Press Release - Half Year Results

Press Release - Half Year Results

01-Mar-1999

THAKRAL REPORTS 6% PROFIT INCREASE IN HALF YEAR


Six Months Ended
31 December                    1998                      1997                            % Change
Total Revenue                   $108.8m                  $107.0m                              1.6%
Profit After Tax                    $16.2m                   $15.2m                               6.4%
Basic Earnings
per Stapled Security             3.27 cents            3.16 cents                             3.5%
Distribution
per Stapled Security               2.6 cents             2.5 cents                               4%


The Joint Chairman of Thakral, Mr Ted Harris, today announced an after tax profit of $16.2 million for the six months ended 31 December 1998 compared to $15.2 million in the previous period. This is an increase of $1million or 6%.

An interim dividend of 2.6 cents per stapled security has been declared, an increase of 4% over the previous corresponding period. This equates to an annualised yield of 8.8% over the past 12 months at a share price of 60 cents. The distribution comprises 1.95 cents from the Thakral Holdings Trust (THT) and a 0.65 cent unfranked dividend from Thakral Holdings Limited. The distribution from THT is 16.5% tax free and 83.5% tax deferred.

The Group holds investments in hotels, shopping centres, commercial offices and public car parking. It has also recently increased its involvement in property development and gaming.

Mr Harris said: "The result for the Group has been achieved in the face of difficult trading conditions for the hotels and reflects the Group's active management of its diversified activities both in terms of property type and geographic spread".

Hotels
The operating profit of the Hotel Division was $17.6 million ­ a 6% fall when compared to the corresponding period. Average room rate was $127 compared to $128 in 1997. Occupancy eased slightly from 75% to 74%. This result reflects the varying trends across the country. Increases in supply in the Sydney, Gold Coast and Darwin markets have resulted in lower earnings from these properties. The All Seasons Premier Pacific Bay hotel reported its first operating profit, against the prior year loss when this property was in 'start up' mode. The Melbourne, Adelaide and Wollongong properties performed broadly in line with last year.

Gaming
During the period, the group successfully bid for its full entitlement of gaming licences in NSW and is in the process of developing gaming lounges in a number of its properties in both NSW and Queensland. These lounges will offer gaming in a sophisticated environment complementary to the hotels in which they are located. The group sees considerable potential for growing its gaming revenues.

Retail and Commercial Division
The Retail and Commercial Division achieved a profit of $7 million, which was an increase of 4% on the previous period. Vacancies are currently approximately 1%.

All Seasons Hotels
The Company's hotel management subsidiary, All Seasons Hotels, made an operating profit of $1.1 million compared to $600,000 in 1997. All Seasons now manages 27 hotels with 3,591 rooms and has contracted to manage a further 3 hotels under construction, including the 234 room All Seasons Darling Harbour (Pumphouse) Hotel.

Development
Thakral has, during the year, continued with the development of land at Pacific Bay, Coffs Harbour. Sale of the Southern Land subdivision has been completed and construction is under-way on the first stage Southern Townhouses that overlook the resort from the South. Of the 12 townhouses currently under construction, 10 have been sold. Subdivision of the Northern Land, which enjoys spectacular ocean views, has been completed and sales are proceeding satisfactorily. Thakral is now investigating the development of further townhouses on ridges to both the North and South of the resort.
In total, Thakral owns some 91ha of land that is expected to produce over 400 dwellings. These will be developed in stages to meet demand over a 5 to 10 year period. A nine-hole par three golf course was also opened in the period, primarily for hotel guests staying at the All Seasons Premier Pacific Bay resort.

As reported previously, Thakral is undertaking residential developments, in joint ventures, at Glenwood, in Sydney's west, on Pittwater at Newport and a 225 unit development in the inner city suburb of Newtown. Currently, 100 of the 160 lots at Glenwood have been sold and the project is expected to be completed by 30 June 1999. Pre-sales at Newport and Newtown are meeting expectations with construction scheduled to commence on both projects in April 1999.

These activities are all being undertaken in a structured form with emphasis on minimising risks to the Group. We see selective property development as a growing area of our business.

Pacific Century Hotels
Thakral's associated trust, Pacific Century Hotels (PCH), a 50% joint venture with Thakral Corporation Limited, a Singapore listed company, made a strong contribution to the Group's results contributing $1.6 million to operating profits, up from $1.4 million in 1997. This reflects an exceptional performance from Melbourne Hilton on the Park, which is trading significantly ahead of its market share following the recent refurbishment and opening of the new Hepburn Day Spa. The All Seasons on Crown in Sydney also improved on last year as it re-established its market following a complete refurbishment in 1997.

Summary
In summary, the six months ended 31 December1998 have been another satisfactory period for the Group. Looking forward, while we will continue to experience tough trading conditions in a number of critical markets, the Group has put in place strategies to mitigate against these and believes that the full year result will exceed last year's performance.

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