Press Release - Year End Financial Results

Press Release - Year End Financial Results

30-Aug-1999

Year Ended 30 June                     1999                  1998                     % Change
Total Revenue                                $215.6m              $207.1m                   4%
Profit After Tax                               $ 31.040m           $ 26.664m               16.4%
Basic Earnings per Stapled Security    6.2 cents             5.5 cents               12.7%
Distribution per Stapled Security         5.8 cents            5.2 cents                11.5%
Final Distribution per Stapled Security  3.2 cents           2.7 cents                 18.5%

The Joint Chairman of Thakral, Mr Ted Harris, today announced an after tax profit of $31.040 million for the year ended 30 June 1999 compared to $26.664 million in the previous period. This is an increase of $4.376 million or 16%.

Total revenue was $215.6 million compared to $207.1 million for the previous year - an increase of 4%.

A final dividend of 3.2 cents per stapled security has been declared. This is an increase of 0.5 cents per stapled security over the final distribution last year. The total distribution for the year is 5.8 cents, an increase of 11.5%.

Mr. Harris said: "This is highest profit recorded by the Group. It reflects the importance to the Group of its diversified spread of assets.

The profit increase was achieved in the face of difficult trading conditions for the Hotel Division principally in the Sydney, Darwin and Gold Coast markets.

The operating profit of the Hotel Division was $33.3 million which was 3% below last year. The average room rate fell slightly across the Group's properties from $127 to $126. Occupancy remained constant at 74%.

Hotel operations benefited by significant increases in gaming income in those hotels where gaming equipment has been installed. The hotel market in Australia has experienced varying trends around the country. Owners return improved at the Novotel on Collins, Novotel Brighton Beach and All Seasons Premier Pacific Bay Resort. All Seasons Premier Menzies in Sydney and Novotel Atrium Darwin suffered from increased supply in the Sydney and Darwin markets.

The Retail and Commercial Division which control 50,000 sq.m of office and retail space, achieved a profit of $14.6 million, which was an increase of 7% on the previous year. Vacancies at all Thakral properties are below 1%. During the year, construction was substantially completed on 1,351m2 of new retail space along The Esplanade Cairns, to complement the refurbished All Seasons Esplanade Hotel. This new retail area has been fully leased to a variety of quality restaurants and tourism related operators and is currently being fitted out.

The Group's hotel management subsidiary, All Seasons Hotels, made an operating profit of $2.3 million compared to $1.3 million in 1998. All Seasons now manage 28 hotels with 3,866 rooms. Since year-end, the All Seasons Barossa Valley opened, and the 234 room All Seasons Darling Harbour (Pumphouse) Hotel, Sydney will open in October 1999. The All Seasons Rosehill, Sydney is scheduled for completion in mid 2000 and will join the All Seasons Premier Menzies (an Olympic Family Hotel), Darling Harbour and All Seasons on Crown in providing facilities for the Olympics.

As reported last year Thakral has continued with the successful development of residential apartments at Pacific Bay. All 12 Southern Townhouses, which overlook the Pacific Bay Resort, have been sold at an average price of $345,000 and construction of an additional 11 units has commenced with completion scheduled for November 1999.

Thakral is now proceeding to construct the first stage of premium villas on the northern ridge of the Pacific Bay Resort with future development planned in stages to meet demand. Additionally construction and sale of the joint venture land subdivision at Glenwood, in Sydney's west, is nearing completion with all of the 163 lots sold. The average price for lots was $138,000 and Thakral's profit share is expected to be in excess of $3 million.

Additional joint venture residential developments are under construction at Newport on Pittwater, comprising a 7 residential, 5 commercial units and a 64 berth marina. Also construction and sale of Stage 1 of a 225 residential unit development in the inner Sydney suburb of Newtown has commenced.

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

Gaming activity has increased during the year with new gaming facilities now trading under the Thakral brand " Treasure Cove". Gaming contributed over $2.5 million to gross profit made during the year.

New lounges which have been specifically designed and constructed to improve facilities at Brighton, Wollongong and the Grand Mercure Broadbeach hotels were recently opened. A new Treasure Cove lounge at Lone Star Tavern, Mermaid Waters is scheduled to open in December and the All Seasons Premier Menzies will be converted shortly. Additional strong revenue from these facilities is expected to continue to enhance the overall performance of those properties.

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 $3.3 million to operating profits, up from $2.7 million in 1998. The PCH owned Westend Hotel was sold at year-end for $9 million which, resulted in a book profit of $789,000. The Westend Hotel did not fit in with the overall group asset and strategic mix and is being converted to a backpacker facility by the new owners.

Interest expense was down significantly during the year reflecting the lower interest rate environment coupled with the effect of the Group's refinancing. The Group's interest exposure is currently 47% hedged. Net borrowings to total tangible assets remained at 34%.

Thakral's property portfolio is revalued annually. Valuations increased from $493 million to $512 million. This result is particularly pleasing as it comes against a backdrop of a weaker hotel market and reflects the added value of our refurbishment programmes and gaming activities."

In summary, Mr. Harris said "1999 has been another successful year for the Group. The strategy adopted several years ago by the Board to diversify into areas of property development together with increasing contributions of the gaming facilities has enabled Thakral to produce a satisfactory profit result in a tourist market which is volatile and a hotel environment which in some markets is experiencing considerable oversupply."

Further information:
John Schaap
Managing Director and CEO

(02) 9272 8888
0417 217 632

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