Press Release Year End Financial Results

Press Release Year End Financial Results

21-Aug-2000

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Year Ended 30 June                    2000                       1999                      % Change
Total Revenue                               $262.3m                   $215.6m                    +22%
Profit after tax and abnormals         $42.0m                     $31.0m                     +35%
Operating Profit before abnormals    $34.4m                     $31.0m                     +11%
Basic EPS before abnormals             6.4 cents                 6.2 cents                    +4%
Basic EPS after abnormals               7.9 cents                  6.2 cents                    +27%
Distribution per Stapled Security      6.25 cents                 5.8 cents                   +8%
Final Distribution per Stapled Security 3.5 cents                 3.2 cents                   +9%



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The Joint Chairman of Thakral, Mr Ted Harris, today announced an after tax profit of $42 million for the year ended 30 June 2000 compared to $31 million in the previous period. This is an increase of $11 million or 35%.

Operating profit before abnormals was $34.4 million, an increase of 11%. Earnings per share before abnormals increased by 4% to 6.44 cents and after abnormals by 27% to 7.9 cents.

Total revenue was $262.3 million compared to $215.6 million for the previous year, an increase of 22%.

A final dividend of 3.5 cents per stapled security has been declared. This is an increase of 9.4% or 0.3 cents per stapled security over the final distribution last year. The total distribution for the year is 6.25 cents, an increase of 7.75%. The final distribution is 58.6% tax free with the balance tax deferred. The Group’s Distribution Reinvestment Plan will operate at a discount of 2.5% and the distribution will be fully underwritten.

"This result reflects Thakral Holdings' strategy of building earning streams from development and gaming to augment revenue from our diversified property portfolio of hotels, shopping centres, commercial offices and public car parking" Mr. Harris said.

"The latest result continues the group’s record of double digit profit growth in every year since listing in 1994," he added.

Segment contributions to profit:               2000                     1999                          % 
                                                                    $'m                       $'m                       Increase

Hotels                                                           37.0                       33.3                          11%

Retail & Commercial                                       15.7                      14.6                            7%

All Seasons*                                                   1.7                        2.3                            n/a

Development                                                  6.3                        4.8                            31%

Pacific Century Hotels                                      3.6                        3.3                              9%

                                                                   64.3                      58.3                           10%
* to March 2000



Hotels
The operating profit of the Hotel Division was $37 million - an increase of 11% compared with the previous year. Across the Group’s properties, average room rates increased from $126 to $128 with occupancy improving from 74% to 75.6%.

There were again varying trends around the country. Profit from the group’s Sydney and Melbourne properties withstood the increasing supply in these markets. In Sydney net profit from All Seasons on Crown and Menzies increased by 5%. Following its recent refurbishment, Novotel Brighton Beach performed strongly, increasing profit by 29%. In Melbourne, Novotel on Collins increased profit by 8% and the 50% owned Hilton on the Park by 5%.

Refurbishments were undertaken at a number of other properties. In Darwin and Adelaide, the hotels underwent extensive refurbishment programmes, which depressed their results for the year. The Atrium in Darwin suffered a reduced profit of 36% while the Hindley suffered a decline of 14%. However, recent trading figures indicate the work has been well received by the market and should contribute to stronger results. In Adelaide, the property was re-branded to a Novotel. Novotel Northbeach Wollongong was also refurbished in the period but was still able to increase profits by 23%. On the Gold Coast, the Grand Mercure improved its profit by 56%.

Included in the hotel profits is a significant increase in gaming profits which contributed $5 million in 2000 compared to $2 million in 1999.

Retail and Commercial Division
The Retail and Commercial Division, which controls over 50,000 sq.m of office and retail space, achieved a profit of $15.7 million, which was an increase of 7% on the previous year. Vacancies at all Thakral properties are below 1%. During the year, construction was completed on 1,351 sq.m of new retail space along The Esplanade Cairns, to complement the refurbished All Seasons Esplanade Hotel. This new retail area has been primarily leased to a variety of quality restaurants and tourism related operators and is currently being marketed for sale by the group.


Development
Contributions from property development were $6.3 million an increase of 31% over 1999. This reflects the Board’s strategy of seeking to expand, in a controlled manner, this area of the Group’s activities.

The result includes contributions from the following projects:

Pacific Bay, Coffs Harbour - During the year, profits continued from the progressive development of the surplus land that surrounds the resort. In addition, sales of part of the existing property occurred with the Beachclub block to be converted into a Marine Research Facility.

Glenwood - A 164 lots residential subdivision in Sydney’s Northwest. The project was completed and fully sold.

Newtown - A 226 unit residential development being undertaken in Joint Venture. The first stage is nearly complete and strong pre-sales exist on Stage 2. Due to the impact of GST and higher than expected construction costs, profit from this project will be lower than originally anticipated.

Lidcombe Olympic Media Village - Thakral is providing mezzanine funding to assist construction of this third party development. Construction is complete and settlement is expected in early 2001.

Newport - Comprising 7 residential units, 6 commercial suites and a 65 berth marina. The development is progressing well with strong pre sales. The marina is complete and construction underway on the units.


In addition to the above projects which all contributed to the year’s result, Thakral has the following projects in the pipeline, some of which may be joint ventured. These should contribute in 2001 and beyond:
Cairns - The re-development of the Lyons Hotel in Cairns which was acquired by Thakral in 1997. Development of a retail strip of tourism focused retail has been completed and marketing will commence shortly on the first residential tower.

The Glades, Robina - Acquired in March 2000, the Robina acquisition comprises a fully completed Greg Norman "signature" golf course and will be developed to provide over 600 dwellings.

Palm Cove - Thakral has, as part of the $20 million acquisition of the Courtyard by Marriott, 189 room hotel, acquired a 1.7ha beachfront development site for which we are currently seeking development approval for a 130 unit development over four years.

Coolangatta - Thakral has acquired a strip of leasehold land adjacent to the Airport and Gold Coast Highway for the development of a retail strip with limited commercial space. The project is 50% pre-leased and construction has recently commenced. The project is forecast to have an end value of approximately $15 million.

St Kilda - In July 2000, Thakral acquired a site in Fitzroy Street, St Kilda for the development of 29 residential units. The project came with pre sales of 12 units and construction is scheduled to commence shortly with completion in the third quarter of 2001.


Pacific Century Hotels
Thakral’s associated trust, Pacific Century Hotels (PCH), a 50% joint venture with Thakral Corporation Limited ("TCL"), a Singapore listed company, made a strong contribution to the Group’s results contributing $3.6 million to operating profits, up from $3.3 million in 1999.

On 29 June 2000, shareholders approved the acquisition by the group of the 50% interest in PCH not already owned. A meeting of TCL is scheduled for 24 August 2000 which is expected to approve the sale from TCL’s perspective. Settlement will occur shortly after the approval when PCH will be fully consolidated.

Interest & Finance Charges
Interest expense remained stable compared to 1999, reflecting reduced borrowings in the early part of the year. The Group’s interest exposure is currently 44% hedged to June 2002. Net borrowings to total tangible assets stood at 35.8 % at year-end.


Property Values
Thakral’s property portfolio is revalued annually. Valuations increased from $511 million to $524 million on a like property portfolio. In preparing the year-end valuations, the independent valuers have revised their method of valuing the group’s gaming revenues. This change in methodology resulted in a reduction in value of some $13 million.


Acquisitions and Disposals
During the year the group has actively pursued the Board’s policy of reviewing asset performance. This resulted in the disposal of the All Seasons Hotel Management Group for $29 million and the disposal by PCH of All Seasons on Crown Hotel for $9.75 million.


The Group acquired the Courtyard by Marriott at Palm Cove for $20 million, the Glades, Robina golf course and development land for $30 million and development sites at Coolangatta and St Kilda for $5 million.

Furthermore, as noted above, the Group expects to complete the acquisition of 50% of PCH in August 2000.

Abnormal Profit
The Group’s hotel management subsidiary, All Seasons Hotels, made a contribution to operating profit of $1.75 million compared to $2.3 million in 1999.

As announced just prior to Christmas, All Seasons Hotel Management business was sold to Accor, with settlement in March 2000. This resulted in an abnormal gain of $10 million.

As part of the sale arrangement, Accor now operate twelve Thakral owned hotels under revised management agreements. Accor paid Thakral a total of $29 million for the All Seasons business and the new long-term contracts on Thakral properties. Thakral has however, retained the right to sell its properties with vacant possession subject to the refund of up to $14 million of the sale consideration. The amount refundable diminishes in equal amounts over eight years. If no hotels are sold in this period the full $14 million will be brought to account as profit at the rate of $1.75 million per annum.

Against this abnormal profit, the Group incurred certain re-structure costs and wrote down the value of certain investments. The net effect was an abnormal gain of $7.6 million.


Summary
In summary, Mr. Harris said: "2000 has been another record year for the Group. The strategy adopted several years ago by the Board to diversify into areas of property development together with increasing contributions from the gaming facilities and continuing satisfactory increases from hotels and commercial property has enabled Thakral to produce another successful result."


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Further information:

John Hudson                Tel: (02) 9272 8888
Chief Financial Officer              0417 266 744

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