3rd May 2007 07:00
Millennium & Copthorne Hotels PLC02 May 2007 3 May 2007 MILLENNIUM & COPTHORNE HOTELS PLC FIRST QUARTER RESULTS TO 31 MARCH 2007 Millennium & Copthorne Hotels plc today announces first quarter results to 31March 2007 together with a trading update. The Group has a portfolio of 111hotels located in the Americas, Europe, Middle-East, Asia and New Zealand. First quarter highlights • Revenue up 9.0% to £153.1m(1) • Hotel operating profit margin improved by 2.1 percentage points to 14.8% • Hotel operating profit up 25.3% to £21.8m(1) • Headline operating profit up 21.8% to £24.0m (2006: £19.7m) (2) • Headline profit before tax up 60.0% to £18.4m (2006: £11.5m) (2) • Headline earnings per share up 100.0% to 3.8p (2006: 1.9p) (3) • Group RevPAR up by 8.5%(1) • Peter Papas appointed as Group CEO and John Arnett as CEO North America (1) At constant rates of exchange (March 2007 exchange rates)(2) Adjusted to exclude other operating income(3) Adjusted to exclude other operating income (net of tax) Commenting today, Mr Kwek Leng Beng, Chairman said: "Results for the first quarter were in line with expectations, helped by buoyantmarket conditions, particularly in New York, London and Singapore. A key focusis to increase average rates throughout the Group and I am pleased to say thatto a large extent we achieved this for the quarter. The focus will be tocontinue to build on this." Enquiries: Peter Papas Group Chief Executive OfficerRobin Lee Senior Vice President FinanceMillennium & Copthorne Hotels plc +44 (0) 20 7872 2444 Ben Foster/Charlie WatenphulFinancial Dynamics +44 (0) 20 7831 3113 There will be a conference call hosted by Peter Papas, Group Chief ExecutiveOfficer, at 8.30am (UK time) on 3 May. For dial-in details, please contact KatieMillett on +44 (0) 20 7831 3113. MILLENNIUM & COPTHORNE HOTELS PLCFIRST QUARTER RESULTS TO 31 MARCH 2007 FINANCIAL REVIEW First quarter First quarter Full year 2007 2006 2006 £m £m £m Revenue 153.1 149.9 646.3 Headline operating profit 24.0 19.7 124.7Other operating income - subsidiaries(1) 1.4 - 21.6Other operating income - share of associates(1) - - 17.7Administrative expenses - impairment - - (3.5)Other(2) (1.9) (1.3) (6.3) Operating profit 23.5 18.4 154.2 Headline profit before tax(3) 18.4 11.5 94.4Profit before tax 19.8 11.5 130.2 Headline EPS 3.8p 1.9p 21.8pBasic EPS 4.2p 1.9p 34.5p RevPAR growth at constant rates of exchange* 8.5% 8.4% 8.9%Occupancy growth 0.3% 2.7% 1.9%Average room rate growth at constant rates of exchange* 8.2% 5.5% 6.8%Hotel revenue growth at constant rates of exchange* 10.8% 7.0% 7.4%Hotel operating profit growth at constant rates of exchange* 25.3% 11.0% 12.9%Effective tax rate (excluding joint ventures and associates) 29.2% 33.0% 21.1% 1. Other operating income - subsidiaries represents profit on disposal of operating assets, business interruption insurance proceeds and fair value adjustments to investment property. Other operating income - share of associates, represents the Group's 39.1% share of fair value adjustment to properties owned by CDL Hospitality Trusts (CDLHT). 2. Other represents share of interest, tax and minority interests of joint ventures and associates. 3. Headline profit before tax excludes other operating income and impairment. * At constant rates of exchange (March 2007 exchange rates) Trading performance The Group recorded a pre tax profit of £19.8m (2006: £11.5m). Hotel operatingprofit margin improved to 14.8% compared to 12.7% in 2006. Headline profitbefore tax increased by £6.9m to £18.4m (2006: £11.5m). Basic earnings per shareincreased by 121.1% to 4.2p (2006: 1.9p) and headline earnings per shareincreased by 100.0% to 3.8p (2006: 1.9p). Group RevPAR for the first quarter increased by 8.5% to £47.20 at constant ratesof exchange. Group occupancies increased by 0.3% and average room rate's grew by8.2% to £65.29. At constant rates of exchange, total hotel revenues increased by£14.4m and hotel operating profit by £4.4m to £21.8m. Other operating income of the Group for 2007 represents a profit of £0.4m on thedisposal of shares in CDLHT (2006: £nil) and following protracted negotiations,the release of a £1.0m property tax provision in the US set aside on theacquisition of Regal hotels in 1999. Taxation The total Group tax charge excluding the tax relating to joint ventures is £5.0m(2006: £3.4m), giving rise to an effective rate of 29.2% (2006: 33.0%). A tax charge of £0.3m (2006: £0.3m) relating to joint ventures and associates isincluded in the reported profit before tax. Earnings per share Basic earnings per share grew by 2.3p to 4.2p (2006: 1.9p) and headline earningsper share increased by 1.9p to 3.8p (2006: 1.9p). PERFORMANCE BY REGION UNITED STATES New York Measures were put in place at the beginning of this year to grow ARR. As aresult of these actions, average rates increased by 15.2% (£17.39) to £131.43(2006: £114.04). The higher growth in average rates came at a cost of a 2.7percentage points fall in occupancy to 78.1%, with the net result being an 11.4%increase in RevPAR to £102.65 (2006: £92.14). The resultant impact of this wasto drive gross operating profit margins up 5.2 percentage points to 29.0% (2006:23.8%). Regional US RevPAR increased by 5.3% to £27.96 (2006: £26.56). This was driven by a 7.2%increase in average room rates to £46.45 (2006: £43.32) offset by a 1.1percentage points fall in occupancy to 60.2% (2006: 61.3%) EUROPE London London achieved the strongest growth in our geographical regions driven bycontinued high demand. RevPAR increased by 15.9% to £72.14 (2006: £62.24) drivenby a 15.5% increase in average room rates and a 0.3 percentage points increasein occupancy to 82.3% Rest of Europe RevPAR increased by 3.0% to £50.72 (2006 £49.22) driven by a 0.5 percentagepoints increase in occupancy to 70.9% and a 2.3% increase in average room ratesto £71.54 (2006: £69.92). Regional UK RevPar increased by 8.5% to £53.86 (2006: £49.66) driven by a 3.4 percentagepoints increase in occupancy to 76.0% and a 3.6% increase in average room ratesto £70.87 (2006: £68.40). France & Germany The quarter under review has been disappointing with the German propertiescontinuing to struggle. The resultant impact of this being a 5.8% reduction inRevPAR to £45.80 (2006: £48.62) arising from a fall of 4.1 percentage points inoccupancy to 62.9% and a £0.26 growth in average room rates. The MillenniumHotel Paris Charles de Gaulle was the only property in this sub-region to showpositive RevPAR growth. ASIA RevPAR increased by 11.9% to £44.39 (2006: £39.68) driven by occupancy growth of2.4 percentage points to 75.3% and an 8.3% increase in average room rates to£58.95 (2006: £54.43). Singapore The strong growth experienced in 2006 has continued through into 2007 whichbodes well for the rest of the year. The resultant buoyancy resulted in a 26.6%increase in RevPAR to £47.60 (2006: £37.59) driven by a 5.9 percentage pointsincrease in occupancy to 85.1% and a 17.9% growth in average room rates to£55.94 (2006: £47.46). Rest of Asia RevPAR figures in the rest of Asia have been impacted by the refurbishment worksat the Regent Kuala Lumpur. RevPAR increased by 2.7% to £42.00 (2006: £40.90).On a like-for-like basis excluding the Regent Hotel, RevPAR increased by 6.0% to£45.40 (2006: £42.83). CDLHT The Group has a 39.0% interest in CDLHT, a Singapore-listed REIT. CDLHT's shareshave performed well and from a listing price of S$0.83, have risen to S$1.83 asat 1 May 2007 valuing the Group's stake at £165m. NEW ZEALAND RevPAR increased by a modest 0.8% to £34.57 (2006: £34.31). This was achievedthrough a 0.8% increase in average room rates and a flat occupancy. TheKingsgate Oriental Bay has been undergoing refurbishment throughout the firstquarter with the loss of 5,808 rooms. On a like-for-like basis excluding roomsrefurbishment, RevPAR increased by 2.8% to £35.38 (2006: £34.43). On completionof the refurbishment the Oriental Bay will be re-branded as a Copthorne hotel. MIDDLE EAST In order to pursue more effectively the Group's growth strategies in the region,the Middle East operations were restructured into a joint venture with our localpartner at the quarter end. This bodes well for our growth plans for the region.A further management contract was signed during the first quarter which bringsthe total number of properties in this region to eleven of which 5 are inoperation. REVIEW AND OUTLOOK The outlook for 2007 remains positive. The second quarter has begun well withGroup RevPAR up by 7.6% in the 1st 4 weeks of April. The focus will be tomaintain the pace of the first quarter and to continue to grow RevPAR withaverage room rates as the primary driver. The board has made significant stridesover the last quarter to boost the strength and skill set of its managementteam. In this regard the appointment of Peter Papas as Group CEO and John Arnettas CEO North America is a clear indication of the board's intentions to maximizethe opportunities emanating in the marketplace and within the Group. Kwek Leng Beng Chairman3 May 2007 Consolidated income statement (unaudited)for the first quarter ended 31 March 2007 Notes First quarter First quarter Full year 2007 2006 2006 £m £m £m Revenue 2 153.1 149.9 646.3 Cost of sales (67.4) (69.8) (277.4) Gross profit 85.7 80.1 368.9 Administrative expenses (66.3) (62.9) (261.5) Other operating income 3 1.4 - 21.6 20.8 17.2 129.0 Share of profit of joint ventures and associates 2.7 1.2 25.2 Analysed between share of: Operating profit before other income 4.6 2.5 13.8Other operating income - - 17.7Interest, tax and minority interests 4 (1.9) (1.3) (6.3) Operating profit 23.5 18.4 154.2 Analysed between: Headline operating profit 2 24.0 19.7 124.7 Other operating income - Group 3 1.4 - 21.6 Other operating income - Share of joint ventures and associates - - 17.7 Administrative expenses - Impairment - - (3.5)Share of interest, tax and minority interests of joint ventures and associates (1.9) (1.3) (6.3) Finance income 2.2 1.2 5.8 Finance expense (5.9) (8.1) (29.8) Profit before tax 19.8 11.5 130.2 Income tax expense 5 (5.0) (3.4) (22.1) Profit for the period 14.8 8.1 108.1 Attributable to: Equity holders of the parent 12.2 5.6 100.1Minority interests 2.6 2.5 8.0 14.8 8.1 108.1 Basic earnings per share 6 4.2p 1.9p 34.5pDiluted earnings per share 6 4.2p 1.9p 34.4p The financial results above all derive from continuing activities. Consolidated statement of recognised income and expense (unaudited)for the first quarter ended 31 March 2007 First quarter First quarter Full year 2007 2006 2006 £m £m £mForeign exchange translation differences - (2.8) (84.2)Share of associates other reserve movements - - (2.3)Actuarial losses arising in respect of defined benefit (1.0) - (1.4)pension plansTaxation credit arising on defined benefit pension plans 0.2 - 0.4Taxation credit arising in respect of revalued property - - 2.2 Income and expense recognised directly in equity (0.8) (2.8) (85.3)Profit for the period 14.8 8.1 108.1 Total recognised income and expense for the period 14.0 5.3 22.8 Attributable to:Equity holders of the parent 8.1 6.6 25.1Minority interests 5.9 (1.3) (2.3) Total recognised income and expense for the period 14.0 5.3 22.8 Consolidated balance sheet (unaudited)as at 31 March 2007 As at As at As at 31 March 31 March 31 December 2007 2006 2006 Notes £m £m £mNon-current assetsProperty, plant and equipment 1,624.1 1,916.9 1,612.4Lease premium prepayment 74.3 84.2 74.6Investment properties 49.7 48.3 49.6Investments in joint ventures and associates 115.4 29.9 115.5Loans due from joint ventures and associates 26.6 26.1 26.5Other financial assets 2.9 1.1 3.2 1,893.0 2,106.5 1,881.8Current assetsInventories 4.4 4.5 4.6Development properties 67.9 62.4 68.6Lease premium prepayment 1.3 1.6 1.3Trade and other receivables 62.9 56.9 57.8Other financial assets 7.9 8.7 7.2Cash and cash equivalents 158.9 111.6 162.3 303.3 245.7 301.8 Total assets 2,196.3 2,352.2 2,183.6 Non-current liabilitiesInterest-bearing loans, bonds and borrowings (327.6) (538.0) (283.1)Employee benefits (16.3) (15.8) (15.0)Provisions (1.2) (1.6) (1.3)Other non-current liabilities (6.4) (6.9) (6.8)Deferred tax liabilities (225.0) (240.9) (224.6) (576.5) (803.2) (530.8) Current liabilitiesInterest-bearing loans, bonds and borrowings (84.4) (43.7) (139.6)Trade and other payables (109.6) (104.3) (102.6)Provisions (0.4) (0.4) (0.4)Income taxes payable (19.8) (18.4) (18.1) (214.2) (166.8) (260.7) Total liabilities (790.7) (970.0) (791.5) Net assets 1,405.6 1,382.2 1,392.1 EquityTotal equity attributable to equity holders of the 1,278.3 1,257.5 1,269.1parentMinority interests 127.3 124.7 123.0 Total equity 7 1,405.6 1,382.2 1,392.1 Consolidated statement of cash flows (unaudited)for the first quarter ended 31 March 2007 First quarter First quarter Full year 2007 2006 2006 £m £m £mCash flows from operating activitiesProfit for the year 14.8 8.1 108.1Adjustments for:Depreciation and amortisation 7.3 9.4 34.5Share of profit of joint ventures and associates (2.7) (1.2) (25.2)Impairment losses for property, plant and equipment - - 3.5Profit on sale of property, plant and equipment - - (11.2)Profit on sale of shares in associates (0.4) - -Revaluation of investment properties - - (4.9)Employee stock options 0.2 0.1 0.6Finance income (2.2) (1.2) (5.8)Finance expense 5.9 8.1 29.8Income tax expense 5.0 3.4 22.1 Operating profit before changes in working capital and 27.9 26.7 151.5provisionsIncrease in inventories, trade and other receivables (4.3) (3.7) (5.1)Decrease/(increase) in development properties 0.8 6.0 (2.5)Increase in trade and other payables 6.4 0.6 0.9Increase/(decrease) in provisions and employee benefits 1.2 0.3 (0.3) Cash generated from operations 32.0 29.9 144.5Interest paid (4.1) (6.8) (28.9)Interest received 2.1 1.7 7.8Income taxes paid (2.1) (3.7) (16.3) Net cash from operating activities 27.9 21.1 107.1 Cash flows from investing activitiesProceeds from sale of property, plant and equipment, - 0.2 210.8investment properties and assets held for saleInvestment in other financial assets (3.8) (1.7) (3.1)Proceeds from disposal of joint venture - 0.7 4.0Proceeds from the sale of shares in associates 1.1 - -Dividends received from associates 2.7 - -Decrease/(increase) in investment in joint ventures and 0.6 - (81.3)associatesAcquisition of property, plant and equipment (22.4) (7.1) (34.6) Net cash from investing activities (21.8) (7.9) 95.8 Balance carried forward 6.1 13.2 202.9 Consolidated statement of cash flows (unaudited) (continued)for the first quarter ended 31 March 2007 First quarter First quarter Full year 2007 2006 2006 £m £m £m Balance brought forward 6.1 13.2 202.9 Cash flows from financing activitiesProceeds from the issue of share capital 0.9 0.5 2.2Repayment of borrowings (67.1) (23.2) (205.0)Drawdown of borrowings 57.8 20.9 79.7Payment of finance lease obligations (1.0) (1.0) (2.0)Loan arrangement fees (0.1) (0.5) (0.6)Dividends paid to minorities (1.6) (1.5) (2.2)Dividends paid to equity holders of the parent - - (9.1) Net cash from financing activities (11.1) (4.8) (137.0) Net increase in cash and cash equivalents (5.0) 8.4 65.9Cash and cash equivalents at beginning of period 161.5 103.7 103.7Effect of exchange rate fluctuations on cash held 1.5 (1.4) (8.1) Cash and cash equivalents at end of the period 158.0 110.7 161.5 Reconciliation of cash and cash equivalentsCash and cash equivalents shown in the balance sheet 158.9 111.6 162.3Overdraft bank accounts included in borrowings (0.9) (0.9) (0.8) Cash and cash equivalents for cash flow statement purposes 158.0 110.7 161.5 Notes to the first quarter results announcement 1. General information Basis of preparation The first quarter results for Millennium & Copthorne Hotels plc ('the Company')to 31 March 2007 comprise the Company and its subsidiaries (together referred toas 'the Group') and the Group's interests in jointly controlled and associateentities. These primary statements and selected notes comprise the unaudited interimconsolidated financial results of the Group for the quarters ended 31 March,2007 and 2006, together with the audited results for the year ended 31 December2006. These first quarter results do not comprise statutory accounts within themeaning 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 was (i) 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 financial information presented in this first quarter results announcementhas been prepared in accordance with the same accounting policies as the Group'sstatutory accounts for the year ended 31 December 2006. The first quarter financial statements were approved by the Board of Directorson 2 May 2007. Use of adjusted measures A number of measures quoted in this first quarter 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• Impairment• Share of other operating income, impairment, interest, tax and minority interests of joint ventures and associates Notes to the first quarter results announcement 2. Segmental analysis The following segmental analysis is not intended to be a full statutorydisclosure. Geographical segments First quarter 2007 New York Regional London Rest of Asia Australasia Central Total US Europe costs Group £m £m £m £m £m £m £m £mRevenueHotel 21.4 23.5 20.5 23.4 45.3 13.4 - 147.5Property operations - 0.5 - - 0.3 4.8 - 5.6 Total 21.4 24.0 20.5 23.4 45.6 18.2 - 153.1 Hotel gross operating profit 6.2 3.2 9.6 7.1 17.4 6.5 - 50.0Hotel fixed charges* (3.5) (4.3) (4.9) (4.1) (9.0) (2.4) - (28.2) Hotel operating profit 2.7 (1.1) 4.7 3.0 8.4 4.1 - 21.8 Property operations operating - - - - 0.2 2.1 - 2.3profitCentral costs - - - - - - (4.7) (4.7)Share of joint ventures and - - - - 4.6 - - 4.6associates operating profit Headline operating profit 2.7 (1.1) 4.7 3.0 13.2 6.2 (4.7) 24.0 Other operating income - Group - - - - 0.4 - 1.0 1.4Share of interest, tax and - - - - (1.9) - - (1.9)minority interests of jointventures and associates Operating profit 2.7 (1.1) 4.7 3.0 11.7 6.2 (3.7) 23.5 Net financing costs (3.7) Profit before tax 19.8 Notes to the first quarter results announcement 2. Segmental analysis (continued) Geographical segments First quarter 2006 New York Regional London Rest of Asia Australasia Central Total US Europe costs Group £m £m £m £m £m £m £m £mRevenueHotel 21.4 25.5 18.0 23.4 40.0 13.8 - 142.1Property operations - 0.7 - - 0.3 6.8 - 7.8 Total 21.4 26.2 18.0 23.4 40.3 20.6 - 149.9 Hotel gross operating profit 5.1 3.2 7.7 6.6 13.8 6.6 - 43.0Hotel fixed charges* (4.1) (4.5) (3.4) (4.4) (6.0) (2.5) - (24.9) Hotel operating profit 1.0 (1.3) 4.3 2.2 7.8 4.1 - 18.1Property operations operating - 0.1 - - 0.2 2.2 - 2.5profitCentral costs - - - - - - (3.4) (3.4)Share of joint ventures and - - - - 2.5 - - 2.5associates operating profit Headline operating profit 1.0 (1.2) 4.3 2.2 10.5 6.3 (3.4) 19.7Share of interest, tax and minority interests of jointventures and associates - - - - (1.3) - - (1.3) Operating profit 1.0 (1.2) 4.3 2.2 9.2 6.3 (3.4) 18.4Net financing costs (6.9) Profit before tax 11.5 Notes to the first quarter results announcement 2. Segmental analysis (continued) Geographical segments Full year 2006 New York Regional London Rest of Asia Australasia Central Total US Europe costs Group £m £m £m £m £m £m £m £mRevenueHotel 103.1 117.0 84.2 96.8 175.1 44.9 - 621.1Property operations - 2.3 - - 1.4 21.5 - 25.2 Total 103.1 119.3 84.2 96.8 176.5 66.4 646.3 -Hotel 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 profit Headline operating profit 22.6 9.4 26.3 12.3 54.0 18.3 (18.2) 124.7 Other operating income - Group 5.5 3.1 - - 13.0 - - 21.6Other operating income - Share - - - - 17.7 - - 17.7of joint ventures andassociatesAdministrative expenses - (0.6) - (2.9) - - - (3.5) - ImpairmentShare of interest, tax and - - - - (6.3) - - (6.3)minority interests of jointventures and associates Operating 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 first quarter results announcement 2. Segmental analysis (continued) Segmental assets and liabilitiesFirst quarter - 31 March 2007 New York Regional US London Rest of Asia Australasia Total Group Europe Q1 2007 Q1 2007 Q1 2007 Q1 2007 Q1 2007 Q1 2007 Q1 2007 £m £m £m £m £m £m £m Hotel operating assets 287.1 242.5 456.1 218.1 475.4 99.3 1,778.5Hotel operating liabilities (57.2) (58.6) (72.6) (42.9) (127.6) (15.2) (374.1)Investments in joint ventures and - - - - 115.4 - 115.4associatesLoans to joint ventures - - - - 26.6 - 26.6 Total hotel operating net assets 229.9 183.9 383.5 175.2 489.8 84.1 1,546.4 Property operations assets - 43.7 - - 34.1 39.5 117.3Property operations liabilities - (3.9) - - (0.4) (0.7) (5.0) Total property operations net - 39.8 - - 33.7 38.8 112.3assets Net debt (253.1) Net assets 1,405.6 First quarter - 31 March 2006 New York Regional US London Rest of Asia Australasia Total Group Europe Q1 2006 Q1 2006 Q1 2006 Q1 2006 Q1 2006 Q1 2006 Q1 2006 £m £m £m £m £m £m £m Hotel operating assets 318.7 293.7 452.4 225.9 686.9 96.4 2,074.0Hotel operating liabilities (60.2) (81.4) (68.0) (46.7) (116.7) (15.2) (388.2)Investments in joint ventures and - - - - 29.9 - 29.9associatesLoans to joint ventures - - - - 26.1 - 26.1 Total hotel operating net assets 258.5 212.3 384.4 179.2 626.2 81.2 1,741.8 Property operations assets - 38.2 - - 32.8 44.2 115.2Property operations liabilities - (3.4) - - (0.5) (0.8) (4.7) Total property operations net - 34.8 - - 32.3 43.4 110.5assets Net debt (470.1) Net assets 1,382.2 Full year - 31 December 2006 New York Regional US London Rest of Asia Australasia Total Group Europe FY 2006 FY 2006 FY 2006 FY 2006 FY 2006 FY 2006 FY 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 - 26.5 Total hotel operating net assets 232.2 171.2 385.0 180.0 484.0 85.8 1,538.2 Property operations assets - 43.3 - - 33.9 42.0 119.2Property operations liabilities - (3.7) - - (0.4) (0.8) (4.9) Total property operations net - 39.6 - - 33.5 41.2 114.3assets Net debt (260.4)Net assets 1,392.1 Notes to the first quarter results announcement 3. Other operating income First quarter First quarter Full year 2007 2006 2006 £m £m £m Profit on sale and leaseback of 3 Singapore hotels - Orchard - - 10.1Hotel, Copthorne Kings Hotel and M HotelChanges in fair value upon revaluation of investment - - 4.9propertyBusiness interruption insurance proceeds - - 5.5Other 1.4 - 1.1 1.4 - 21.6 4. Share of joint ventures and associates interest, tax and minority interests First quarter First quarter Full year 2007 2006 2006 £m £m £m Interest (0.8) (0.4) (1.4)Tax (0.3) (0.3) (1.8)Minority interests (0.8) (0.6) (3.1) (1.9) (1.3) (6.3) 5. Income tax expense The £5.0m total income tax charge for the first quarter ended 31 March 2007comprises a UK tax charge of £0.6m and an overseas tax charge of £4.4m (firstquarter ended 31 March 2006 a UK charge of £0.6m and overseas tax charge of£2.8m). Income tax expense for the period presented is the expected tax payable on thetaxable income for the period, calculated at the estimated average annualeffective income tax rate applied to the pre-tax income of the period. Taxation for the period comprises both the Group tax charge and the jointventure taxation charge which is included separately within the Group's share ofjoint venture profits (but disclosed on the face of the income statement). The estimated annual effective rate applied to profit before tax excluding theGroup's share of joint venture profits is 29.2%. For the comparative periods,the Group's effective tax rate was 33.0% (first quarter ended 31 March 2006) and21.1% (full year ended 31 December 2006). The lower rate for the full year ended31 December 2006 is primarily due to a tax credit arising on the disposal ofthree Singapore hotels. Notes to the first quarter results announcement 6. Earnings per share First quarter First quarter Full year 2007 2006 2006 £m £m £mBasic Profit for period attributable to holders of the parent (£m) 12.2 5.6 100.1 Weighted average number of shares outstanding (m) 291.9 288.2 289.9Basic earnings per share (pence) 4.2 1.9 34.5 DilutedWeighted average number of shares outstanding (m) 292.7 288.4 290.6Diluted earnings per share (pence) 4.2 1.9 34.4 Headline earnings per shareProfit for the period attributable to holders of the parent (£m) 12.2 5.6 100.1Adjustment to exclude: - Other operating income (net of tax and minorities) (1.0) - (22.4)- Impairment (net of tax) - - 3.3- Share of associates other operating income (nil tax) - - (17.7) Adjusted profit for the period attributable to holders of 11.2 5.6 63.3the parent (£m) Weighted average number of shares outstanding (m) 291.9 288.2 289.9Headline earnings per share (pence) 3.8 1.9 21.8 7. Reconciliation of movements in total equity First quarter First quarter Full year 2007 2006 2006 £m £m £m Total recognised income and expense for the period 14.0 5.3 22.8 Dividends paid/payable to equity holders of the parent - - (22.3) Issue of shares in lieu of dividends - - 13.2 Dividends paid to minority interests (1.6) (1.5) (2.2) Share options exercised 0.9 0.5 2.2 Equity settled transactions 0.2 0.1 0.6 Net increase in total equity 13.5 4.4 14.3 Opening total equity 1,392.1 1,377.8 1,377.8 Closing total equity 1,405.6 1,382.2 1,392.1 APPENDIX 1: Key operating statisticsfor the first quarter ended 31 March 2007 First quarter First quarter First quarter Full year 2007 2006 2006 2006 Reported Constant Reported Reported currency currency currency currencyOccupancy %New York 78.1 80.8 86.5Regional US 60.2 61.3 67.3 Total US 64.4 65.8 71.7 London 82.3 82.0 87.0Rest of Europe 70.9 70.4 73.3 Total Europe 76.0 75.5 79.4 Asia 75.3 72.9 76.1Australasia 81.2 81.2 69.6 Total Group 72.3 72.1 74.4 Average Room Rate (£)New York 131.43 114.04 127.99 143.34Regional US 46.45 43.32 48.62 51.33 Total US 70.28 63.36 71.11 76.98 London 87.66 75.90 75.90 85.63Rest of Europe 71.54 69.92 70.54 71.05 Total Europe 79.29 72.80 73.12 78.14 Asia 58.95 54.43 58.90 59.07Australasia 42.57 42.25 44.23 39.72 Total Group 65.29 60.33 64.45 67.92 RevPAR (£)New York 102.65 92.14 103.42 123.99Regional US 27.96 26.56 29.80 34.55 Total US 45.26 41.69 46.79 55.19 London 72.14 62.24 62.24 74.50Rest of Europe 50.72 49.22 49.66 52.08 Total Europe 60.26 54.96 55.21 62.04 Asia 44.39 39.68 42.94 44.95Australasia 34.57 34.31 35.91 27.65 Total Group 47.20 43.50 46.47 50.53 Gross Operating Profit Margin (%)New York 29.0 23.8 37.7Regional US 13.6 12.5 23.7 Total US 20.9 17.7 30.3 London 46.8 42.8 47.6Rest of Europe 30.3 28.2 29.9 Total Europe 38.0 34.5 38.1 Asia 38.4 34.5 39.6Australasia 48.5 47.8 41.9 Total Group 33.9 30.3 36.0 For comparability the 31 March 2006 Average Room Rate and RevPAR have beentranslated at 31 March 2007 exchange rates. 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Millennium & Copthorne Hotels