5th May 2005 07:01
Millennium & Copthorne Hotels PLC05 May 2005 5 May 2005 MILLENNIUM & COPTHORNE HOTELS PLC TRADING UPDATE AND RESULTS FOR THE THREE MONTHS ENDED 31 MARCH 2005 Millennium & Copthorne Hotels plc today provides a trading update and resultsfor the three months ended 31 March 2005. The results presented today representfirst time adoption of International Financial Reporting Standards ('IFRS').Accordingly 2004 comparatives have been restated. Full details of the transitionto IFRS can be found in appendix A(b). Group results - IFRS • Like for like turnover* increased by £3.9m to £129.5m (2004 restated: £125.6m)• Group turnover increased to £129.5m (2004 restated: £ 127.0m)• Like for like* operating profit before other operating income and expenses £13.4m (2004 restated: £12.2m)• Hotel operating profit increased to £15.8m (2004 restated: £14.4m)• Pre-exceptional profit before tax increased to £7.5m (2004 restated: £4.0m)• Exceptional £12.8m profit contribution from settlement of Millenium Hilton insurance dispute• Post-exceptional profit before tax £20.3m (2004 restated: £4.5m) Group results - UK GAAP (for information only) • Like for like turnover* £128.9m (2004: £125.2m)• Group turnover £128.9m (2004: £126.6m)• Like for like* operating profit before other operating income and expenses £13.5m (2004: £13.1m)• Hotel operating profit £16.1m (2004: £14.7m)• Pre-exceptional profit before tax £7.8m (2004: £5.1m) * Like for like turnover and operating profit before other operating income andexpenses exclude rental income from Birkenhead Shopping Centre and Marina (£1.4mand £0.8m respectively), which were disposed of in November 2004 Overview • RevPAR increases in all regions - Group RevPAR in constant currency up 4.4% compared to equivalent period in 2004• Group occupancies increased to 70.2% (2004: 68.7%)• Average rate increased to £58.23 (2004: £56.97 in constant currency)• 8 new management contracts across three continents Commenting today, Mr Kwek Leng Beng, Chairman said: "Although still early in the Group's financial year, the Group's hotelperformance for the first quarter of 2005 reflects steady progress with animproved performance in New York. We continue to look for ways to grow ourbusiness and are pleased to have signed eight new management contracts in thequarter , including two 5-star Millennium management contracts to manage a hotelin Bangkok and one in Sharm el Sheikh." Enquiries: Tony Potter, Group Chief Executive 020 7872 2444David Cashman, Group Chief Financial Officer 020 7872 2444Millennium & Copthorne Hotels plc Nick Claydon/Kate Miller/Ruban Yogarajah 020 7404 5959Brunswick Group Limited MILLENNIUM & COPTHORNE HOTELS PLC TRADING UPDATE AND RESULTS FOR THE THREEMONTHS ENDED 31 MARCH 2005 Overview Hotel trading in 2005 saw increased revenues and RevPAR. Group RevPAR for thequarter was £40.88, a 4.4% quarter on quarter improvement at constant rates ofexchange. Group occupancies for the period increased to 70.2% compared to 68.7%in the equivalent period in 2004. Revenues and profits from our non-hotel divisions have declined, mainly due tothe sale of the Birkenhead shopping centre and marina in the last quarter of2004. Due to timing differences, sales within our land bank in New Zealandslowed in comparison to 2004. We expect full recovery by the fourth quarter. For the three months to 31 March, like for like turnover increased to £129.5m(2004 restated, and excluding Birkenhead shopping centre and marina: £125.6m).Like for like operating profit before other operating income and expensesincreased to £13.4m (2004 like for like restated: £12.2m). In March the Group settled the September 11 2001 Business Interruption/Propertydamage insurance claim regarding the Millenium Hilton for US$85.0m. The finalproceeds received in 2005 of US$25.0m (£12.8m) are disclosed within otheroperating income. As a result, Group operating profit was £26.2m (2004 restated: £13.5m) andprofit before tax increased £15.8m to £20.3m (2004 restated: £4.5m). Summary of performance Although still early in the Group's financial year, the Group's hotelperformance for the first quarter of 2005 reflects steady progress with animproved performance in New York. The following comments are all based onconstant currency exchange rates. In New York, the aggressive approach to rate enhancement we adopted last yearhas continued. Rate has increased to £102.86 (2004: £90.47) at the expense of0.8 percentage points in occupancy. This resulted in a 12.5% increase in RevPARfor the quarter. This has been the major contributor to the return to a hoteloperating profit contribution of £0.7m (2004: loss £0.7m) in the first quarter. Revenue growth in Regional US was driven by occupancy, up 5.6 percentage points,with a fall in rate of £3.32 to £44.30. The resultant RevPAR was up 2.8% to£26.00 (2004: £25.29). Whilst our management focus is showing a positive effect,the full benefits of the changes we have instigated will take some time to comethrough. London occupancy in the first quarter was 7.8 percentage points ahead of 2004.As a result of the occupancy improvement and positioning of Easter, whichcontained lower rated leisure business, the room rate was as a consequence £1.28behind 2004 at £75.79 (2004: £77.07). RevPAR was £4.96 ahead of last year at£62.53 (2004: £57.57). Hotel profit was marginally down on last year due to oneoff rate refunds across all London properties of £0.5m in 2004 and theaforementioned timing of Easter which impacted the last two weeks of March. Within the Rest of Europe, RevPAR growth for Regional UK properties was up 5.9%,based on both increased occupancies and average rates. In France and Germany,RevPAR fell by 5.1% with all four properties experiencing occupancy declines. Our senior management team has been further strengthened by the appointment ofDinky Puri, an experienced international hotelier, as President of MillenniumHotels in Europe. This appointment adds to previous announcements made with respect to the strengthening of our managementteam in Europe and gives the Group the opportunity to enhance performance inthis region for the remainder of the year. Following on from the large Asian occupancy increases in 2004, the rateincreases which started in the final quarter of 2004 continued in 2005. Allhotels in the region increased their rate leading to an overall increase to£49.15 (2004: £46.02), up 6.8%. The Orchard hotel, our largest contributor inSingapore, is still undergoing a full 346 room refurbishment in one of its twotowers. More than 12,000 room nights were lost in the first quarter due to thiswork and this was the primary reason for the small shortfall in occupancy thisquarter. A further 3,000 room nights are expected to be lost in the secondquarter. This will leave 96 club rooms to be refurbished in the final quarter,the majority of which is expected to be finished by the autumn of this year. New Zealand continues to improve. There has been full year RevPAR growth, atconstant rates of exchange, since our acquisition of this portfolio in 1999.This growth was repeated this quarter with RevPAR increasing 3.9% from £34.49 to£35.83. This was rate driven, with a small fall in occupancy. Our non-hotel operations saw a reduction of £2.0m in revenue and £0.5m inoperating profit . The main factor being the Birkenhead shopping centre andmarina which was sold last November. Management Contracts We have signed, in the first quarter, two landmark, 5-star Millennium managementcontracts. The first is to operate a 328 bedroom hotel in Bangkok, Thailand,scheduled to open in December 2007. The second is to operate a luxury hotelresort and residence in Sharm el Sheikh for 350 hotel bedrooms and 92 duplexapartments (scheduled to open in late 2006/early 2007). In the UK, we are pleased to confirm that we have signed a contract with MarineDevelopment Limited to manage a 200 bedroom 4-star luxury Millennium Hotellocated in Ocean Village on the waterfront in Southampton, scheduled to open in2007.Following our announcement last year of a separate team to focus on Copthorne,we have also signed a management contract for a new Copthorne hotel in Reading,the 83 bedroom Kirtons Farm property close to the M4. Following a fullrefurbishment by the owners of the property the hotel will reopen as theCopthorne Hotel Reading on completion. In New Zealand we have commenced managing four new properties as at 1st April2005. The Copthorne Hotel Grand Central, New Plymouth, the Copthorne Hotel &Resorts, Hokianga, the Kingsgate Hotel, Wanganui and the Kingsgate HotelBeachcomber, Nelson. Current trading April trading, particularly in London, was positively impacted by Easter fallingwithin March this year. Group RevPAR for the four weeks to 28 April was up 15.2%and for the 17 weeks to 28 April was up 7.9%. Kwek Leng BengChairman5 May 2005 Consolidated interim income statementfor the three months ended 31 March 2005 (unaudited) Note 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2005 2004 2004 £m £m £m Unaudited Unaudited Unaudited Revenue 129.5 127.0 551.0 Cost of sales (60.5) (59.9) (246.2) -------- -------- -------Gross profit 69.0 67.1 304.8 Administrative expenses (55.6) (54.1) (219.6) -------- -------- -------Operating profit before other operatingincome and expenses 13.4 13.0 85.2 Other operating income 2(a) 12.8 0.5 55.0Other operating expenses 2(b) - - (15.2) -------- -------- -------Group operating profit 26.2 13.5 125.0 Share of profit of joint venturesand associates------------------------ ------ -------- -------- -------- operating profit 1.7 1.3 7.8- interest (0.2) (0.9) (3.2)- taxation (0.2) (0.2) (0.8)------------------------ -------- -------- ------- 1.3 0.2 3.8 Finance expenses (7.8) (9.7) (41.5)Finance income 0.6 0.5 5.8 -------- -------- -------Profit before tax 20.3 4.5 93.1 Income tax expense 4 (8.0) (1.5) (31.4) -------- -------- -------Profit for the period 12.3 3.0 61.7 -------- -------- ------- Attributable to:Equity holders of the parent 9.8 0.4 50.9Minority interest 2.5 2.6 10.8 -------- -------- -------Profit for the period 12.3 3.0 61.7 -------- -------- ------- Basic earnings per share (pence) 5 3.4 0.1 17.9 -------- -------- -------Diluted earnings per share (pence) 5 3.4 0.1 17.8 -------- -------- ------- Consolidated interim statement of recognised income and expensefor the three months ended 31 March 2005 Note 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2005 2004 2004 £m £m £m Unaudited Unaudited Unaudited Foreign exchange translation differences 21.0 (20.9) (46.3)Cash flow hedges: effective portion of changes in 1.6 - -fair valueActuarial gains and losses arising in respect of defined benefit pension schemes (0.8) (0.8) (3.3)Revaluation of property, plant and equipment - Group - - 11.5- Joint ventures - - 17.5Taxation charge arising: - On revaluation of hotel assets - - (1.1)- On defined benefit pension schemes 0.2 0.2 1.0 -------- ------- -------Income and expense recognised directly in equity 22.0 (21.5) (20.7) Profit for the period 12.3 3.0 61.7 -------- ------- -------Total recognised income and expense for the period 6 34.3 (18.5) 41.0 -------- ------- ------- Attributable to:Equity holders of the parent 29.0 (17.0) 29.5Minority interest 5.3 (1.5) 11.5 -------- ------- -------Total recognised income and expense for the period 34.3 (18.5) 41.0 -------- ------- ------- Consolidated interim balance sheetas at 31 March 2005 (unaudited) Note 31 March 31 March 31 2005 2004 December £m £m 2004 Unaudited Unaudited £m UnauditedAssetsProperty, plant and equipment 1,848.0 1,883.4 1,821.9Lease premium prepayment 90.7 92.8 90.5Investment properties 44.6 89.0 43.7Investments in joint ventures and associates 42.9 43.4 40.7Loans due from joint ventures and associates 22.9 31.7 22.3Other financial assets 1.3 2.6 2.8 ------- -------- --------Total non-current assets 2,050.4 2,142.9 2,021.9 ------- -------- -------- Assets held for sale 3 10.1 - 14.5Inventories 3.9 3.7 3.9Development properties 37.2 17.4 32.3Trade and other receivables 63.0 60.3 49.8Cash and cash equivalents 86.8 39.3 90.7Other Financial assets 4.2 7.1 4.1 ------- -------- --------Total current assets 205.2 127.8 195.3 ------- -------- --------Total assets 2,255.6 2,270.7 2,217.2 ------- -------- -------- LiabilitiesInterest-bearing loans, bonds and borrowings 247.9 650.3 248.0Employee benefits 14.0 10.5 13.3Other non-current liabilities 8.9 9.6 9.1Deferred tax liabilities 222.5 202.4 216.5 ------- -------- --------Total non-current liabilities 493.3 872.8 486.9 ------- -------- -------- Interest-bearing loans, bonds and borrowings 320.1 64.6 325.7Trade and other payables 97.8 86.1 99.0Income taxes payable 28.2 15.2 22.6Other financial liabilities - hedging 3.2 - -derivatives ------- -------- --------Total current liabilities 449.3 165.9 447.3 ------- -------- --------Total liabilities 942.6 1,038.7 934.2 ------- -------- --------Net assets 1,313.0 1,232.0 1,283.0 ------- -------- -------- EquityIssued capital 86.0 85.0 85.9Share premium 847.0 846.7 846.1Revaluation reserves 242.0 243.7 242.0Retained earnings 10.3 (59.1) (13.4) ------- -------- --------Total equity attributable to equity holders of the parent 6 1,185.3 1,116.3 1,160.6Minority interest 127.7 115.7 122.4 ------- -------- --------Total equity 6 1,313.0 1,232.0 1,283.0 ------- -------- -------- Consolidated statement of cash flowsfor the three months ended 31 March 2005 (unaudited) 3 months 3 months Year ended ended ended 31 March 31 March 31 2005 2004 December £m £m 2004 Unaudited Unaudited £m Unaudited Cash flows from operating activitiesProfit for the period 12.3 3.0 61.7Adjustments for:Depreciation and amortisation 9.0 9.2 37.1Property, plant and equipment written off - - 0.2Share of profit of joint ventures and associates (1.3) (0.2) (3.8)Impairment losses for property, plant and equipment - - 15.2Profit on sale of property, plant and equipment - (0.5) (3.2)Gain on sale of joint venture - - (51.8)Employee stock options 0.1 0.1 0.4Investment income (0.6) (0.5) (5.8)Interest expense 7.8 9.7 41.5Income tax expense 8.0 1.5 31.4 ------- ------- --------Operating profit before changes in working capital and provisions 35.3 22.3 122.9Increase in stocks, trade and other receivables (13.0) (9.6) (6.9)(Increase)/decrease in development properties (5.0) 0.8 2.4Increase/(decrease) in trade and other payables 1.2 (8.1) 4.0Increase in provisions and employee benefits 0.1 0.1 0.4 ------- ------- --------Cash generated from the operations 18.6 5.5 122.8Net interest paid (6.2) (8.8) (35.5)Income taxes (paid)/refunded (1.1) 1.3 (10.5) ------- ------- --------Net cash from operating activities 11.3 (2.0) 76.8 ------- ------- -------- Cash flows from investing activitiesProceeds from sale of property, plant and equipment 4.7 1.4 45.1Change in financial assets (0.1) (2.7) 0.3Disposal of joint venture - - 90.8Repayment from loans to associates - 0.8 -Acquisition of property, plant and equipment (5.9) (3.0) (25.4) ------- ------- --------Net cash from investing activities (1.3) (3.5) 110.8 ------- ------- -------- Consolidated statement of cash flows (continued)for the three months ended 31 March 2005 (unaudited) Note 3 months 3 months Year ended ended Ended 31 March 31 March 31 2005 2004 December £m £m 2004 Unaudited Unaudited £m Unaudited Cash flows from financing activitiesProceeds from the issue of share capital 1.0 1.0 1.4Purchase of shares from minority interests - - (5.9)Repayment of borrowings (34.9) (35.6) (396.9)Drawdown of borrowings 19.0 38.9 273.1Payment of finance lease liabilities (0.9) (0.8) (1.6)Payment of finance costs (0.1) (0.1) (0.6)Dividends paid to minorities - - (1.6)Equity dividends paid - - (3.0) ------- ------- -------Net cash from financing activities (15.9) 3.4 (135.1) ------- ------- ------- Net (decrease)/increase in cash and cash equivalents (5.9) (2.1) 52.5Cash and cash equivalents at beginning of period 90.7 40.5 40.5Effect of exchange rate fluctuations on 2.0 0.9 (2.3)cash held ------- ------- -------Cash and cash equivalents at period end 86.8 39.3 90.7 ------- ------- ------- Segmental informationfor the three months ending 31 March 2005 (unaudited) New Regional London Rest of Asia Austra- Group York US Europe lasia 2005 2005 2005 2005 2005 2005 2005 £m £m £m £m £m £m £m TURNOVERHotel 16.4 22.0 18.0 22.5 33.8 13.8 126.5Non-hotel - 0.5 - - 0.4 2.1 3.0------------------------ ------ ------ ------ ------ ------ ------ ------Total 16.4 22.5 18.0 22.5 34.2 15.9 129.5------------------------ ------ ------ ------ ------ ------ ------ ------ HOTEL GROSS OPERATING PROFIT 2.8 2.2 8.4 6.1 11.6 6.4 37.5Hotel fixed charges (2.1) (4.2) (3.3) (4.4) (5.2) (2.5) (21.7)------------------------ ------ ------ ------ ------ ------ ------ ------HOTEL OPERATING PROFIT 0.7 (2.0) 5.1 1.7 6.4 3.9 15.8NON-HOTEL OPERATING PROFIT - - - - 0.2 1.1 1.3Central Costs - - - - - - (3.7)------------------------ ------ ------ ------ ------ ------ ------ ------OPERATING PROFIT BEFORE OTHER OPERATING INCOME AND EXPENSES - - - - - - 13.4Other operating income 12.8 - - - - - 12.8Other operating expense - - - - - - -Share of operating profits of - - - - 1.3 - 1.3joint ventures ------------------------ ------ ------ ------ ------ ------ ------ ------OPERATING PROFIT BEFORE FINANCING COSTS - - - - - - 27.5Net financing costs - - - - - - (7.2)------------------------ ------ ------ ------ ------ ------ ------ ------PROFIT BEFORE TAX - - - - - - 20.3------------------------ ------ ------ ------ ------ ------ ------ ------ Segmental informationfor the three months ending 31 March 2004 (unaudited) Reported Currency New Regional London Rest of Asia Austra- Group York US Europe lasia 2004 2004 2004 2004 2004 2004 2004 £m £m £m £m £m £m £m TURNOVERHotel 15.7 21.1 17.2 22.1 32.5 13.3 121.9Non-hotel - 0.6 - - 0.4 4.1 5.1------------------------ ------ ------ ------ ------ ------ ------ ------Total 15.7 21.7 17.2 22.1 32.9 17.4 127.0------------------------ ------ ------ ------ ------ ------ ------ ------ HOTEL GROSS OPERATING PROFIT 2.3 2.3 8.3 6.1 11.4 6.4 36.8Hotel fixed charges (3.0) (4.4) (3.1) (4.4) (5.1) (2.4) (22.4)------------------------ ------ ------ ------ ------ ------ ------ ------HOTEL OPERATING PROFIT (0.7) (2.1) 5.2 1.7 6.3 4.0 14.4NON-HOTEL OPERATING PROFIT - 0.1 - - 0.2 1.6 1.9Central costs - - - - - - (3.3)------------------------ ------ ------ ------ ------ ------ ------ ------OPERATING PROFIT BEFORE OTHER OPERATING INCOME AND EXPENSES - - - - - - 13.0Other operating income - - - - 0.5 - 0.5Other operating expense - - - - - - -Share of operating profits of (1.2) - - - 1.4 - 0.2joint ventures ------------------------ ------ ------ ------ ------ ------ ------ ------OPERATING PROFIT BEFORE FINANCING COSTS - - - - - - 13.7Net financing costs - - - - - - (9.2)------------------------ ------ ------ ------ ------ ------ ------ ------PROFIT BEFORE TAX - - - - - - 4.5------------------------ ------ ------ ------ ------ ------ ------ ------ Key operating statisticsfor the quarter ending 31 March 2005 (unaudited) 3 months 3 months 3 months Year ended 31 ended 31 ended 31 ended 31 March 2005 March March 2004 December 2004 2004 Reported Constant Reported Reported currency currency currency currencyOccupancy (%)New York 77.6 78.4 78.4 84.0Regional US 58.7 53.1 53.1 61.2USA 63.0 59.5 59.5 66.9London 82.5 74.7 74.7 83.5Rest of Europe 68.9 69.0 69.0 72.8Europe 74.9 71.5 71.5 77.6Asia 69.7 70.7 70.7 73.2Australasia 82.6 83.3 83.3 71.5Group 70.2 68.7 68.7 71.8 -------- -------- -------- -------- Average room rate (£)New York 102.86 90.47 94.41 108.77Regional US 44.30 47.62 49.69 52.91USA 60.77 61.74 64.43 70.43London 75.79 77.07 77.07 79.79Rest of Europe 69.33 68.19 67.66 66.67Europe 72.48 72.30 72.01 72.93Asia 49.15 46.02 45.10 46.76Australasia 43.38 41.40 40.33 38.77Group 58.23 56.97 57.29 60.59 -------- -------- -------- -------- RevPAR (£)New York 79.82 70.93 74.02 91.37Regional US 26.00 25.29 26.39 32.38USA 38.29 36.74 38.34 47.12London 62.53 57.57 57.57 66.62Rest of Europe 47.77 47.05 46.69 48.54Europe 54.29 51.69 51.49 56.59Asia 34.26 32.54 31.89 34.23Australasia 35.83 34.49 33.59 27.72Group 40.88 39.14 39.36 43.50 -------- -------- -------- -------- Gross operating profit%New York 17.1 14.6 14.6 28.9Regional US 10.0 10.9 10.9 21.0USA 13.0 12.5 12.5 24.4London 46.7 48.3 48.3 51.2Rest of Europe 27.1 27.6 27.6 30.0Europe 35.8 36.6 36.6 39.5Asia 34.3 35.1 35.1 35.4Australasia 46.4 48.1 48.1 41.6Group 29.6 30.4 30.2 33.6 -------- -------- -------- -------- Notes to the consolidated interim financial statements 1 Basis of preparationMillennium & Copthorne Hotels plc (the "Company") is a company domiciled in theUnited Kingdom. The consolidated quarterly financial statements of the Companyfor the quarter ended 31 March 2005 comprise the Company and its subsidiaries(together referred to as the "Group") and the Group's interest in associates andjointly controlled entities. The consolidated quarterly financial statements have been prepared in accordancewith International Financial Reporting Standards (IFRSs). These are the Group'sfirst IFRS consolidated quarterly financial statements for part of the periodcovered by the first IFRS annual financial statements and IFRS 1 First-timeadoption of International Financial Reporting Standards has been applied. Theconsolidated quarterly financial statements do not include all of theinformation required for full annual financial statements and none of thefinancial information included within the consolidated financial statements hasbeen subject to audit. An explanation of how the transition to IFRSs has affected the reportedfinancial position, financial performance and cash flows of the Group isprovided in Appendix A. This note includes reconciliations of equity and profitor loss for comparative periods reported under UK GAAP to those reported forthose periods under IFRSs. 2. Other operating income/other operating expenses 3 months 3 months Year ended ended 31 ended 31 31 December March March 2004 2005 2004 £m £m £m Restated Unaudited Restated Unaudited Unaudited(a) Other operating income (i) Business interruption insurance proceeds 12.8 - - (ii) Profit on disposal of fixed assets - 0.5 3.2 (iii) Profit on disposal of joint venture - - 51.8 --------- --------- --------- 12.8 0.5 55.0 --------- --------- --------- (b) Other operating expenses Impairment of US hotel properties - - (15.2) --------- --------- --------- 3. Assets held for saleAt 31 December 2004, the following assets are presented as held for sale:• Commercial property assets held in Sydney, comprising part of theformer Millennium Sydney hotel property and the adjoining retail and conferencecentre: this asset is expected to be sold during 2005• Kingsgate Hotel Greenlane, Auckland: this asset was sold in January2005 No impairment loss was required to be recognised in the prior or current periodin respect of these properties. The total carrying amount of the assets held forsale as at 31 March 2005 is £10.1m. 4. Income taxesIncome tax expense for the quarterly periods presented is the expected taxpayable on the taxable income for the period, calculated as the estimatedaverage annual effective income tax rate applied to the pre-tax income of theinterim period The current tax expense for the three months ended 31 March 2005 and 2004 wascalculated based on the estimated average annual effective income tax rate(excluding the estimated tax expense relating to the Millenium Hilton businessinterruption insurance proceeds). The estimate annual effective income tax ratecalculated on this basis is 29.0% (three months ended 31 March 2004: 33.3%).The average annual effective income tax rate has been applied to profitsexcluding the Millenium Hilton business interruption insurance proceeds. The taxcharge relating to the insurance proceeds income has been calculated separatelyand has been recognised in full in the quarter ended 31 March 2005. The currentand deferred taxation arising in respect of these insurance proceeds isestimated at £6.0m. 5. Earnings per share (a) Three months ended 31 MarchThe basic earnings per share of 3.4p (2004: earnings per share of 0.1p) arebased on a profit of £9.8m (2004: profit of £0.4m) and a weighted average numberof shares in issue of 286.4 million (2004: 282.9 million) being the averagenumber of shares in issue in the period. The fully diluted earnings per share of3.4p (2004: earnings per share of 0.1p) are based on a weighted average numberof shares in issue of 287.5 million (2004: 283.5 million) being the averagenumber of shares in issue in the period adjusted for the exercise of dilutiveshare options. (b) Year ended 31 December 2004The basic earnings per share of 17.9p are based on a profit of £50.9m and aweighted average number of shares in issue of 284.5 million being the averagenumber of shares in issue in the period. The fully diluted earnings per share of17.8p are based on a weighted average number of shares in issue of 285.2 millionbeing the average number of shares in issue in the period adjusted for theexercise of dilutive share options. 6. Reconciliation of equity (unaudited) Share Share Reval Translation Hedging Retained Total Minority Total capital premium reserve reserve reserve earnings interest equity £m £m £m £m £m £m £m £m £m Balance at 1 January 2004 84.8 845.8 247.3 - - (45.6) 1,132.3 117.2 1,249.5Total recognised income and expense - - 17.6 (39.4) - 51.3 29.5 11.5 41.0Dividends to shareholders - - - - - (11.7) (11.7) - (11.7)Dividends paid - minority interests - - - - - - - (1.6) (1.6)Issue of shares in lieu of dividends 0.9 (0.9) - - - 8.7 8.7 - 8.7Share options exercised 0.2 1.2 - - - - 1.4 - 1.4Equity settled transactions - - - - - 0.4 0.4 - 0.4Purchase of minority interest - - - - - - - (4.7) (4.7)Transfer of realisedprofit- annual depreciation charge - - (0.5) - - 0.5 - - -- Profit on disposal of fixed assets - - (22.4) - - 22.4 - - - ------ ------- ------ ------- ------ ------ ------ ------ ------Balance at 31 December 2004 85.9 846.1 242.0 (39.4) - 26.0 1,160.6 122.4 1,283.0 Balance at 1 January 2005 85.9 846.1 242.0 (39.4) - 26.0 1,160.6 122.4 1,283.0Adoption of IAS39 - 1 Jan 2005 - - - - (4.0) (1.4) (5.4) - (5.4)Total recognised income & expense - - - 18.2 1.6 9.2 29.0 5.3 34.3Issue of share options 0.1 0.9 - - - - 1.0 - 1.0Equity settled transactions - - - - - 0.1 0.1 - 0.1 ------ ------- ------ ------- ------ ------ ------ ------ ------Balance at 31 March 2005 86.0 847.0 242.0 (21.2) (2.4) 33.9 1,185.3 127.7 1,313.0 ------ ------- ------ ------- ------ ------ ------ ------ ------ Appendix A: Explanation of the transition to IFRS (a) Explanation of transition to IFRSsThese are the Group's first consolidated quarterly financial statements for partof the period covered by the first IFRS annual consolidated financial statementsprepared in accordance with IFRSs. The accounting policies in Appendix B have been applied in preparing theconsolidated quarterly financial statements for the three months ended 31 March2005, the comparative information for the three months ended 31 March 2004, thefinancial statements for the year ended 31 December 2004 and the preparation ofan opening IFRS balance sheet at 1 January 2004 (the Group's date oftransition). The Group has applied the transition adoption rules of IAS 32: FinancialInstruments (Disclosure and presentation) and IAS 39: Financial Instruments(Recognition and measurement). The Group has therefore applied these standards,and the related accounting policies 1(e) and 1(f), only with effect for thecurrent period from 1 January 2005 and not within the comparative financialperiods. A reconciliation showing the impact on the financial statements of theadoption of these standards from 1 January 2005 is set out within this Appendix. In preparing its opening IFRS balance sheet, comparative information for thethree months ended 31 March 2004 and financial statements for the year ended 31December 2004, the Group has adjusted amounts reported previously in financialstatements prepared in accordance with UK GAAP. An explanation of how the transition from previous UK GAAP to IFRSs has affectedthe Group's financial position, financial performance and cash flows is set outin the following tables and the notes that accompany the tables. (b) Summary profit and loss impact (unaudited) IAS Restated 3 months 3 months Year ended ended ended 31 31 March 31 March December 2005 2004 2004 £m £m £m Unaudited Unaudited UnauditedTotal revenue - UK GAAP 128.9 126.6 547.1IAS 18 RevenueLand bank revenue recognition - New Zealand 0.6 0.4 3.9 ---------- --------- --------Restated total revenue - IFRS 129.5 127.0 551.0 ---------- --------- --------Group operating profit - UK GAAP 26.3 14.4 125.7Adjustment to hotel operating profitIAS 17 LeasesLeasehold land amortisation - Europe (0.2) (0.2) (0.6)Leasehold land amortisation - US - - (0.1)Leasehold land amortisation - Asia (0.1) (0.1) (0.5)Adjustment to non-hotel operating profitIAS 18 RevenueLand bank profit - New Zealand 0.4 (0.4) 1.3Adjustment to central costsIAS 19 Employee benefitsDefined benefit pension charge (0.1) (0.1) (0.4)IFRS 2 Share based paymentsShare option fair value amortisation (0.1) (0.1) (0.4)Share of operating profits of joint venturesIAS 17 Leases ---------- --------- --------Restated Group operating profit - IFRS 26.2 13.5 125.0 ---------- --------- --------Profit before tax - UK GAAP 20.6 5.6 94.8Effect of IFRS - within Group operating profit (0.1) (0.9) (0.7)Joint venture land - - (0.2) ---------- --------- --------Reclassification of joint venture tax charge (0.2) (0.2) (0.8) ---------- --------- --------Restated profit before tax - IFRS 20.3 4.5 93.1 ---------- --------- --------Restated profit before tax 7.5 4.0 53.3excluding other operating income/expense ---------- --------- -------- (c) Reconciliation of UK GAAP to IFRS(i) Balance sheet at 1 January 2004 (unaudited) UK Lease Joint Assets New Employee Deferred Dividend IFRS GAAP premium venture held Zealand benefit taxes £m pre land for land payment sale bank sales £m £m £m £m £m £m £m £m Note (d)i (d)ii (d)iii (d)iv (d)v (d)vii (d)viiiAssetsProperty, plant and equipment 2,012.7 (93.5) - - - - - - 1,919.2Lease premium prepayment - 93.5 - - - - - - 93.5Investment properties 90.3 - - - - - - - 90.3Investments inassociatesand joint ventures 58.6 - - - - - (13.0) - 45.6Loans due from joint ventures 32.7 - - - - - - - 32.7Other non-current assets 2.8 - - - - - - - 2.8 ------ ------ ------ ------ ------ ------ ------ ------ ------Total non-current assets 2,197.1 - - - - - (13.0) - 2,184.1 ------ ------ ------ ------ ------ ------ ------ ------ ------Assets held for sale - - - - - - - - -Inventories 4.0 - - - - - - - 4.0Development properties 12.0 - - - 2.6 - - - 14.6Trade and other receivables 59.6 - - - (4.5) - - - 55.1Cash and cash equivalents 40.5 - - - - - - - 40.5Financial assets 4.4 - - - - - - 4.4 ------ ------ ------ ------ ------ ------ ------ ------ ------Total current assets 120.5 - - - (1.9) - - - 118.6 ------ ------ ------ ------ ------ ------ ------ ------ ------Total assets 2,317.6 - - - (1.9) - (13.0) - 2,302.7 ------ ------ ------ ------ ------ ------ ------ ------ ------ LiabilitiesInterest-bearingloans, bondsand borrowings 659.3 - - - - - - - 659.3Employee benefits 4.4 - - - - 5.7 - - 10.1Other non-current liabilities 10.1 - - - - - - - 10.1Deferred tax liabilities 52.2 - - - - - 149.9 - 202.1 ------ ------ ------ ------ ------ ------ ------ ------ ------Total non-current liabilities 726.0 - - - - 5.7 149.9 - 881.6 ------ ------ ------ ------ ------ ------ ------ ------ ------Interest-bearingloans, bondsand borrowings 66.5 - - - - - - - 66.5Trade and other payables 97.5 - - - (0.2) - - (5.8) 91.5Income taxes payable 14.2 - - - (0.6) - - - 13.6 ------ ------ ------ ------ ------ ------ ------ ------ ------Total current liabilities 178.2 - - - (0.8) - - (5.8) 171.6 ------ ------ ------ ------ ------ ------ ------ ------ ------Total liabilities 904.2 - - - (0.8) 5.7 149.9 (5.8) 1,053.2 ------ ------ ------ ------ ------ ------ ------ ------ ------ Net Assets 1,413.4 - - - (1.1) (5.7) (162.9) 5.8 1,249.5 ------ ------ ------ ------ ------ ------ ------ ------ ------ EquityIssued capital 84.8 - - - - - - - 84.8Share premium 845.8 - - - - - - - 845.8Revaluation reserve 296.4 7.5 0.7 - - - (57.3) - 247.3Retained earnings 59.5 (7.5) (0.7) - (0.5) (5.6) (96.6) 5.8 (45.6) ------ ------ ------ ------ ------ ------ ------ ------ ------Total equityattributable toequity holders of the parent 1,286.5 - - - (0.5) (5.6) (153.9) 5.8 1,132.3 ------ ------ ------ ------ ------ ------ ------ ------ ------Minority interest 126.9 - - - (0.6) (0.1) (9.0) - 117.2 ------ ------ ------ ------ ------ ------ ------ ------ ------Total equity 1,413.4 - - - (1.1) (5.7) (162.9) 5.8 1,249.5 ------ ------ ------ ------ ------ ------ ------ ------ ------ (ii) Balance sheet at 31 March 2004 (unaudited) UK Lease Joint Assets New Employee Deferred Dividend IFRS GAAP premium venture held Zealand benefits taxes pre land for land payment sale bank sales £m £m £m £m £m £m £m £m £m Note (d)i (d)ii (d)iii (d)iv (d)v (d)vii (d)viiiAssetsProperty, plant and 1,976.2 (92.8) - - - - - - 1,883.4equipmentLease premium - 92.8 - - - - - - 92.8prepaymentInvestment 89.0 - - - - - - - 89.0propertiesInvestments inassociatesand joint ventures 56.4 - - - - - (13.0) - 43.4Loans due from 31.7 - - - - - - - 31.7joint venturesOther non-current 2.6 - - - - - - - 2.6assets ------ ------ ------ ------ ------ ------ ------ ------ ------Total non-current assets 2,155.9 - - - - - (13.0) - 2,142.9 ------ ------ ------ ------ ------ ------ ------ ------ ------Assets held for - - - - - - - - -saleInventories 3.7 - - - - - - - 3.7Development 15.6 - - - 1.8 - - - 17.4propertiesTrade and other 64.5 - - - (4.2) - - - 60.3receivablesCash and cash 39.3 - - - - - - - 39.3equivalentsFinancial assets 7.1 - - - - - - - 7.1 ------ ------ ------ ------ ------ ------ ------ ------ ------Total current 130.2 - - - (2.4) - - - 127.8assets ------ ------ ------ ------ ------ ------ ------ ------ ------Total assets 2,286.1 - - - (2.4) - (13.0) - 2,270.7 ------ ------ ------ ------ ------ ------ ------ ------ ------ LiabilitiesInterest-bearingloans, bondsand borrowings 650.3 - - - - - - - 650.3Employee benefits 3.9 - - - - 6.6 - - 10.5Other non-current 9.6 - - - - - - - 9.6liabilitiesDeferred tax 51.8 - - - - - 150.6 - 202.4liabilities ------ ------ ------ ------ ------ ------ ------ ------ ------Total non-current 715.6 - - - - 6.6 150.6 - 872.8liabilities ------ ------ ------ ------ ------ ------ ------ ------ ------Interest-bearingloans, bondsand borrowings 64.6 - - - - - - - 64.6Trade and other 92.2 - - - (0.3) - - (5.8) 86.1payablesIncome taxes 15.9 - - - (0.7) - - - 15.2payable ------ ------ ------ ------ ------ ------ ------ ------ ------Total current 172.7 - - - (1.0) - - (5.8) 165.9liabilities ------ ------ ------ ------ ------ ------ ------ ------ ------Total liabilities 888.3 - - - (1.0) 6.6 150.6 (5.8) 1,038.7 ------ ------ ------ ------ ------ ------ ------ ------ ------ Net Assets 1,397.8 - - - (1.4) (6.6) (163.6) 5.8 1,232.0 ------ ------ ------ ------ ------ ------ ------ ------ ------ EquityIssued capital 85.0 - - - - - - - 85.0Share premium 846.7 - - - - - - - 846.7Revaluation reserve 292.5 7.8 0.7 - - - (57.3) - 243.7Retained earnings 48.2 (7.8) (0.7) - (0.6) (6.5) (97.5) 5.8 (59.1) ------ ------ ------ ------ ------ ------ ------ ------ ------Total equityattributable toequity holders of 1,272.4 - - - (0.6) (6.5) (154.8) 5.8 1,116.3the parent ------ ------ ------ ------ ------ ------ ------ ------ ------Minority interest 125.4 - - - (0.8) (0.1) (8.8) - 115.7 ------ ------ ------ ------ ------ ------ ------ ------ ------Total equity 1,397.8 - - - (1.4) (6.6) (163.6) 5.8 1,232.0 ------ ------ ------ ------ ------ ------ ------ ------ ------ (iii) Balance sheet at 31 December 2004 (unaudited) UK Lease Joint Assets New Employee Deferred Dividend IFRS GAAP premium venture held Zealand benefits taxes pre land for land payment sale bank sales £m £m £m £m £m £m £m £m £m Note (d)i (d)ii (d)iii (d)iv (d)v (d)vii (d)viiiAssetsProperty, plant and equipment 1,926.9 (90.5) - (14.5) - - - - 1,821.9Lease premium prepayment - 90.5 - - - - - - 90.5Investment properties 43.7 - - - - - - - 43.7Investments inassociatesand joint ventures 40.7 - - - - - - - 40.7Loans due from joint ventures 22.3 - - - - - - - 22.3Other non-current assets 2.8 - - - - - 2.8 ------ ------ ------ ------ ------ ------ ------ ------ ------Total non-current assets 2,036.4 - - (14.5) - - - - 2,021.9 ------ ------ ------ ------ ------ ------ ------ ------ ------Assets held for sale - - - 14.5 - - - - 14.5Inventories 3.9 - - - - - - - 3.9Development properties 32.1 - - - 0.2 - - - 32.3Trade and other receivables 50.4 - - - (0.6) - - - 49.8Cash and cash equivalents 90.7 - - - - - - - 90.7Financial assets 4.1 - - - - - - - 4.1 ------ ------ ------ ------ ------ ------ ------ ------ ------Total current assets 181.2 - - 14.5 (0.4) - - - 195.3 ------ ------ ------ ------ ------ ------ ------ ------ ------Total assets 2,217.6 - - - (0.4) - - - 2,217.2 ------ ------ ------ ------ ------ ------ ------ ------ ------ LiabilitiesInterest-bearingloans, bondsand borrowings 248.0 - - - - - - - 248.0Employee benefits 3.9 - - - - 9.4 - - 13.3Other non-current liabilities 9.1 - - - - - - - 9.1Deferred taxRelated Shares:
Millennium & Copthorne Hotels