Millennium Copthorne Hotels (“MC”) has announced that Singapore’s Building and Construction Authority has granted a temporary occupation permit (“TOP”) to the Glyndebourne residential development, a project developed by a subsidiary of MC.
Glyndebourne, which was constructed on the site of the former Copthorne Orchid Hotel in Singapore, includes 150 condominium apartments, of which 147 have been sold.
The granting of the TOP enables MC to recognise revenues and costs arising from the development. The revenue and cost recognition will result in a significant one-time increase in MC’s revenues and operating profits for the fourth quarter of 2013 and for the full 2013 financial reporting year.
Revenues from the Glyndebourne apartment sales totalled approximately £274m and MC’s pre-tax profits for the year are estimated to increase by £130m to £140m as a result of the transaction.
The tax rate applicable to the transaction is likely to be lower than the Group’s underlying effective tax rate. Revenue and profit for the three remaining apartments will be recognised when sold.
MC chairman, Kwek Leng Beng, said: “In line with our asset management strategy, the Copthorne Orchid Hotel was redeveloped because, as one of the Group’s older hotels in Singapore, it required significant capital expenditure that we did not consider likely to generate sufficient returns over the medium term.
“This was mainly because the hotel’s surrounding location had become increasingly residential over the years since the hotel was constructed. Converting the site to residential use was an attractive alternative, which has delivered excellent value for our shareholders.”
At 11:33am: (LON:MLC) Millennium Copthorne Hotels PLC share price was +1.25p at 585.25p
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