7th Nov 2007 07:01
Millennium & Copthorne Hotels PLC07 November 2007 7 November 2007 MILLENNIUM & COPTHORNE HOTELS PLC THIRD QUARTER AND NINE MONTHS RESULTS TO 30 SEPTEMBER 2007 Millennium & Copthorne Hotels plc today announces its third quarter and ninemonths results to 30 September 2007. The Group has a portfolio of 111 hotelslocated in the Americas, Europe, Middle-East, Asia and New Zealand. Third quarter highlights • Revenue up 6.0% to £160.6m(1) • Hotel operating profit up 27.5% to £34.8m(1) • Headline operating profit up 17.1% to £34.3m (2006: £29.3m) (2) • Headline profit before tax up 24.1% to £28.8m (2006: £23.2m) (2) • Headline earnings per share up 48.8% to 6.4p (2006: 4.3p) (3) • Group RevPAR up by 9.6%(1) Nine months highlights • Revenue up 7.9% to £483.0m(1) • Hotel operating profit up 24.6% to £93.7m(1) • Headline operating profit up 20.5% to £98.0m (2006: £81.3m) (2) • Headline profit before tax up 39.5% to £82.3m (2006: £59.0m) (2) • Headline earnings per share up 57.3% to 19.5p (2006: 12.4p) (3) • Group RevPAR up by 9.1%(1) (1) At constant rates of exchange (September 2007 exchange rates) (2) Adjusted to exclude other operating income (3) Adjusted to exclude other operating income (net of tax) and effect of change in UK tax legislation to remove claw back on hotel tax allowances Commenting today, Mr Kwek Leng Beng, Chairman said: "Our strong performance in the first half has continued into the third quarterthrough our strategy of actively maximizing yield management. Revenue growth haslargely been driven by our hotels in London, New York and Asia and managementhas successfully generated strong profit contribution across the portfolio. Thefourth quarter has begun well with RevPAR up by 10.5% in the first 4 weeks ofOctober. The Group's balance sheet and cash flows remain strong, placing us in aposition to take advantage of any opportunities that arise. Drawing on his long association with the Group since the IPO in 1996 and hisexperience as Executive Director since 2001, the Interim CEO Wong Hong Ren isconducting a comprehensive review of the Group's management structures andsystems. The search for the CEO will be exhaustive so that the right candidatewhen appointed will have the opportunity to implement the recommendationsarising from this review. In this way the new CEO will be well placed to movethe Company forward to the next stage quickly and effectively. In the meantimethe Company remains on course to meet its projected targets for the nextquarter." Enquiries: Wong Hong Ren, Interim Group Chief ExecutiveRobin Lee, Senior Vice President FinanceAlan Chapman, Group Financial Reporting ManagerMillennium & Copthorne Hotels plc +44 (0) 20 7872 2444 Ben FosterFinancial Dynamics +44 (0) 20 7831 3113 MILLENNIUM & COPTHORNE HOTELS PLCTHIRD QUARTER AND NINE MONTHS RESULTS TO 30 SEPTEMBER 2007 FINANCIAL AND OPERATING HIGHLIGHTS Third quarter ended Nine months ended 30 September 30 September 2007 2006 2007 2006Financial information £m £m £m £m Revenue 160.6 156.1 483.0 468.8 Operating profit 41.0 38.4 103.4 88.0 Profit before tax 37.8 33.3 93.0 69.4 Profit for the period 28.9 27.0 87.3 54.9 Basic earnings per share (pence) 9.4p 8.9p 27.4p 17.1p Performance reporting Hotel operating profit 34.8 28.0 93.7 78.2 Headline operating profit 34.3 29.3 98.0 81.3 Headline profit before tax 28.8 23.2 82.3 59.0 Headline earnings per share (pence) 6.4p 4.3p 19.5p 12.4p Net debt 247.6 296.4 Gearing (%) 18.6% 24.0% Operational RevPAR growth at constant rates of exchange* 9.6% 9.8% 9.1% 8.3% Occupancy movement (0.6%) 2.1% (0.3%) 1.8% Average room rate growth at constant rates of exchange* 10.4% 7.5% 9.4% 6.4% Hotel revenue growth at constant rates of exchange* 7.5% 7.4% 9.4% 4.6% Hotel operating profit growth at constant rates of 27.5% 11.9% 24.6% 10.3%exchange* * At constant rates of exchange (September 2007 exchange rates) Third quarter overview For the third quarter to 30 September 2007, the Group recorded a pre tax profitof £37.8m (2006: £33.3m). Hotel operating profit increased by £6.8m to £34.8m(2006: £28.0m). Headline profit before tax increased by £5.6m to £28.8m (2006:£23.2m). Basic earnings per share increased by 5.6% to 9.4p (2006: 8.9p).Headline earnings per share increased by 48.8% to 6.4p (2006: 4.3p). SUMMARY OF NINE MONTHS PERFORMANCE For the nine months to 30 September 2007, the Group recorded a pre tax profit of£93.0m (2006: £69.4m). Hotel operating profit increased by £15.5m to £93.7m(2006: £78.2m). Headline profit before tax increased by £23.3m to £82.3m (2006:£59.0m) Group RevPAR increased by 9.1% to £51.88 at constant rates of exchange. Averageroom rates grew by 9.4% to £69.83 while occupancy fell by 0.2 percentage pointto 74.3%. At constant rates of exchange, total hotel revenues increased by£40.4m and hotel operating profit by £18.8m to £93.7m. CDL Hospitality Trust's (CDLHT), the REIT in which the Group holds a 38.53%stake, has continued its success and contributed £4.6m to the Group's share ofoperating profit before other income of joint ventures and associates. Inaddition, the Group recorded £7.3m for the period being its share of therevaluation surplus on CDLHT's investment properties. Other operating income of the Group of £3.4m (2006: £10.4m) comprises (i) a£2.0m dilution gain arising on the investment in CDLHT following the Group'ssubscription to a rights issues of shares at discount together andnon-participation in a S$32.8m (£10.6m) private placement issue, the effect ofwhich marginally diluted the Group's interest in CDLHT which at 30 September2007 was 38.53%, (ii) a profit of £0.4m on the disposal of stapled securities inCDLHT and, (iii) following protracted negotiations, the release of a £1.0mproperty tax provision in the US set aside on the acquisition of Regal hotels in1999. On 27 September 2007, the Group announced that its subsidiary company Millennium& Copthorne Hotels New Zealand Limited ('MCHNZ') had entered into a strategiccooperation agreement to invest in a joint venture with a Chinese propertydeveloper Guangdong Idea valley Group Co., Ltd. MCHNZ to contributeapproximately US$32.5m (£16.1m). Taxation Excluding the tax relating to joint ventures and associates, the Group hasrecorded a tax expense of £5.7m (2006: £14.5m). This reduced tax expense isprimarily attributable to the deferred tax impact of a change in UK taxlegislation in respect of the removal of claw back on hotel tax allowances,resulting in an estimated attributed £12.8m tax credit, and also includes a£4.8m credit in respect of the impact of reduced tax rates applied to broughtforward net deferred tax liabilities. Excluding the impact of the tax credit adjustments arising from changes in taxlegislation and tax rates, the underlying income tax expense for the period iscalculated by applying an estimated average annual effective tax rate, in thiscase of 30.0%, to profit before tax for the period excluding the Group's shareof joint ventures and associates profits. A tax charge of £0.9m (2006: £0.8m) relating to joint ventures and associates isincluded in the reported profit before tax. Earnings per share Growth in profit before tax combined with a reduced tax expense of £5.7mresulted in basic earnings per share increasing by 60.2% to 27.4p (2006: 17.1p).Headline earnings per share increased by 57.3% to 19.5p (2006: 12.4p). Thereduced tax expense is primarily attributable to a change in UK tax legislationin respect of the removal of claw back on hotel tax allowances. PERFORMANCE BY REGION UNITED STATES New York The emphasis on driving rate remains in New York and has been very successful atthe Millennium UN Plaza whose business performance has improved greatly. As aresult, the improvements seen in the first half have continued. Average ratesincreased by 14.1% to £141.59 (2006: £124.08). The net result was a 13.6%increase in RevPAR to £121.63 (2006: £107.08). This was the highest of our sixmain geographic segments for the year to date. The resultant impact of this wasto drive gross operating profit margins up 3.6 percentage points to 37.4% (2006:33.8%). Regional US RevPAR increased by 7.0% to £34.64 (2006: £32.38). This was driven by a 7.5%increase in average room rates to £50.57 (2006: £47.06) offset by a 0.3percentage points fall in occupancy to 68.5% (2006: 68.8%). The top fiveMillennium properties had RevPAR growth of between 12% and 18%, with three ofthese properties managing to increase occupancy in addition to rate. EUROPE London RevPAR increased by 10.6% to £80.77 (2006: £73.01) through a combination ofstrong demand and good management. Average rates improved by 13.6% to £94.69(2006: £83.34 with an overall 2.3 percentage point fall in occupancy to 85.3%.The Millennium Gloucester, on the back of a 142 room refurbishment in the firstfour months of 2006, continues to produce the highest growth amongst our Londonproperties. Rest of Europe RevPAR increased by 1.8% to £52.84 (2006: £51.91) driven by rate growth of 3.5%from £70.53 to £72.99 and occupancy levels which fell from 73.6% to 72.4%. Regional UK RevPAR increased 5.0% to £56.32 driven by a 0.7 percentage point increase inoccupancy to 78.2% (2006: 77.5%) and a 4.0% increase in rate to £72.02 (2006:£69.22). The strongest growth remains in Glasgow & Aberdeen whilst our twoGatwick properties also grew RevPAR by more than 10%. France & Germany Our presence in these two countries remains limited to four hotels. RevPAR fellby 3.7% to £47.28. This year started with a weak set of results in our twoGerman properties which has continued throughout the period. As a result, wehave sold 10.8% fewer rooms which, when combined with a small fall in rate, hasresulted in a RevPAR decrease of 12.0%. A new general manager at Hannover hotelhas been appointed recently and we expect the business performance to improve inthe medium term. Our two French properties showed a 4.2% increase in RevPAR. ASIA RevPAR increased by 12.5% to £47.15 (2006: £41.90) driven by an 11.1% increasein average room rates to £61.80 (2006: £55.65) and 1.0 percentage pointoccupancy growth to 76.3%. Singapore The Grand Copthorne Waterfront is now included in the statistics for this regionand strong growth continues in this buoyant market. On a like-for-like basis,RevPAR increased 29.0% to £51.80 (2006: £40.14) driven by a 4.8 percentagepoints increase in occupancy to 86.8% and a 21.9% growth in average room ratesto £59.68 (2006: £48.95). Rest of Asia RevPAR figures in the rest of Asia have been impacted by the refurbishment ofall functional areas and related closure of rooms at the Millennium KualaLumpur. RevPAR increased by 1.7% to £43.65 (2006: £42.93). On a like-for-likebasis excluding the Millennium Kuala Lumpur, RevPAR increased by 6.8% to £47.84(2006: £44.81). There was positive growth in the remaining property portfoliowithin Asia, with credible performances in Seoul, Jakarta, Manila and Penang.The Millennium Seoul Hilton now benefits from the addition of a state runCasino. AUSTRALASIA In New Zealand, where we operate under the Millennium, Copthorne and Kingsgatebrands, RevPAR increased by 2.5%. Occupancy was flat at 68.2% (2006: 68.1%) andaverage rate increased by 2.4% to £41.66 (2006: £40.69). The Oriental Bay hasbeen undergoing a major refurbishment and has now been re-branded as a Copthorneand operations at the Kingsgate Greenlane ceased when its lease expired in April2007. In Sydney, seven Zenith apartments have been sold during the first two quartersfor a profit of £0.7m. REVIEW AND OUTLOOK Our strong performance in the first half has continued into the third quarterthrough our strategy of actively maximizing yield management. Revenue growth haslargely been driven by our hotels in London, New York and Asia and managementhas successfully generated strong profit contribution across the portfolio. Thefourth quarter has begun well with RevPAR up by 10.5% in the first 4 weeks ofOctober. The Group's balance sheet and cash flows remain strong, placing us in aposition to take advantage of any opportunities that arise. Drawing on his long association with the Group since the IPO in 1996 and hisexperience as Executive Director since 2001, the Interim CEO Wong Hong Ren isconducting a comprehensive review of the Group's management structures andsystems. The search for the CEO will be exhaustive so that the right candidatewhen appointed will have the opportunity to implement the recommendationsarising from this review. In this way the new CEO will be well placed to movethe Company forward to the next stage quickly and effectively. In the meantimethe Company remains on course to meet its projected targets for the nextquarter. Kwek Leng BengChairman6 November 2007 Consolidated income statement (unaudited)for the nine months ended 30 September 2007 Nine months Nine months Year Notes ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Revenue 2 483.0 468.8 646.3 Cost of sales (201.1) (204.7) (277.4) Gross profit 281.9 264.1 368.9 Administrative expenses (197.2) (191.2) (261.5) Other operating income 3 3.4 10.4 21.6 88.1 83.3 129.0 Share of profit of joint ventures and associates 15.3 4.7 25.2 Analysed between share of: Operating profit before other income 13.3 8.4 13.8 Other operating income 7.3 - 17.7 Interest, tax and minority interests 4 (5.3) (3.7) (6.3) Operating profit 103.4 88.0 154.2 Analysed between: Headline operating profit 2 98.0 81.3 124.7 Other operating income - Group 3 3.4 10.4 21.6Other operating income - Share of joint ventures and associates 7.3 - 17.7 Impairment - - (3.5)Share of interest, tax and minority interests of joint ventures and associates (5.3) (3.7) (6.3)Finance income 7.0 4.0 5.8Finance expense (17.4) (22.6) (29.8)Profit before tax 93.0 69.4 130.2Income tax expense 5 (5.7) (14.5) (22.1)Profit for the period 87.3 54.9 108.1 Attributable to:Equity holders of the parent 80.5 49.6 100.1Minority interests 6.8 5.3 8.0 87.3 54.9 108.1Basic earnings per share (pence) 6 27.4 17.1 34.5Diluted earnings per share (pence) 6 27.3 17.1 34.4 The financial results above all derive from continuing activities. Consolidated statement of recognised income and expense (unaudited)for the nine months ended 30 September 2007 Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Foreign exchange translation differences (8.3) (63.8) (84.2) Share of associates other reserve movements - - (2.3)Actuarial losses arising in respect of defined benefit pension schemes (2.3) - (1.4)Taxation credit arising on defined benefit pension schemes 0.7 - 0.4 Taxation credit arising in respect of previously revalued property 2.4 - 2.2Income and expense recognised directly in equity (7.5) (63.8) (85.3) Profit for the period 87.3 54.9 108.1 Total recognised income and expense for the period 79.8 (8.9) 22.8 Attributable to:Equity holders of the parent 68.9 (3.5) 25.1 Minority interests 10.9 (5.4) (2.3) Total recognised income and expense for the period 79.8 (8.9) 22.8 Consolidated balance sheet (unaudited)as at 30 September 2007 As at As at As at Notes 30 September 30 September 31 December 2007 2006 2006 £m £m £mNon-current assetsProperty, plant and equipment 1,609.0 1,649.1 1,612.4Lease premium prepayment 73.6 74.5 74.6Investment properties 48.7 45.0 49.6Investments in joint ventures and associates 181.0 97.5 115.5Loans due from joint ventures and associates 5.1 25.6 26.5Other financial assets 4.7 2.5 3.2 1,922.1 1,894.2 1,881.8Current assetsInventories 4.4 4.3 4.6Development properties 72.5 63.8 68.6Lease premium prepayment 1.2 1.5 1.3Trade and other receivables 66.4 66.2 57.8Other financial assets 6.3 5.5 7.2Cash and cash equivalents 169.7 134.6 162.3 320.5 275.9 301.8Total assets 2,242.6 2,170.1 2,183.6Non-current liabilitiesInterest-bearing loans, bonds and borrowings (266.8) (368.6) (283.1)Employee benefits (16.4) (16.0) (15.0)Provisions (1.1) (1.4) (1.3)Other non-current liabilities (6.4) (6.9) (6.8)Deferred tax liabilities (209.3) (228.3) (224.6) (500.0) (621.2) (530.8)Current liabilitiesInterest-bearing loans, bonds and borrowings (150.5) (62.4) (139.6)Trade and other payables (110.0) (115.9) (102.6)Provisions (0.4) (0.4) (0.4)Income taxes payable (20.4) (14.5) (18.1) (281.3) (193.2) (260.7)Total liabilities (781.3) (814.4) (791.5)Net assets 1,461.3 1,355.7 1,392.1 EquityTotal equity attributable to equity holders of the parent 1,329.6 1,235.8 1,269.1Minority interests 131.7 119.9 123.0Total equity 8 1,461.3 1,355.7 1,392.1 Consolidated statement of cash flows (unaudited)for the nine months ended 30 September 2007 Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £mCash flows from operating activitiesProfit for the period 87.3 54.9 108.1 Adjustments for:Depreciation and amortisation 21.4 26.6 34.5Share of profit of joint ventures and associates (15.3) (4.7) (25.2)Impairment losses for property, plant and equipment - - 3.5Profit on sale of property, plant and equipment - (10.4) (11.2)Release of property tax provision (1.0) - -Gain on dilution of investment in associates (2.0) - -Profit on sale of stapled securities in associates (0.4) - -Revaluation of investment properties - - (4.9)Employee stock options 0.6 0.5 0.6Finance income (7.0) (4.0) (5.8)Finance expense 17.4 22.6 29.8Income tax expense 5.7 14.5 22.1Operating profit before changes in working capital and provisions 106.7 100.0 151.5 Increase in inventories, trade and other receivables (9.8) (21.9) (5.1)(Increase)/decrease in development properties (5.3) 3.5 (2.5)Increase in trade and other payables 7.0 13.5 0.9Increase/(decrease) in provisions and employee benefits 1.2 (0.2) (0.3)Cash generated from operations 99.8 94.9 144.5 Interest paid (15.5) (24.6) (28.9) Interest received 6.3 9.2 7.8 Income taxes paid (11.4) (13.9) (16.3) Net cash from operating activities 79.2 65.6 107.1 Cash flows from investing activitiesProceeds from sale of property, plant and equipment and investment properties 0.1 210.8 210.8Investment in financial assets (2.7) (1.4) (3.1)Proceeds from disposal of joint venture - 4.1 4.0Proceeds from the sale of stapled securities in associates 1.3 - -Dividends received from associates 6.6 - -Increase in investment in joint ventures and associates (34.9) (78.0) (81.3)Acquisition of property, plant and equipment (36.9) (29.8) (34.6)Net cash flow (used in)/from investing activities (66.5) 105.7 95.8Balance carried forward 12.7 171.3 202.9 Consolidated statement of cash flows (unaudited) (continued)for the nine months ended 30 September 2007 Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Balance brought forward 12.7 171.3 202.9 Cash flows from financing activitiesProceeds from the issue of share capital 1.4 1.8 2.2Repayment of borrowings (169.5) (203.9) (205.0)Drawdown of borrowings 172.8 80.7 79.7Payment of finance lease obligations (2.1) (2.0) (2.0)Loan arrangement fees (0.1) (0.6) (0.6)Dividends paid to minorities (2.2) (2.2) (2.2)Dividends paid to equity holders of the parent (7.6) (7.3) (9.1)Net cash used in financing activities (7.3) (133.5) (137.0) Net increase in cash and cash equivalents 5.4 37.8 65.9Cash and cash equivalents at beginning of period 161.5 103.7 103.7Effect of exchange rate fluctuations on cash held 2.4 (7.5) (8.1)Cash and cash equivalents at end of the period 169.3 134.0 161.5 Reconciliation of cash and cash equivalentsCash and cash equivalents shown in the balance sheet 169.7 134.6 162.3Overdraft bank accounts included in borrowings (0.4) (0.6) (0.8)Cash and cash equivalents for cash flow statement purposes 169.3 134.0 161.5 Notes to the nine months results announcement (unaudited) 1. General information Basis of preparation The third quarter and nine months results for Millennium & Copthorne Hotels plc('the Company') to 30 September 2007 comprise the Company and its subsidiaries(together referred to as 'the Group') and the Group's interests in jointlycontrolled and associate entities. These results comprise primary statements and selected notes and represent theunaudited consolidated financial results of the Group for the nine months ended30 September 2007 and 2006 together with the audited results for the year ended31 December 2006. These nine month results do not comprise statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The comparative figures for the financial year ended 31 December 2006 have beenextracted from the Group's statutory accounts for that financial year but do notconstitute those accounts. Those accounts have been reported on by the Company'sauditors and (i) were unqualified, (ii) did not include a reference to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The consolidated financial statements ofthe Group for the financial year ended 31 December 2006 are available from theCompany's website www.millenniumhotels.com. The nine months results has been prepared applying the accounting policies andpresentation that were applied in the preparation of the Group's publishedconsolidated financial statements for the year ended 31 December 2006. The nine months results were approved by the Board of Directors on 6 November2007. Use of adjusted measures A number of measures quoted in this nine months results announcement are 'non-GAAP' measures. The directors believe these measures provide a moremeaningful analysis of trading results of the Group and are consistent with theway financial performance is measured by management. These include hoteloperating profit, headline operating profit, headline profit before tax,headline earnings per share, net debt and free cash flow. These measures areused for internal performance analysis and are useful in connection withdiscussion with the investment analyst community. They are not defined byAdopted IFRSs and therefore may not be directly comparable with other companies'adjusted performance measures. It is not intended to be a substitute for, orsuperior to Adopted IFRSs performance measures. The adjustments made to reported profit before tax are: • Fair value adjustments of investment property • Business interruption insurance proceeds • Gains/losses on disposal of property and investments • Release of property tax provision set aside on the acquisition of Regal hotels in 1999 • Impairment • Share of other operating income, impairment, interest, tax and minority interests of joint ventures and associates Notes to the nine months results announcement (unaudited) 2. Segmental analysis The following segmental analysis is not intended to be a full statutorydisclosure. Nine months ended 30 September 2007 New York Regional London Rest of Asia Australasia Central Total US Europe costs GroupRevenue £m £m £m £m £m £m £m £mHotel 74.5 84.6 66.6 70.4 141.2 32.6 - 469.9Property operations - 1.3 - - 1.1 10.7 - 13.1Total 74.5 85.9 66.6 70.4 142.3 43.3 - 483.0Hotel gross operating profit 27.9 21.1 33.2 21.4 58.8 13.3 - 175.7Hotel fixed charges* (11.4) (13.2) (11.1) (11.9) (28.0) (6.4) - (82.0)Hotel operating profit 16.5 7.9 22.1 9.5 30.8 6.9 - 93.7Property operations operating - (0.1) - - 0.5 4.4 - 4.8profitCentral costs - - - - - - (13.8) (13.8)Share of joint ventures and - - - - 13.3 - - 13.3associates operating profitHeadline operating profit 16.5 7.8 22.1 9.5 44.6 11.3 (13.8) 98.0Other operating income - Group - - - - 2.4 - 1.0 3.4Other operating income - Share - - - - 7.3 - - 7.3of joint ventures and associatesShare of interest, tax and - - - - (5.3) - - (5.3)minority interests of jointventures and associatesOperating profit 16.5 7.8 22.1 9.5 49.0 11.3 (12.8) 103.4Net financing costs (10.4)Profit before tax 93.0 Nine months ended 30 September 2006 New York Regional London Rest of Asia Australasia Central Total US Europe costs GroupRevenue £m £m £m £m £m £m £m £mHotel 73.0 88.9 60.8 70.8 124.9 32.7 - 451.1Property operations - 1.9 - - 1.0 14.8 - 17.7Total 73.0 90.8 60.8 70.8 125.9 47.5 - 468.8Hotel gross operating profit 24.7 21.4 28.2 21.0 46.6 13.4 - 155.3Hotel fixed charges* (14.8) (14.0) (9.8) (11.9) (19.8) (6.8) - (77.1)Hotel operating profit 9.9 7.4 18.4 9.1 26.8 6.6 - 78.2Property operations operating - 0.3 - - 0.6 4.9 - 5.8profitCentral costs - - - - - - (11.1) (11.1)Share of joint ventures and - - - - 8.4 - - 8.4associates operating profitHeadline operating profit 9.9 7.7 18.4 9.1 35.8 11.5 (11.1) 81.3Other operating income - Group - - - - 10.4 - - 10.4Share of interest, tax and - - - - (3.7) - - (3.7)minority interests of jointventures and associatesOperating profit 9.9 7.7 18.4 9.1 42.5 11.5 (11.1) 88.0Net financing costs (18.6)Profit before tax 69.4 Notes to the nine months results announcement (unaudited) 2. Segmental analysis (continued) Year ended 31 December 2006 New York Regional London Rest of Asia Australasia Central Total US Europe costs GroupRevenue £m £m £m £m £m £m £m £mHotel 103.1 117.0 84.2 96.8 175.1 44.9 - 621.1Property operations - 2.3 - - 1.4 21.5 - 25.2Total 103.1 119.3 84.2 96.8 176.5 66.4 - 646.3Hotel gross operating profit 38.9 27.7 40.1 28.9 69.4 18.8 - 223.8Hotel fixed charges* (16.3) (18.5) (13.8) (16.6) (29.8) (8.5) - (103.5)Hotel operating profit 22.6 9.2 26.3 12.3 39.6 10.3 - 120.3Property operations operating - 0.2 - - 0.6 8.0 - 8.8profitCentral costs - - - - - - (18.2) (18.2)Share of joint ventures and - - - - 13.8 - - 13.8associates operating profitHeadline operating profit 22.6 9.4 26.3 12.3 54.0 18.3 (18.2) 124.7Other operating income - Group 5.5 3.1 - - 13.0 - - 21.6Other operating income - Share of - - - - 17.7 - - 17.7associates and joint venturesImpairment - (0.6) - (2.9) - - - (3.5)Share of interest, tax and - - - - (6.3) - - (6.3)minority interests of jointventures and associatesOperating profit 28.1 11.9 26.3 9.4 78.4 18.3 (18.2) 154.2Net financing costs (24.0)Profit before tax 130.2 * 'Hotel fixed charges' include depreciation, amortisation of lease prepayments,property rent, taxes and insurance, operating lease rentals and management fees Notes to the nine months results announcement (unaudited) 2. Segmental analysis (continued) Segmental assets and liabilitiesNine months - 30 September 2007 New York Regional US London Rest of Asia Australasia Total Group Europe 2007 2007 2007 2007 2007 2007 2007 £m £m £m £m £m £m £mHotel operating assets 275.8 238.0 450.3 217.2 479.8 101.7 1,762.8Hotel operating liabilities (66.1) (62.0) (53.0) (37.1) (130.2) (14.0) (362.4)Investments in joint ventures and - - - - 181.0 - 181.0associatesLoans to joint ventures - - - - 5.1 - 5.1Total hotel operating net assets 209.7 176.0 397.3 180.1 535.7 87.7 1,586.5Property operating assets - 43.1 - - 33.8 47.2 124.1Property operating liabilities - (0.1) - - (0.5) (1.1) (1.7)Total property operating net - 43.0 - - 33.3 46.1 122.4assetsNet debt (247.6)Net assets 1,461.3 Nine months - 30 September 2006 New York Regional US London Rest of Asia Australasia Total Group Europe 2006 2006 2006 2006 2006 2006 2006 £m £m £m £m £m £m £mHotel operating assets 297.3 268.3 453.3 229.2 462.5 90.6 1,801.2Hotel operating liabilities (72.6) (56.1) (65.9) (44.3) (129.3) (12.2) (380.4)Investments in joint ventures and - - - - 97.5 - 97.5associatesLoans to joint ventures - - - - 25.6 - 25.6Total hotel operating net assets 224.7 212.2 387.4 184.9 456.3 78.4 1,543.9Property operating assets - 39.8 - - 27.6 43.8 111.2Property operating liabilities - (0.3) - - (0.5) (2.2) (3.0)Total property operating net - 39.5 - - 27.1 41.6 108.2assetsNet debt (296.4)Net assets 1,355.7 Year - 31 December 2006 New York Regional US London Rest of Asia Australasia Total Group Europe 2006 2006 2006 2006 2006 2006 2006 £m £m £m £m £m £m £mHotel operating assets 292.3 235.9 452.0 216.1 468.8 97.4 1,762.5Hotel operating liabilities (60.1) (64.7) (67.0) (36.1) (126.8) (11.6) (366.3)Investments in joint ventures and - - - - 115.5 - 115.5associatesLoans to joint ventures - - - - 26.5 - 26.5Total hotel operating net assets 232.2 171.2 385.0 180.0 484.0 85.8 1,538.2Property operating assets - 43.3 - - 33.9 42.0 119.2Property operating liabilities - (3.7) - - (0.4) (0.8) (4.9)Total property operating net - 39.6 - - 33.5 41.2 114.3assetsNet debt (260.4)Net assets 1,392.1 Notes to the nine months results announcement (unaudited) 3. Other operating income Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Release of property tax provision set aside on acquisition of Regal hotels in 1999 1.0 - -Profit on disposal of stapled securities in CDLHT 0.4 - - Gain on dilution of investment in CDLHT (see note below) 2.0 - - Profit on sale and leaseback of three Singapore hotels - OrchardHotel, Copthorne Kings Hotel and M Hotel - 10.1 10.1Changes in fair value upon revaluation of investment property - - 4.9Business interruption insurance proceeds - - 5.5Other - 0.3 1.1 3.4 10.4 21.6 Note The £2.0m gain on dilution arose from the Group subscribing to a rights issue atdiscount and non-participation in a private placement issue. 4. Share of joint ventures and associates interest, tax and minority interests Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Interest (2.3) (0.9) (1.4) Tax (0.9) (0.8) (1.8) Minority interests (2.1) (2.0) (3.1) (5.3) (3.7) (6.3) 5. Income tax expense/(credit) Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m UK (14.4) 2.5 0.7Overseas 20.1 12.0 21.4Total income tax expense in income statement 5.7 14.5 22.1 Notes to the nine months results announcement (unaudited) 5. Income tax expense (continued) Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £mCurrent taxCorporation tax charge for the period 13.7 12.7 18.2Adjustment in respect of prior years 0.3 (4.1) (6.6)Total current tax expense 14.0 8.6 11.6Deferred taxOrigination and reversal of timing differences 7.1 (6.6) 0.3(Reduction)/increase in tax rate (4.8) 0.2 0.2Benefits of tax losses recognised 2.5 10.1 9.0(Over)/under provision in respect of prior years (0.3) 2.2 1.0Change in UK tax legislation in respect of the removal of claw back on hotel tax allowances (12.8) - -Total deferred tax (credit)/expense (8.3) 5.9 10.5Total income tax expense in the income statement 5.7 14.5 22.1 Income tax reconciliation Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Profit before tax in income statement 93.0 69.4 130.2Less share of profit of joint ventures and associates (15.3) (4.7) (25.2) 77.7 64.7 105.0Income tax on ordinary activities at the standard rate of UK tax of 30% 23.3 19.4 31.5Effects of:Permanent differences (2.2) (4.1) (5.5)Non-utilisation of tax losses arising in the year 0.6 0.5 0.5Utilisation of brought forward tax losses - - (0.6)Higher/(lower) rates on overseas earnings 0.1 (0.8) (1.2)Overseas tax suffered 1.5 1.2 1.6Effect of change in tax rates on opening deferred taxes (4.8) 0.2 0.3Effect of change in UK tax legislation in respect of the removal of claw back on hotel tax allowances (12.8) - -Other adjustments to tax charge in respect of prior years - (1.9) (5.6)Unrecognised deferred tax assets - - 1.1Total income tax expense in the income statement 5.7 14.5 22.1 Excluding the tax relating to joint ventures and associates, the Group hasrecorded a tax expense of £5.7m (nine months ended 30 September 2006 a £14.5mtax expense and for the year ended 31 December 2006 a £22.1m tax expense). Thisreduced tax expense is primarily attributable to the deferred tax impact of achange in UK tax legislation in respect of the removal of claw back on hotel taxallowances, resulting in an estimated attributed £12.8m tax credit, and alsoincludes a £4.8m credit in respect of the impact of reduced tax rates applied tobrought forward net deferred tax liabilities. Excluding the impact of the tax credit adjustments arising from changes in taxlegislation and tax rates, the underlying income tax expense for the period iscalculated by applying an estimated average annual effective tax rate, in thiscase of 30.0%, to profit before tax for the period excluding the Group's shareof joint ventures and associates profits. A tax charge of £0.9m (2006: £0.8m)relating to joint ventures and associates is included in the reported profitbefore tax. Notes to the nine months results announcement (unaudited) 6. Earnings per share Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Basic earnings per share Profit for period attributable to holders of the parent (£m) 80.5 49.6 100.1Weighted average number of shares outstanding (m) 293.8 289.3 289.9Basic earnings per share (pence) 27.4 17.1 34.5 Diluted earnings per shareWeighted average number of shares outstanding (m) 294.5 290.2 290.6Diluted earnings per share (pence) 27.3 17.1 34.4 Headline earnings per shareProfit for the period attributable to holders of the parent (£m) 80.5 49.6 100.1Adjustment to exclude: - Other operating income (net of tax) (£m) (3.0) (13.6) (22.4) - Impairment (net of tax) (£m) - - 3.3 - Share of associates other operating income (nil tax) (£m) (7.3) - (17.7) - Change in UK tax legislation on hotel tax allowances (£m) (12.8) - -Adjusted profit for the period attributable to holders of the 57.4 36.0 63.3parent (£m)Weighted average number of shares outstanding (m) 293.8 289.3 289.9 Adjusted earnings per share (pence) 19.5 12.4 21.8 7. Dividends Dividends have been recognised within equity as follows: Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Final ordinary dividend for 2006 of 6.42p (for 2005: 5.62p) 18.7 16.2 16.2 Interim ordinary dividend for 2007 of 2.08p (for 2006: 2.08p) 6.2 6.0 6.1 24.9 22.2 22.3 Special ordinary dividend for 2006 of 4.00p (for 2005: Nil) 11.7 - - 36.6 22.2 22.3 Notes to the nine months results announcement (unaudited) 8. Statement of changes to total equity Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Total recognised income and expense for the period 79.8 (8.9) 22.8 Dividends paid/payable to equity holders of the parent (36.6) (22.2) (22.3) Issue of shares in lieu of dividends 26.1 8.9 13.2 Dividends paid to minority interests (2.2) (2.2) (2.2) Share options exercised 1.4 1.8 2.2 Equity settled transactions 0.7 0.5 0.6 Net increase/(decrease) in total equity 69.2 (22.1) 14.3 Opening total equity 1,392.1 1,377.8 1,377.8 Closing total equity 1,461.3 1,355.7 1,392.1 Notes to the nine months results announcement (unaudited) 9. Non-GAAP measures Headline operating profit Headline operating profit is the Group's measure of the underlying profit beforeinterest and tax. It includes the operating results of joint ventures andassociates but excludes other operating income (of Group and share ofassociates) which is normally a one-off item. Nine months Nine months Year ended ended ended 30 September 30 September 31 December 2007 2006 2006 £m £m £m Profit before tax 93.0 69.4 130.2Adjusted to exclude: Fair value adjustments of investment property - - (4.9) Business interruption insurance proceeds - - (5.5) Net gain on disposal of property - sale and leaseback of 3 Singapore hotels - (10.1) (10.1) - other - (0.3) (1.1) Gain on dilution of investment in CDLHT (2.0) - - Profit on disposal of stapled securities in CDLHT (0.4) - - Release of property tax provision set aside on acquisition of Regal hotels in 1999 (1.0) - - Share of associate (CDLHT) fair value adjustments to investment property (7.3) - (17.7) Impairment - - 3.5 Headline profit before tax 82.3 59.0 94.4Add back:Share of results of joint ventures and associates - interest 2.3 0.9 1.4 - taxation 0.9 0.8 1.8 - minority interests 2.1 2.0 3.1 Net financing costs 10.4 18.6 24.0 Headline operating profit 98.0 81.3 124.7 As at As at As at 30 September 30 September 31 DecemberNet Debt 2007 2006 2006 £m £m £m Cash and cash equivalents (as per cash flow statement) 169.3 134.0 161.5 Bank overdrafts (included as part of borrowings) 0.4 0.6 0.8 Cash and cash equivalents (as per the consolidated balance sheet) 169.7 134.6 162.3 Interest-bearing loans, bonds and borrowings - Non-current (266.8) (368.6) (283.1) - Current (150.5) (62.4) (139.6) Net debt (247.6) (296.4) (260.4)Gearing (%) 18.6% 24.0% 20.5% APPENDIX 1: Key operating statistics (unaudited)for the nine months ended 30 September 2007 Nine months ended Nine months ended Nine months ended 30 September 2007 30 September 2006 30 September 2006 Reported Constant Reported currency currency currencyOccupancy %New York 85.9 86.3Regional US 68.5 68.8Total US 72.5 72.9London 85.3 87.6Rest of Europe 72.4 73.6Total Europe 78.1 79.8Asia 76.3 75.3Australasia 68.2 68.1Total Group 74.3 74.5 Average Room Rate (£)New York 141.59 124.08 136.12Regional US 50.57 47.06 51.63Total US 75.50 68.13 74.75London 94.69 83.34 83.34Rest of Europe 72.99 70.53 70.81Total Europe 83.50 76.76 76.91Asia 61.80 55.65 59.33Australasia 41.66 40.69 39.57Total Group 69.83 63.83 67.05 RevPAR (£)New York 121.63 107.08 117.47Regional US 34.64 32.38 35.52Total US 54.74 49.67 54.49London 80.77 73.01 73.01Rest of Europe 52.84 51.91 52.12Total Europe 65.21 61.25 61.37Asia 47.15 41.90 44.68Australasia 28.41 27.71 26.95Total Group 51.88 47.55 49.95 Gross Operating Profit Margin (%)New York 37.4 33.8Regional US 24.9 24.1Total US 30.8 28.5London 49.8 46.4Rest of Europe 30.4 29.7Total Europe 39.9 37.4Asia 41.6 37.3Australasia 40.8 41.0Total Group 37.4 34.4 For comparability the 30 September 2006 Average Room Rate and RevPAR have beentranslated at 30 September 2007 exchange rates. APPENDIX 2: Consolidated income statement (unaudited)for the third quarter ended 30 September 2007 Third quarter Third quarter ended ended 30 September 30 September 2007 2006 £m £m Revenue 160.6 156.1 Cost of sales (65.4) (64.7) Gross profit 95.2 91.4 Administrative expenses (65.2) (65.7) Other operating income 2.0 10.1 32.0 35.8 Share of profit of joint ventures and associates 9.0 2.6 Analysed between share of: Operating profit before other income 4.3 3.6Other operating income 7.0 -Interest, tax and minority interests (2.3) (1.0) Operating profit 41.0 38.4 Analysed between: Headline operating profit 34.3 29.3 Other operating income - Group 2.0 10.1 Other operating income - Share of joint ventures and associates 7.0 -Share of interest, tax and minority interests of joint ventures and associates (2.3) (1.0)Finance income 2.5 1.5Finance expense (5.7) (6.6)Profit before tax 37.8 33.3Income tax expense (8.9) (6.3)Profit for the period 28.9 27.0Attributable to:Equity holders of the parent 27.8 25.9Minority interests 1.1 1.1 28.9 27.0Basic earnings per share (pence) 9.4 8.9Diluted earnings per share (pence) 9.4 8.9 The financial results above all derive from continuing activities. APPENDIX 3: Segmental analysis for the third quarter ended 30 September 2007 Third quarter ended 30 September 2007 New York Regional London Rest of Asia Australasia Central Total US Europe costs GroupRevenue £m £m £m £m £m £m £m £mHotel 25.5 30.7 22.7 23.0 47.0 9.9 - 158.8Property operations - 0.4 - - 0.4 1.0 - 1.8Total 25.5 31.1 22.7 23.0 47.4 10.9 - 160.6Hotel gross operating profit 9.7 9.1 11.6 7.0 19.7 3.8 - 60.9Hotel fixed charges* (3.9) (4.4) (2.7) (3.5) (9.4) (2.2) - (26.1)Hotel operating profit 5.8 4.7 8.9 3.5 10.3 1.6 - 34.8Property operations operating profit - (0.1) - - 0.2 0.2 - 0.3Central costs - - - - - - (5.1) (5.1)Share of joint ventures and associates operating profit - - - - 4.3 - - 4.3Headline operating profit 5.8 4.6 8.9 3.5 14.8 1.8 (5.1) 34.3Other operating income - Group - - - - 2.0 - - 2.0Other operating income - Share of joint ventures and associates - - - - 7.0 - - 7.0Share of interest, tax and minority interests of jointventures and associates - - - - (2.3) - - (2.3)Operating profit 5.8 4.6 8.9 3.5 21.5 1.8 (5.1) 41.0Net financing costs (3.2)Profit before tax 37.8 Third quarter ended 30 September 2006 New Regional London Rest of Asia Australasia Central Total York US Europe costs GroupRevenue £m £m £m £m £m £m £m £mHotel 24.0 31.6 21.6 22.9 43.1 9.6 - 152.8Property operations - 0.6 - - 0.3 2.4 3.3Total 24.0 32.2 21.6 22.9 43.4 12.0 - 156.1Hotel gross operating profit 8.6 9.2 10.6 7.2 16.6 3.5 - 55.7Hotel fixed charges* (5.5) (4.7) (3.1) (4.1) (8.1) (2.2) - (27.7)Hotel operating profit 3.1 4.5 7.5 3.1 8.5 1.3 - 28.0Property operations operating profit - - - - 0.3 0.9 - 1.2Central costs - - - - - - (3.5) (3.5)Share of joint ventures and associates operating profit - - - - 3.6 - - 3.6Headline operating profit 3.1 4.5 7.5 3.1 12.4 2.2 (3.5) 29.3Other operating income - Group - - - - 10.1 - - 10.1Share of interest, tax and minority interests of jointventures and associates - - - - (1.0) - - (1.0)Operating profit 3.1 4.5 7.5 3.1 21.5 2.2 (3.5) 38.4Net financing costs (5.1)Profit before tax 33.3 APPENDIX 4: Non-GAAP measures for the third quarter ended 30 September 2007 Headline operating profit Headline operating profit is the Group's measure of the underlying profit beforeinterest and tax. It includes the operating results of joint ventures andassociates but excludes other operating income (of Group and share ofassociates) which is normally a one-off item. Third quarter Third quarter ended ended 30 September 30 September 2007 2006 £m £m Profit before tax 37.8 33.3 Adjusted to exclude: Other operating income - Group (2.0) (10.1) Share of associates (CDLHT) fair value adjustments toinvestment property (7.0) - Headline profit before tax 28.8 23.2 Add back: Share of results of associates and joint ventures - interest 1.4 0.1 - taxation 0.3 0.2 - minority interests 0.6 0.7 Net financing costs 3.2 5.1 Headline operating profit 34.3 29.3 APPENDIX 5: Key operating statistics (unaudited)for the third quarter ended 30 September 2007 Third quarter ended Third quarter ended Third quarter ended 30 September 2007 30 September 2006 30 September 2006 Reported Constant Reported currency currency currencyOccupancy %New York 90.4 87.1Regional US 74.5 74.9Total US 78.1 77.7London 87.7 92.6Rest of Europe 73.5 74.8Total Europe 79.8 82.7Asia 77.4 78.8Australasia 63.9 62.1Total Group 76.6 77.1 Average Room Rate (£)New York 143.64 127.32 136.68Regional US 52.03 48.51 52.20Total US 76.52 68.93 74.10London 97.60 87.57 87.57Rest of Europe 72.36 69.04 68.77Total Europe 84.67 78.24 78.10Asia 61.45 54.36 56.73Australasia 41.37 39.24 36.64Total Group 70.92 64.27 66.48 RevPAR (£)New York 129.85 110.90 119.05Regional US 38.76 36.33 39.10Total US 59.76 53.56 57.58London 85.60 81.09 81.09Rest of Europe 53.20 51.64 51.44Total Europe 67.57 64.70 64.59Asia 47.56 42.84 44.70Australasia 26.44 24.37 22.75Total Group 54.32 49.55 51.26 Gross Operating Profit Margin (%)New York 38.0 35.8Regional US 29.6 29.1Total US 33.5 32.0London 51.1 49.1Rest of Europe 30.4 31.4Total Europe 40.7 40.0Asia 41.9 38.5Australasia 38.4 36.5Total Group 38.4 36.5 For comparability the 30 September 2006 Average Room Rate and RevPAR have beentranslated at 30 September 2007 exchange rates. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Millennium & Copthorne Hotels