20th Apr 2006 07:01
Millennium & Copthorne Hotels PLC20 April 2006 20 April 2006 MILLENNIUM & COPTHORNE HOTELS PLC TRADING UPDATE AND FIRST QUARTER RESULTS TO 31 MARCH 2006 Millennium & Copthorne Hotels plc today provides a trading update and firstquarter results to 31 March 2006. The Group has a portfolio of 91 hotels locatedin the Americas, Europe, Middle-East, Asia and New Zealand. Financial Highlights • Revenue up 16% to £149.9m (2005: £129.5m)• Hotel operating profit up 15% to £18.1m (2005: £15.8m)• Group operating profit before other operating income up 28% to £17.2m (2005: £13.4m) - Other operating income of £nil (2005: £12.8m)• Profit before tax excluding other operating income up 64% to £11.5m (2005: £7.0m)• Profit before tax £11.5m (2005: £19.8m). This decline reflects the one-off £12.8m insurance receipt in Q1 2005• Adjusted earnings per share up 90% to 1.9p (2005: 1.0p) (1)• Earnings per share 1.9p (2005: 3.4p) Overview of Group Performance • Group RevPAR up by 13.7%• Ongoing focus on operational improvement and commitment to achieving sustained operational excellence in our hotels• Continued success in implementing rate growth• Particularly strong performances in the US and Singapore• Management contract secured for an all executive suite Millennium hotel in Abu Dhabi• Non hotel performance benefited from the initial sale of apartments in Sydney leading to a £1.1m increase in operating profit for our non-hotel operations in Australasia. This underlines the Group's ability to drive shareholder value through the redevelopment of assets for alternative use Commenting today, Mr Kwek Leng Beng, Chairman said: "We have had a successful first quarter with the positive trends of 2005continuing into the current year. This has been achieved by both owning andoperating an attractive portfolio of hotels with good exposure to improvingmarkets, particularly in New York and Singapore. As a result, we remainconfident of making further progress and the outlook for the year as a wholeremains in line with our expectations at the year end." Enquiries: Tony Potter, Group Chief Executive +44 (0) 20 7872 2444Robin Lee, Senior Vice President Finance +44 (0) 20 7872 2444Millennium & Copthorne Hotels plc Ben Foster/Charlie WatenphulFinancial Dynamics +44 (0) 20 7831 3113 There will be a conference call hosted by Tony Potter, Group Chief Executive, at8.30am (UK time) on 20 April 2006. For dial-in details, please contact HelenLutman on 0207 831 3113. (1) Adjusted to exclude other operating income (net of tax) MILLENNIUM & COPTHORNE HOTELS PLCTRADING UPDATE AND FIRST QUARTER RESULTS TO 31 MARCH 2006 OVERVIEW Hotel trading during the first quarter of 2006 saw increases in revenue andRevPAR. Group RevPAR for the quarter was £46.47, an 8.4% year on yearimprovement at constant rates of exchange. Group occupancy for the periodincreased to 72.1% compared to 70.2% in the equivalent period in 2005 andaverage rates increased by 5.5% to £64.45 compared to £61.07 at constant ratesof exchange. Revenues and profits from our non-hotel divisions have increased primarilythrough the sale of the first tranche of apartments in our redevelopment of theremaining tower of our former hotel in Sydney. This tranche represents 12 of the97 apartments in the development. For the three months to 31 March, revenue increased to £149.9m (2005: £129.5m).Group operating profit before other operating income increased to £17.2m (2005:£13.4m). The positive one-off effect of the £12.8m in other operating income in the firstquarter of last year relates to the proceeds received from the September 11 2001insurance claim. Adjusting for this insurance receipt in 2005, profit before taxwas £11.5m (2005 adjusted: £7.0m). SUMMARY OF PERFORMANCE Although it is still early in the Group's financial year, the Group's hotelperformance during the first quarter of 2006 reflects further progress withparticularly encouraging performances in the US and Singapore. All figures arebased on constant currency exchange rates. In New York, the market remains buoyant, and this has assisted us to continue tofocus on our strategy of improving rates. The average rate increased by £16.24to £127.99 (2005: £111.75). This, combined with improved occupancy of 3.2%, ledto an increase in RevPAR to £103.42 which is a £16.70, or 19.3%, improvementover 2005 (2005: £86.72). Regional US, on a like for like basis, saw RevPAR increase 10.0% to £30.80(2005: £28.00). This improvement highlights our focus on driving occupancylevels alongside the continued recovery of the region. On a reported basis,revenue growth in Regional US was driven by occupancy, up 2.6 percentage points,with an increase in rate of £0.49 to £48.62. The resultant RevPAR was up 5.5% to£29.80 (2005: £28.25). In London, the average rate during the first quarter was £75.90, an increase of£0.11 on the prior year (2005: £75.79). Occupancy, however, was 0.5 percentagepoints lower compared with 2005 with RevPAR declining by £0.29 to £62.24. Thisperformance reflects the impact of the 143-room upgrade and refurbishment at theMillennium Gloucester during the first quarter, as disclosed in February 2006.These rooms returned into service in mid-April. RevPAR continued to improve within the Rest of Europe, driven by increasedoccupancy and average rate growth across Regional UK and Continental Europe. Asa result, RevPAR increased by 4.4% to £49.66. Asia continued to perform well. RevPAR increased by £5.49 or 14.7% to £42.94.This was driven by both occupancy, which increased by 3.2 percentage points to72.9%, and by average rate, which increased by £5.17 to £58.90 (2005: £53.73).Singapore delivered the strongest growth with a RevPAR increase of 43.9%. Thisperformance was the result of a buoyant market in February due to a majoraerospace fair as well as the Group's ability to increase average ratesfollowing the completion of the refurbishment programme at the Orchard hotel.The Group's remaining hotels across Asia have continued to experience positiverate growth. RevPAR in New Zealand remained flat. A reduction in occupancy levels of 1.4percentage points was offset by a £0.78 increase in average rates resulting inRevPAR of £35.91 (2005 £35.89). Our non-hotel operations in Australasia saw an increase of £1.1m in operatingprofit. This was primarily due to the sale of the first tranche of apartments inour former hotel in Sydney, Australia, representing 12 of the 97 apartments inthe development. We are pleased to announce that we have signed a new management contract tooperate and manage an all executive suite Millennium hotel in Abu Dhabi. Thisexciting development will comprise 198 furnished apartments with business andsports facilities. It is expected to be complete in two years time. CURRENT TRADING We have had a successful first quarter with the positive trends of 2005continuing into the current year. This has been achieved by both owning andoperating an attractive portfolio of hotels with good exposure to improvingmarkets, particularly in New York and Singapore. As a result, we remainconfident of making further progress and the outlook for the year as a wholeremains in line with our expectations at the year end. Kwek Leng BengChairman20 April 2006 Consolidated income statement (unaudited)For the three months ended 31 March 2006 3 months 3 months Year Notes ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £m Revenue 2 149.9 129.5 595.2 Cost of sales (69.8) (60.5) (259.1) Gross profit 80.1 69.0 336.1 Administrative expenses (62.9) (55.6) (243.0) Other operating income 3 - 12.8 28.3 Group operating profit 17.2 26.2 121.4 Analysed between:Group operating profit before other operating income andimpairment 17.2 13.4 99.6 Other operating income 3 - 12.8 28.3 Impairment - - (6.5) Share of profit of joint ventures and associates 1.2 0.8 3.5 Analysed between: Operating profit 2.5 1.7 8.5 Interest (0.4) (0.2) (1.3) Taxation (0.3) (0.2) (1.4) Minority interests (0.6) (0.5) (2.3) Finance income 1.2 0.6 6.7 Finance expense (8.1) (7.8) (35.8) Profit before tax 11.5 19.8 95.8 Income tax expense 4 (3.4) (8.0) (26.0) Profit for the period 8.1 11.8 69.8 Attributable to:Equity holders of the parent 5.6 9.8 61.1Minority interests 2.5 2.0 8.7 8.1 11.8 69.8 Basic earnings per share (pence) 5 1.9 3.4 21.3Diluted earnings per share (pence) 5 1.9 3.4 21.2 The financial results above all derive from continuingactivities. Consolidated statement of recognised income and expense (unaudited)For the three months ended 31 March 2006 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £mForeign exchange translation differences (2.8) 20.6 80.7Cash flow hedges: amounts recycled to income statement - 1.6 4.0Actuarial gains and losses arising in respect of defined benefit - (0.8) (2.4)pension schemesTaxation credit arising on defined benefit pension plans - 0.2 0.6Income and expense recognised directly in equity (2.8) 21.6 82.9Profit for the period 8.1 11.8 69.8Total recognised income and expense for the period 5.3 33.4 152.7First-time adoption of IAS 39 and IAS 32:Hedging reserve - (4.0) (4.0)Retained earnings - (1.4) (1.4) - (5.4) (5.4)Total 5.3 28.0 147.3 Attributable to:Equity holders of the parent 6.6 28.7 138.3Minority interests (1.3) 4.7 14.4Total recognised income and expense for the period 5.3 33.4 152.7 Statement of changes to total equity (unaudited)For the three months ended 31 March 2006 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £m Total recognised income and expense for the period 5.3 33.4 152.7 First time adoption of IAS 39 - (5.4) (5.4) Dividends paid - - (35.7) Issue of shares in lieu of dividends - - 4.2 Dividends paid to minority interests (1.5) - (2.3) Transfer from share of associates - 0.6 0.6 Share options exercised 0.5 1.0 2.1 Equity settled transactions 0.1 0.1 0.6 Net increase in total equity 4.4 29.7 116.8 Opening total equity 1,377.8 1,261.0 1,261.0 Closing total equity 1,382.2 1,290.7 1,377.8 Consolidated balance sheet (unaudited)As at 31 March 2006 As at As at As at 31 March 31 March 31 December 2006 2005 2005 £m £m £mNon-current assetsProperty, plant and equipment 1,916.9 1,844.4 1,943.4Lease premium prepayment 84.2 80.4 80.8Investment properties 48.3 44.6 48.0Investments in joint ventures and associates 29.9 24.8 29.0Loans due from joint ventures and associates 26.1 22.9 26.3Other financial assets 1.1 1.3 2.2 2,106.5 2,018.4 2,129.7Current assetsAssets held for sale - 10.1 -Inventories 4.5 3.9 4.4Development properties 62.4 37.2 48.5Lease premium prepayment 1.6 1.0 1.0Trade and other receivables 56.9 63.0 53.2Other financial assets 8.7 4.2 5.9Cash and cash equivalents 111.6 86.8 104.6 245.7 206.2 217.6Total assets 2,352.2 2,224.6 2,347.3Non-current liabilitiesInterest-bearing loans, bonds and borrowings (538.0) (247.9) (530.1)Employee benefits (15.8) (14.0) (16.0)Provisions (1.6) (1.9) (1.6)Other non-current liabilities (6.9) (6.6) (6.8)Deferred tax liabilities (240.9) (213.8) (239.9) (803.2) (484.2) (794.4)Current liabilitiesInterest-bearing loans, bonds and borrowings (43.7) (320.1) (54.9)Trade and other payables (104.3) (97.8) (100.3)Provisions (0.4) (0.4) (0.4)Income taxes payable (18.4) (28.2) (19.5)Other financial liabilities - hedging derivatives - (3.2) - (166.8) (449.7) (175.1)Total liabilities (970.0) (933.9) (969.5)Net assets 1,382.2 1,290.7 1,377.8EquityTotal equity attributable to equity holders of the parent 1,257.5 1,170.8 1,250.3Minority interests 124.7 119.9 127.5Total equity 1,382.2 1,290.7 1,377.8 Consolidated statement of cash flows (unaudited)For the three months ended 31 March 2006 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £mCash flows from operating activitiesProfit for the period 8.1 11.8 69.8Adjustments for:Depreciation and amortisation 9.4 9.0 36.4Share of profit of joint ventures and associates (1.2) (0.8) (3.5)Impairment for property, plant and equipment - - 6.5Profit on sale of property, plant and equipment - - (9.6)Revaluation of investment properties - - (5.9)Employee stock options 0.1 0.1 0.7Finance income (1.2) (0.6) (6.7)Finance expense 8.1 7.8 35.8Income tax expense 3.4 8.0 26.0Operating profit before changes in working capital and provisions 26.7 35.3 149.5Increase in inventories, trade and other receivables (3.7) (13.0) (19.3)Increase/(decrease) in development properties 6.0 (5.0) (17.6)Increase in trade and other payables 0.6 1.2 3.9Increase/(decrease) in provisions and employee benefits 0.3 0.1 (0.4)Cash generated from operations 29.9 18.6 116.1Interest paid (6.8) (7.7) (35.4)Interest received 1.7 1.5 6.1Income taxes paid (3.7) (1.1) (13.1)Net cash from operating activities 21.1 11.3 73.7 Cash flows from investing activitiesProceeds from sale of property, plant and equipment, investment properties and assets held for sale 0.2 4.7 34.5Change in financial assets (1.7) (0.1) (1.8)Proceeds from disposal of joint venture 0.7 - 6.5Acquisition of property, plant and equipment (7.1) (5.9) (39.2)Net cash from investing activities (7.9) (1.3) -Balance carried forward 13.2 10.0 73.7 Consolidated statement of cash flows (unaudited) (continued)For the three months ended 31 March 2006 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £mBalance brought forward 13.2 10.0 73.7Cash flows from financing activitiesProceeds from the issue of share capital 0.5 1.0 2.1Repayment of borrowings (23.2) (34.9) (419.0)Drawdown of borrowings 20.9 19.0 387.0Payment of finance lease obligations (1.0) (0.9) (1.8)Loan arrangement fees (0.5) (0.1) (1.4)Dividends paid to minorities (1.5) - (2.3)Dividends paid to equity holders of the parent - - (31.5)Net cash from financing activities (4.8) (15.9) (66.9) Net increase in cash and cash equivalents 8.4 (5.9) 6.8Cash and cash equivalents at beginning of period 103.7 89.8 89.8Effect of exchange rate fluctuations on cash held (1.4) 2.3 7.1Cash and cash equivalents at end of the period 110.7 86.2 103.7 Reconciliation of cash and cash equivalentsCash and cash equivalents shown in the balance sheet 111.6 86.8 104.6Overdraft bank accounts included in borrowings (0.9) (0.6) (0.9)Cash and cash equivalents for cash flow statement purposes 110.7 86.2 103.7 Notes to the first quarter results announcement (unaudited) 1. Basis of preparation and accounting policies The comparative figures for the financial year ended 31 December 2005 have beenextracted from the Group's statutory accounts for that financial year. Thoseaccounts have been reported on by the Company's auditors. The report of theauditors was (i) unqualified, (ii) did not include a reference to any matters towhich the auditors drew attention by way of emphasis without qualifying theirreport, and (iii) did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. 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 2005. 2. Segmental analysis The following segmental analysis is not intended to be a full statutorydisclosure. 3 months ended 31 March 2006 New York Regional London Rest of Asia Australasia Central Total Group US Europe costs £m £m £m £m £m £m £m £mRevenue Hotel 21.4 25.5 18.0 23.4 40.0 13.8 - 142.1 Property 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 - 43.0 -Hotel 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 - 18.1 Property operations operating - 0.1 - - 0.2 2.2 - 2.5profit Profit before central costs 1.0 (1.2) 4.3 2.2 8.0 6.3 - 20.6 Central costs - - - - - - (3.4) (3.4) Group operating profit before other operating income and impairment 1.0 (1.2) 4.3 2.2 8.0 6.3 (3.4) 17.2 3 months ended 31 March 2005 New York Regional London Rest of Asia Australasia Central Total Group US Europe costs £m £m £m £m £m £m £m £mRevenue Hotel 16.4 22.0 18.0 22.5 33.8 13.8 - 126.5 Property operations - 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 - 37.5 Hotel 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 - 15.8 Property operations operating - - - - 0.2 1.1 - 1.3profit Profit before central costs 0.7 (2.0) 5.1 1.7 6.6 5.0 - 17.1 Central costs - - - - - - (3.7) (3.7) Group operating profit before other operating income and impairment 0.7 (2.0) 5.1 1.7 6.6 5.0 (3.7) 13.4 Notes to the first quarter results announcement (unaudited) (continued) 2. Segmental analysis (continued) Year ended 31 December 2005 New York Regional London Rest of Asia Australasia Central Total Group US Europe costs £m £m £m £m £m £m £m £mRevenue Hotel 91.2 112.8 78.7 97.7 151.7 48.6 - 580.7 Property operations - 2.6 - - 1.4 10.5 - 14.5 Total 91.2 115.4 78.7 97.7 153.1 59.1 - 595.2 Hotel gross operating profit 31.2 23.5 38.1 31.1 55.7 20.4 - 200.0 Hotel fixed charges* (14.2) (18.5) (13.5) (17.0) (20.7) (9.4) - (93.3) Hotel operating profit 17.0 5.0 24.6 14.1 35.0 11.0 - 106.7 Property operations operating - 0.6 - - 0.8 5.3 - 6.7profit Profit before central costs 17.0 5.6 24.6 14.1 35.8 16.3 - 113.4 Central costs - - - - - - (13.8) (13.8) Group operating profit before other operating income and impairment 17.0 5.6 24.6 14.1 35.8 16.3 (13.8) 99.6 *'Hotel fixed charges' include depreciation, amortisation of lease prepayments,property rent, taxes and insurance, operating lease rentals and management fees. 3. Other operating income 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005 £m £m £mFair value adjustments of investment - - 5.9propertyBusiness interruption insurance proceeds - 12.8 12.8Net gain on disposal of property, plant and - - 9.6equipment - 12.8 28.3 4. Income tax expense Income tax expense for the three month period 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 theperiod. 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 estimate annual effective rate applied to profit before tax excluding theGroup's share of joint venture profits is 33.0%. For the comparative periods,excluding the Group's share of joint venture profits and also excluding theMillenium Hilton business interruption profit of £12.8m and the tax thereon of£6.0m, the Group's effective tax rate was 32.3% (three months ended 31 March2005) and 25.2% (year ended 31 December 2005). Notes to the first quarter results announcement (unaudited) (continued) 5. Earnings per share 3 months 3 months Year ended 31 ended 31 ended 31 March March December 2006 2005 2005Basic 5.6 9.8 61.1 Profit for period attributable to holders of the parent (£m)Weighted average number of shares outstanding (m) 288.2 286.4 287.0 Basic earnings per share (pence) 1.9 3.4 21.3DilutedWeighted average number of shares outstanding (m) 288.4 287.5 287.9 Diluted earnings per share (pence) 1.9 3.4 21.2Adjusted earnings per shareProfit for the period attributable to holders of the parent (£m) 5.6 9.8 61.1Adjustment to exclude other operating income and impairment (net of tax) - (6.8) (7.3)(£m)Adjusted profit for the period attributable to holders of the parent (£m) 5.6 3.0 53.8Weighted average number of shares outstanding (m) 288.4 287.5 287.9 Adjusted earnings per share (pence) 1.9 1.0 18.7 Key operating statistics (unaudited)For the three months ended 31 March 2006 3 months 3 months 3 months Year ended 31 March 2006 31 March 2005 31 March 2005 31 December 2005 Reported Constant Reported Reported currency Currency currency currencyOccupancy %New York 80.8 77.6 84.5Regional US 61.3 58.7 66.2Total US 65.8 63.0 70.4London 82.0 82.5 84.8Rest of Europe 70.4 68.9 72.8Total Europe 75.5 74.9 78.1Asia 72.9 69.7 73.7Australasia 81.2 82.6 69.6Total Group 72.1 70.2 73.0 Average Room Rate (£)New York 127.99 111.75 102.86 129.42Regional US 48.62 48.13 44.30 49.63Total US 71.11 66.02 60.77 71.53London 75.90 75.79 75.79 80.20Rest of Europe 70.54 69.02 69.33 69.83Total Europe 73.12 72.33 72.48 74.82Asia 58.90 53.73 49.15 52.40Australasia 44.23 43.45 43.38 43.43Total Group 64.45 61.07 58.23 64.01 RevPAR (£)New York 103.42 86.72 79.82 109.36Regional US 29.80 28.25 26.00 32.86Total US 46.79 41.59 38.29 50.36London 62.24 62.53 62.53 68.01Rest of Europe 49.66 47.55 47.77 50.84Total Europe 55.21 54.18 54.29 58.43Asia 42.94 37.45 34.26 38.62Australasia 35.91 35.89 35.83 30.23Total Group 46.47 42.87 40.88 46.73 Gross Operating Profit Margin (%)New York 23.8 17.1 34.2Regional US 12.5 10.0 20.8Total US 17.7 13.0 26.8London 42.8 46.7 48.4Rest of Europe 28.2 27.1 31.8Total Europe 34.5 35.8 39.2Asia 34.5 34.3 36.7Australasia 47.8 46.4 42.0Total Group 30.3 29.6 34.4 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Millennium & Copthorne Hotels