Tuan Sing Holdings Limited · SGX:T24
Tuan Sing — Great Hotels Group (GHG) — Proxy Contest (September 2006)
18 slides from Tuan Sing's proxy contest presentation, September 2006
Slide 1: GHG Stapled Security Holders Should Reject Mulpha's Totally Inadequate Offer
GHG Stapled Security Holders Should REJECT Mulpha’s Totally Inadequate Offer Avoid handing to Mulpha tens of millions of dollars of value belonging to you, the GHG Stapled Security holders – reject the Offer Investor Presentation 1
Slide 2: Agenda
Agenda 1. GHG Overview • Historical trading performance • Significant Capex program • Focused property portfolio • Strong sector outlook • Improved trading performance • Restructure completed 2. Mulpha’s Offer / GHG’s Response • Discount to NTA • Forecast earnings growth • Forecast distribution incr
Slide 3: GHG Overview
GHG Overview Hotel-related property group with asset management and operations expertise across hotels, car parks, retail and office premises Lodging • 7 hotels throughout Australia • 4 Hyatt branded 5-star hotels - total 1,532 rooms • 1 Country Comfort and 2 Chifley hotels - total 290 rooms Hospita
Slide 4: GHG Overview: Specialist Expertise Required
GHG Overview Specialist expertise is required to manage hotel assets through cyclical conditions created by external factors • Hotels are a specialised asset • Specialist management skills class in cyclical sector required to mitigate cyclical • Operating conditions and impacts and asset complexity:
Slide 5: Historical Trading Performance
Historical Trading Performance GHG has implemented strategies to overcome the constraints on past performance • Securities have underperformed GHG Three Year Security Price Performance $1.20 in the past due to: 12 March 2004 $0.54 31 October 2005 $0.96 18 August 2006 $0.84 – Over-supply of 4 & 5 sta
Slide 6: Significant Capex Program
Significant Capex Program Capital expenditure is focused on 2007/08 to improve competitiveness and generate material earnings growth from 2009/10 onwards Capital Expenditure 2006/07 2007/08 2008/09 Maintenance Capital Expenditure 5.1 4.8 5.4 Growth Capital Expenditure Grand Hyatt Melbourne 1.7 29.0
Slide 7: Significant Capex Program
Significant Capex Program Further earnings upside from $38m refurbishment of Grand Hyatt • Majority of work to be undertaken in 2007/08 • Key areas include retail plaza, Collins St facade, level 6 café and bar, 206 guest rooms, main Russell St entrance facade and lobby • Operations will be managed t
Slide 8: Focused Property Portfolio
Focused Property Portfolio GHG has a unique portfolio of 5-star hotels in prime capital city locations managed by leading international operator, Hyatt Rating Grand Hyatt Melbourne Rating Hyatt Regency Perth Location Largest 5-star hotel in Melbourne located in the heart of Collins Stree
Slide 9: Strong Sector Outlook
Strong Sector Outlook Strong outlook for 5-star hotel sector driven by limited new supply and increasing demand Past 5 years - Difficult Sector Dynamics Next 5 years – Improved Outlook • Impact on tourism of 9/11 • GHG’s hotels are ideally positioned to exploit the favourable outlook • Collapse of A
Slide 10: Improved Trading Performance
Improved Trading Performance The trading performance of GHG’s 5-star properties since 2003/04 illustrates the recovery in sector conditions Revenue per Available Room for 5-Star Hyatt Portfolio • 24% increase in 2006/07F $160 $154 RevPAR compared to 2003/04 $150 – Improved occupancy / rates – Demand
Slide 11: Restructure Completed
Restructure Completed The Board has restructured GHG and it is now ideally positioned to exploit opportunities created by the cyclical upswing in the hotel sector Key restructuring steps: Positioned for 1. Sold under-performing assets Growth 2. Reduced debt (incl. CPS) • Focused portfolio • Cyclical
Slide 12: Overview of Mulpha's Offer
Overview of Mulpha’s Offer The Directors* regard Mulpha’s Offer as Totally Inadequate and Derisory • Mulpha is offering $0.85 cash for each GHG Stapled Security • Offer period to close on 11 October, unless extended • Highly conditional: – 50% minimum acceptances – Availability of funding – Stamp du
Slide 13: Discount to NTA
Discount to NTA Mulpha’s Offer is a 36% discount to NTA of $1.33 as at 30 June 06 $1.33 • Potential for further value upside – Benefits of planned 36% discount refurbishment program in 2007/08 $0.85 – Revised and independently verified earnings forecasts – Proposed leases over Country Comfort and Ch
Slide 14: Forecast Earnings Growth
Forecast Earnings Growth Net profit after tax before abnormals forecast to increase 90% in 2006/07 $m Reconciliation of 2006/07F Net Profit with 2005/06 • Key earnings drivers 1.9 0.2 – Strong underlying trading from Hyatt 15 portfolio 13.9 0.5 (1.6) – Impact of Grand Hyatt Melbourne 5.0 0.6* banque
Slide 15: Forecast Distribution Increase
Forecast Distribution Increase Distributions are forecast to increase by 81% in 2006/07 • GHG now conservatively geared 7.70 cents – 31% debt to total tangible assets 6.15 cents – Sale of properties – Conversion of CPS – Improved cash flow 4.25 cents • New distribution policy – Pay out non-cash buil
Slide 16: No Premium for Control
No Premium for Control Mulpha is Offering No Premium for Control • The average premium to NTA in other transactions in the LPT sector is 26% which would equate to a price of $1.68 for GHG NTA Premium 80% 63% 60% 55% 38% 40% 29% 26% Average 26% 26% 23% 22% 20% 20% 16% 10% 4% 4% 0% (20%) (40%) (36%) (
Slide 17: Maximising Value
Maximising Value The Board is Committed to Maximising Value • Board committed to maximising value of your GHG Stapled Securities • Board expects security price to converge to NTA – Improved distribution policy – Favourable hotel sector conditions – Capital improvements – Reduced gearing • Board will
Slide 18: Conclusion
Conclusion • Mulpha Offer is totally inadequate and derisory – 36% below NTA of $1.33 • GHG is ideally positioned to exploit strengthening sector conditions following successful restructuring • Earnings are forecast to increase by 90% in 2006/07 – Further earnings upside potential expected following
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