June 2014;
-Chairman's Review;
-Media Release.
Takeshi Ito
Company Secretary
CHAIRMAN'S REVIEW
-Financial Performance:
The Directors of Millennium & Copthorne Hotels New Zealand Limited ("MCK")
announced an unaudited profit after tax and non-controlling interests of
$6.22 million for the six month period ended 30 June 2014 (2013: $9.02
million). Profit before income tax and non-controlling interests was $14.94
million (2013: $16.01 million). The key reason for the decrease in profit
was its share of its loss from First Sponsor Group Limited being $3.13
million which included expenses relating to its IPO. These are dealt with in
more detail below.
The actual result does not reflect an increase of 16% in group revenue and
other income for the period under review from $58.06 million in 2013 to
$67.41 million in the first six months of this year. The increase is
attributable to good section sales by CDL investments and improved
performance at the Company's New Zealand hotels. Gross profit for the period
also increased from $31.23 million in 2013 to $36.37 million. Operating
profit for the period increased from $14.84 million in the same period in
2013 to $17.38 million in the period under review. This figure included
business interruption insurance income of $0.49 million (2013: $2.65
million).
--Completion of Redeemable Preference Share Issue:
On 24 March, the Company announced that it had raised $111.77 million from
its offer of redeemable preference shares which closed on 19 March. Under
the offer, MCK shareholders were entitled to acquire one new redeemable
preference share for every two ordinary shares they currently held.
MCK's majority shareholder, Millennium & Copthorne Hotels plc, subscribed for
its full entitlement to preference shares under the offer and also subscribed
for additional preference shares under the oversubscription facility. The
offer was oversubscribed (through the oversubscription facility) by 15.5%.
The new redeemable preference shares now trade on the NZX Main Board under
the MCKPA ticker code. On behalf of the Board, I thank our shareholders for
their support of the share issue.
--Scheme of Arrangement and First Sponsor Group Limited - update:
In June, MCK shareholders were sent information, including a notice of
meeting, independent adviser's report, relating to a scheme of arrangement
under which the company would undertake 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 have been cancelled and shareholders have 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 is now
listed on the Singapore Exchange under SGX ticker code ADN. 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 is
being operated by Trustees Executors and runs for a six week period from 22
July.
Due to rounding, the Company retained a small shareholding in FSGL after
completion of the scheme. The Company has agreed not to sell or deal with
these shares for a minimum period of six months from the listing date. MCK
has also prepaid a total of $0.60 million of one-off costs associated with
the capital reduction scheme / distribution in specie in the period under
review. These costs relate to professional advice obtained from the
Company's legal, taxation and financial advisors.
This was a significant matter for the Company and on behalf of the Board, I
thank shareholders for supporting the distribution in specie process by
voting overwhelmingly in favour of the scheme.
--Acquisition of remaining shares in Quantum Limited:
On 10 July, 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 is subject to approval by the Overseas Investment
Office. An application for consent will be lodged by MCK shortly and the
agreement is expected to settle before the end of the year. Any financial
impact of the acquisition will be recognized in the second half of 2014.
This marks the end of a valued and productive business relationship with the
Maori Trustee and the Board thanks Te Tumu Paeroa for their support of
Quantum Limited and its operations over the past two decades.
--Canterbury Update:
Discussions between the landlord of Millennium Hotel Christchurch and the
insurers have continued on the repair or rebuild of this hotel. To date, no
resolution has been reached. Once MCK is in a position to make further
comment, we will update shareholders and stakeholders as required;
The acquisition designation on Copthorne Hotel Christchurch Central has now
been lifted and MCK will look at future plans for the site at an appropriate
time in the near future.
--New Zealand Hotel Operations:
Total revenue for the New Zealand hotel operations (13 owned or leased and
operated hotels excluding 10 franchised properties) for the period under
review increased to $40.57 million (2013: $38.58 million). Occupancy for
those owned / leased hotels for the period increased to 72.7% (2013: 69.0%)
across the Group allowing for the closure of the three Christchurch CBD
hotels.
The increases in revenue, gross profit and revenue per available room
(REVPAR) are pleasing and have come through a focus on occupancy and room
rates together with increasing operational efficiencies.
The refurbishment of 76 rooms and the restaurant, bar and public areas at
Kingsgate Hotel Palmerston North and rebranding to a Copthorne Hotel was also
completed in the period under review and has already generated increased
revenue per available room (REVPAR) for the hotel.
--CDL Investments New Zealand Limited ('CDLI'):
CDLI announced an unaudited operating profit after tax for the six months
ended 30 June 2014 of $8.22 million, (2013: $5.73 million). Strong sales from
its Hamilton and Rolleston (Canterbury) subdivisions have again contributed
to the result. CDLI expects to match or better its 2013 results in 2014.
--Offshore investments - Australia and China:
As MCK did not distribute its interest in FSGL until after 30 June 2014, it
still had a 31.42% shareholding in that company at balance date. In China,
First Sponsor Group Limited ("FSGL") (a 31.42% associate company) reported a
loss of S$12.42 million for the period to 30 June 2014 (2013: US$0.49 million
profit from First Sponsor Capital Limited). FSGL recorded lower revenue from
the sale of properties compared to the same period in 2013 and did not
recognise any revenue from the Millennium Waterfront project located in
Wenjiang City, Chengdu Province in the period under review. FSGL also
recorded total operating expense of S$22.15 million in H1 2014 mostly
relating to its IPO expenses, selling expenses, and service fees charged by a
controlling shareholder. It also included a share-based charge in connection
with the Company's issuance of 25,850,000 ordinary shares to certain
management staff and employees of the Group at par value in March 2014 as
well as an increase in headcount for M Hotel Chengdu and its property
development operations in Chengdu. MCK has recognized $3.13 million as its
share of this loss (2013: $0.20 million profit).
In Australia, occupancy at the Zenith Residences remains steady at 97%. The
units owned by the Group are leased out on short-term leases. The litigation
affecting a majority-owned subsidiary remains on foot and experts have been
appointed to quantify the rectification works required.
--Outlook:
With the completion of the capital raising and the distribution in specie of
the Company's interest in FSGL, the Company is now able to focus on its New
Zealand business segments. Improvements are being seen in the New Zealand
hotel operations and the land development operations continue to trade
strongly. We expect that the good work in these two areas will be reflected
to a certain extent in our final results. We caution that one-time costs and
other factors may dilute the extent of those performance improvements.
As a result of the capital reduction and as highlighted at the annual and
special meetings of shareholders, while the number of shares in the Company
will reduce, we expect the net asset value of the Company and the earnings
per share to rise as the total assets of the business have not changed as a
result of the capital reduction, save for changes to take account of the
distribution of the FSGL shareholding.
We remain focused on investing in the hotel business and our recent
refurbishments and the acquisition of the remaining stake in Quantum Limited
are proof of that. We also remain focused on being a sustainably profitable
business and we will continue to seek improvements in our operations at all
levels to deliver better returns for all of our shareholders.
Wong Hong Ren
Chairman
31 July 2014
MEDIA RELEASE
MCK REPORTS INCREASES IN REVENUE AND OPERATING PROFIT
IN FIRST HALF OF 2014
New Zealand hotel owner / operator, Millennium & Copthorne Hotels New Zealand
Limited (NZX:MCK), today announced its (unaudited) results for the six months
to 30 June 2014:
--Average hotel occupancy across the Group: 72.7% (2013: 69.0%)
--Group revenue and other income: $67.41 million (2013: $58.06 million)
--Operating profit: $17.38 million (2013: $14.84 million)
--Profit before income tax and non-controlling interests: $14.95 million
(2013: $16.01 million)
--Profit after tax and non-controlling interests: $6.22 million (2013: $9.02
million)
MCK's Managing Director Mr. B K Chiu noted that the profit result did not
reflect improvements in the Company's Group Revenue from increased sales by
the Company's majority-owned residential property developer CDL Investments
New Zealand Limited and improved results from the New Zealand hotel
operations. However, operating profit for the period did increase to $17.38
million from last year's $14.84 million.
"CDI has had a strong first half with good sections sales and we have also
been able to make gains in occupancy and revenue per occupied room (REVPAR)
at our hotels although these are not reflected in the bottom line results",
he said. "This was due to one-time costs relating to the Preference Share
issue and its share of costs from FSGL's IPO," he added.
Mr. Chiu noted that the past six months had been a very busy time for MCK.
"The six months have been remarkable. Not only did we complete a successful
redeemable preference share issue in the first six months, we also did what
was necessary to effect the recently completed capital reduction and
distribution in specie of our shareholding in First Sponsor Group Limited to
all MCK shareholders", he said.
Mr. Chiu noted that prepaid costs related to those two projects amounted to
$0.60 million. The Company's half year results were affected mainly by the
Company's share of the loss of $3.13 million from First Sponsor Group
Limited. FSGL recorded lower revenue from the sale of properties compared to
the previous year and did not recognise any revenue from sales in the
Millennium Waterfront Project in the first half of 2014.
Speaking to the Company's prospects in the second half of 2014, Mr. Chiu said
MCK remained focused on investing in its New Zealand hotel business.
"Our recent refurbishments and the acquisition of the remaining shareholding
in Quantum Limited demonstrate that commitment", he said.
Mr. Chiu also said that the Company expected positive changes to key metrics
as a result of the capital reconstruction of the Company".
"We expect that, while the total number of shares in the Company has fallen,
the net asset value of the Company and the earnings per share should improve
as the core assets of the business have not changed. Further performance
improvements which we are able to make in the second half of the year will
also be reflected in the annual results", he said.
ENDS
Issued by Millennium & Copthorne Hotels New Zealand Ltd
Any inquiries please contact:
B K Chiu, Managing Director
Millennium & Copthorne Hotels New Zealand Ltd
(09) 353 5058
End CA:00253355 For:MCK Type:HALFYR Time:2014-07-31 15:54:24
