MCK 0.00% $2.95 millennium & copthorne hotels new zealand limited

Ann: FLLYR: MCK: MCK: 2014 Results Announcement

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    10/02/2015 15:54
    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
    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
    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
    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:
    $13.4 million) and reported an increase in its section sales from 202 in 2013
    to 248 in 2014 reflecting continuing positive market conditions across CDLI's
    CDLI increased its ordinary dividend to 2.2 cents per share from 2.0 cents
    per share in 2013.  MCHNZ's stake in CDLI reduced slightly to 67.06% as a
    result of MCK taking its dividend in cash and not shares.
    Offshore Operations - Australia & China
    In Australia, short term leasing of the units at the Zenith Residences
    continued during the year with occupancy of over 95% recorded.  No sales of
    the owned units were made in 2014.
    On 24 December, MCK announced that it had entered into a conditional
    agreement with the Tai Tak Group (Tai Tak) for the acquisition of the
    remaining 38.7% of the shares in KIN Holdings Limited (KIN Holdings) which
    MCK did not already own.  KIN Holdings is the holding company for MCK's
    Australian operations and assets, which include the residential units at the
    Zenith Residences in Sydney and a sales office.  The price agreed for the
    acquisition of the shares was NZ$ 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
    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.
    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
    10 February 2015
    [**Media Release**]
    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
    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
    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)
    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
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