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RNS

Half-year Report

Released 07:00 03-Aug-2018

RNS Number : 7067W
Millennium & Copthorne Hotels PLC
03 August 2018
 

                                                                                                                       

                               

For Immediate Release                                                                                                           3 August 2018

 

 

MILLENNIUM & COPTHORNE HOTELS plc

INTERIM MANAGEMENT REPORT

Half year and second quarter results to 30 June 2018

LEI: 2138003EQ104LZ1JNH19

 

First half 2018:

 

 

H1

2018

Reported Currency

Constant Currency

H1

2017

Change

 

H1

2017

Change

RevPAR

£75.29

£78.69

£(3.40)

(4.3)%

£74.95

£0.34

       0.5%

Revenue - total

£477m

£485m

£(8)m

(1.6)%

£463m

£14m

3.0%

Revenue - hotel

£404m

£418m

£(14)m

(3.3)%

£399m

£5m

1.3%

Profit before tax (Note 1)

£65m

£63m

£2m

3.2%

£61m

£4m

6.6%

Basic earnings per share

8.5p

12.8p

(4.3)p

(33.6)%

 

 

 

Interim dividend

2.08p

2.08p

-

-

 

 

 

 

 

Second quarter 2018:

 

 

Q2

2018

Reported Currency

Constant Currency

Q2

2017

Change

 

Q2

2017

Change

RevPAR

£82.01

£86.64

£(4.63)

(5.3)%

£83.46

£(1.45)

      (1.7)%

Revenue - total

£260m

£262m

£(2)m

(0.8)%

£253m

£7m

2.8%

Revenue - hotel

£217m

£227m

£(10)m

(4.4)%

£219m

£(2)m

(0.9)%

Profit before tax (Note 1)

£39m

£50m

£(11)m

(22.0)%

£48m

£(9)m

(18.8)%

 

Note 1: Pre-tax profit for H1 2018 includes gain of £3m from the disposal of two Australian hotels that were owned by CDL Hospitality Trusts ("CDLHT"). During the same period last year, pre-tax profit included reversal of loan impairment of £12m and impairment of assets of £9m, with a net credit of £3m recognised in the income statement.

 

 

·      In reported currency, Group RevPAR decreased by 4.3% in H1 2018 to £75.29 (H1 2017: £78.69). In constant currency, it grew by 0.5%. Like-for-like* Group RevPAR for the six months of 2018 increased by 2.0%.

 

·      RevPAR for the Group's London hotels in H1 2018 was down by 15.1% compared to H1 2017 mainly because of refurbishment work at our Mayfair hotel.  Having been partially closed since November 2017, this property closed completely at the beginning of July 2018 to facilitate on-going refurbishment work to reposition the property as the Group's flagship property within a new luxury competitive set. 

 

·      Reported hotel revenue for H1 2018 fell by 3.3% to £404m (H1 2017: £418m). In constant currency, hotel revenue increased by 1.3%. Stronger sterling during the period had the effect of reducing our revenue from overseas hotels by £19m. Higher contributions from Millennium Hilton New York One UN Plaza (re-branded in August 2017) and M Social Auckland (opened in October 2017) were partially offset by lower revenue from the Mayfair hotel and London hotels.

 

·      Total revenue for H1 2018 fell by £8m or 1.6% to £477m (H1 2017: £485m). In constant currency, total revenue for H1 2018 increased by £14m or 3.0%. Increased residential section sales in New Zealand added £5m, whilst CDLHT added £3m, helped mainly by recently acquired hotels.

 

·      In Q2 2018, Group RevPAR fell by 5.3% in reported currency and by 1.7% in constant currency. Like-for-like* Group RevPAR increased slightly by 0.8%.

 

·      In reported currency, pre-tax profit for the first half of 2018 increased by £2m to £65m (H1 2017: £63m).  In constant currency, pre-tax profit for the period increased by £4m to £65m (H1 2017: £61m).     

 

·      Pre-tax profit in Q2 2018 declined, on a constant currency basis, by £9m versus Q2 2017.  This decline largely resulted from weaker hotel performance, notably in London, as well as a £3m reduction due to the timing of one-off gains.      

 

·      The Board declared an interim dividend of 2.08p per share.

 

 

 

 

 

 

 

*           Like-for-like comparisons exclude the impact of acquisitions, closures and refurbishments; and they are stated in constant currency terms.

 

 

Mr Kwek Leng Beng, Chairman commented: 

 

"I am pleased to welcome Jennifer Fox as Group CEO.  I am working with her closely to expedite the changes we agree are necessary to improve performance as a niche owner-operator of hospitality assets.  I am confident that her expertise in branding and marketing will bring benefits to the Group.

 

Results in the first half of 2018 were mixed.  Whilst North Asia and New Zealand saw higher revenue, our London hotels under-performed partly due to their slow adjustment to competitive market conditions in addition to the impact of refurbishment at our Mayfair property.  Although New York RevPAR was up, mainly due to improvements at Millennium Hilton New York One UN Plaza, the region remains unprofitable.  Singapore was down slightly.

 

Since the close of the second quarter, we underlined our commitment to stepping up investment in Group assets by closing the Mayfair hotel entirely at the beginning of July.  We look forward to its re-opening as our flagship property in Q1 next year. Additional refurbishment projects in London and New York will be announced in due course.

 

Given current volatile political and economic conditions - especially Brexit and the unfolding trade tensions between the United States, China and Europe - the Group continues to be cautious about the immediate future.  However, this will not affect our plan to step up investment in our hotels, which we regard as essential to the Group's long-term health."

 

 

Ms Jennifer Fox, Group Chief Executive Officer commented:

 

"I am pleased to have joined M&C and see there is opportunity to strengthen the company and drive results for our shareholders.  Since arriving on 19 June, I have reinforced the leadership team with two key appointments in a Group Chief Marketing Officer and a Head of Human Resources. In the past six weeks I have been reviewing the earnings profile and potential of our most important properties.  A strategic plan currently is being developed."

 

 

 

 

 

Enquiries

Millennium & Copthorne Hotels plc                                                                                                               Tel: +44 (0) 2078722444

Jennifer Fox, Group Chief Executive Officer

Kok-Kee Chong, Chief Financial Officer

Jonathon Grech, Group General Counsel and Company Secretary

Peter Krijgsman, Financial Communications (Media)               

 

FINANCIAL PERFORMANCE

 

For the six months ended 30 June 2018, Group reported revenue decreased by 1.6% to £477m (H1 2017: £485m).  On a constant currency basis, Group revenue increased by £14m or 3.0%.

 

 

 

H1 2018

£m

Reported Currency

Constant Currency

H1 2017

£m

Change

H1 2017

£m

Change

£m

%

£m

%

Hotel

404

418

(14)

(3.3)

399

5

1.3

Property

41

38

3

7.9

35

6

17.1

REIT

32

29

3

10.3

29

3

10.3

Total Revenue

477

485

(8)

(1.6)

463

14

3.0

 

In constant currency, hotel revenue for H1 2018 increased by 1.3% as compared to the first half last year with higher contributions from Millennium Hilton New York One UN Plaza (re-branded in August 2017) and M Social Auckland (opened in October 2017); partially offset by the reduced revenue from London, where the Mayfair hotel was partially closed from November 2017 and is now fully closed since the beginning of July 2018.

 

Increased residential section sales in New Zealand and CDLHT's recently acquired hotels contributed £5m and £3m respectively to the higher total revenue. Higher profits from these activities were offset by lower hotel operating profit.

 

Pre-tax profit for H1 2018 includes gain of £3m from CDLHT's disposal of two Australian hotels. During the same period last year, pre-tax profit included reversal of loan impairment of £12m and impairment of assets of £9m, with a net credit of £3m recognised in the income statement.

 

Hotel operation

 

In constant currency, Group RevPAR for H1 2018 was flat at £75.29 (H1 2017: £74.95). Like-for-like* Group RevPAR increased by 2.0%.

 

 

RevPAR

Occupancy

Average Room Rate

 

H1 2018

£

#H1 2017

£

Change

%

H1 2018

%

H1 2017

%

Change

%pts

H1 2018

£

#H1 2017

£

Change

%

  New York

141.11

133.13

6.0

82.3

80.3

2.0

171.53

165.83

3.4

  Regional US

55.25

56.16

(1.6)

56.4

59.3

(2.9)

97.89

94.76

3.3

Total US

83.52

81.50

2.5

64.9

66.2

(1.3)

128.60

123.14

4.4

  London

86.06

101.38

(15.1)

71.9

81.5

(9.6)

119.69

124.33

(3.7)

  Rest of Europe

54.67

52.10

4.9

70.7

69.7

1.0

77.37

74.77

3.5

Total Europe

70.76

77.06

(8.2)

71.3

75.7

(4.4)

99.25

101.81

(2.5)

  Singapore

80.65

81.00

(0.4)

84.1

86.3

(2.2)

95.85

93.85

2.1

  Rest of Asia

62.75

59.47

5.5

65.0

63.8

1.2

96.61

93.18

3.7

Total Asia

69.68

67.81

2.8

72.4

72.5

(0.1)

96.27

93.49

3.0

Australasia

74.64

69.55

7.3

84.5

83.3

1.2

88.33

83.50

5.8

 

 

 

 

 

 

 

 

 

 

Total Group

75.29

74.95

0.5

71.0

72.3

(1.3)

106.01

103.72

2.2

 

 

 

RevPAR

Occupancy

Average Room Rate

 

Q2 2018

£

#Q2 2017

£

Change

%

Q2 2018

%

Q2 2017

%

Change

%pts

Q2 2018

£

#Q2 2017

£

Change

%

  New York

175.60

166.67

5.4

89.2

88.4

0.8

196.86

188.46

4.5

  Regional US

64.60

67.33

(4.1)

62.2

66.1

(3.9)

103.94

101.87

2.0

Total US

101.15

100.04

1.1

71.1

73.5

(2.4)

142.34

136.19

4.5

  London

93.32

115.71

(19.4)

74.5

86.6

(12.1)

125.23

133.61

(6.3)

  Rest of Europe

62.07

59.24

4.8

76.6

75.1

1.5

81.07

78.93

2.7

Total Europe

78.09

87.84

(11.1)

75.5

80.9

(5.4)

103.41

108.57

(4.8)

  Singapore

79.00

80.55

(1.9)

81.7

85.2

(3.5)

96.74

94.49

2.4

  Rest of Asia

66.72

62.80

6.2

66.9

65.4

1.5

99.77

95.98

3.9

Total Asia

71.47

69.67

2.6

72.6

73.1

(0.5)

98.45

95.31

3.3

Australasia

61.37

59.87

2.5

77.9

76.2

1.7

78.75

78.62

0.2

 

 

 

 

 

 

 

 

 

 

Total Group

82.01

83.46

(1.7)

73.4

75.4

(2.0)

111.74

110.66

1.0

 

 

#           In constant currency whereby 30 June 2017 RevPAR and average room rates have been translated at average exchange rates for the period ended 30 June 2018. 

 

 

*           Like-for-like comparisons exclude the impact of acquisitions, closures and refurbishments; and they are stated in constant currency terms.

 

 

US

 

US RevPAR for H1 2018 increased by 2.5% to £83.52 (H1 2017: £81.50). Average room rate increased by 4.4% offset partially by decrease in occupancy of 1.3% points.

 

New York RevPAR increased by 6.0% as a result of increases in both occupancy and average room rate of 2.0% points and 3.4% respectively.  RevPAR for Regional US decreased by 1.6% to £55.25 (H1 2017: £56.16) with higher average room rate of 3.3% and lower occupancy of 2.9% points.

 

In Q2 2018, US RevPAR increased by 1.1% with room rates up by 4.5% and occupancy down 2.4% points.

 

Europe

 

Europe RevPAR for H1 2018 fell by 8.2% with lower occupancy and average room rate.

 

RevPAR for London decreased by 15.1% due to the phased closure of our Mayfair hotel during the first half of the year. It was fully closed at the start of July 2018. The closure of the Mayfair hotel resulted in about 81% of the lower London revenue. There was weaker trading in the other London hotels during the period mainly due to a lower level of corporate business. 

 

RevPAR for Rest of Europe during H1 2018 grew by 4.9% with increase in occupancy and average room rate of 1.0% points and 3.5% respectively.

 

Excluding the Mayfair hotel and Millennium Hotel Glasgow where 56 rooms were permanently removed from the hotel in connection to the development of Queen Street Station, Europe RevPAR decreased by 1.1%. On the same basis, RevPAR for London and Rest of Europe was down by 4.4% and up by 4.9% respectively.

 

In Q2 2018, Europe RevPAR fell by 11.1% with room rates down by 4.8% and occupancy down 5.4% points. On a like-for-like basis, Europe RevPAR fell by 1.7%.

 

Asia

 

Asia RevPAR for H1 2018 increased by 2.8% to £69.68 (H1 2017: £67.81) driven mainly by a 3.0% increase in average room rates. 

 

Singapore RevPAR fell by 0.4% with an increase in average room rate of 2.1% offset by lower occupancy of 2.2% points. 

 

Although visitor numbers are increasing and the growth in hotel rooms is levelling off, Singapore remains highly competitive with recent additions to hotel inventory seeking to build market share. 

 

Rest of Asia saw an improvement in performance with higher RevPAR of 5.5% reflecting increases in both average room rate and occupancy of 3.7% and 1.2% points respectively. Grand Hyatt Taipei benefited from the Computex show held in June 2018 whilst Millennium Seoul Hilton gained from increased government business as a result of the North Korea/South Korea summit.

 

In Q2 2018, Asia RevPAR increased by 2.6% with room rates up by 3.3% and occupancy down 0.5% points.

 

Australasia

 

Like-for-like Australasia RevPAR grew by 4.5% during H1 2018. With the inclusion of M Social Auckland, Australasia RevPAR increased by 7.3% in H1 2018 with an increase in average room rate and occupancy of 5.8% and 1.2% points respectively.

 

In Q2 2018, Australasia RevPAR increased by 2.5% with room rates up slightly by 0.2% and occupancy up 1.7% points. Like-for-like RevPAR was flat, with decrease in average room rate by 2.4% and higher occupancy by 2.0%.

 

 

Developments

The construction of a 263-room hotel and a 250-unit residential apartment block on 35,717m2 mixed use freehold landsite at Sunnyvale, California has commenced this year with site preparation and pre-construction work. The construction cost is estimated at US$200m (£152m).

The Group is re-considering the design of the Yangdong development in Seoul, possibly with a view to increase the number of hotel rooms and apartment units. The construction cost will be determined once the new design is finalised.

 

 

 

 

Hotel refurbishments

The on-going refurbishment work at our Mayfair hotel started in November 2017 and will cost around £40m in total. The hotel ceased trading at the start of July 2018 and is scheduled to re-open in Q1 next year.

Refurbishment plans for Millennium Hotel London Knightsbridge are under review. As previously announced, the Group plans to spend about US$80m (£61m) to upgrade its New York properties over the next two years.

Orchard Hotel Singapore has commenced work on its lobby and food & beverage outlets, which is expected to complete by end 2018. The hotel remains fully operational but some disruption and revenue loss is anticipated.  The guest rooms in the Orchard wing will be renovated progressively from 4Q 2018 to around 1Q 2019, as well as the ballroom and some meeting spaces in the hotel.

 

Other Group operations

 

Joint ventures and associates contributed £8m to profit in H1 2018 (H1 2017: £6m). The Group has an effective interest of 36% in First Sponsor Group Limited, which is listed on the Singapore Exchange and reports its results publicly. 

 

In April 2018, the Group subscribed for its full entitlement of FSGL's rights issue of new perpetual convertible capital securities ("PCCS") for a total cost of S$58.2m (£32m) and the PCCS were allotted on 19 April 2018.

 

Financial position

 

At 30 June 2018, the Group had net debt of £674m (Dec 2017: net debt of £650m). Excluding CDLHT, net debt at 30 June 2018 was £232m (Dec 2017: net debt of £186m).

 

Board and management changes

 

As previously announced, Jennifer Fox was appointed as the Group Chief Executive Officer and a member of the Board of Directors on 19 June 2018. The Group has also appointed a Group Chief Marketing Officer and a Head of Human Resources, both based in London.

 

Dividend

 

The Board has declared an interim dividend of 2.08 pence per share. The interim dividend will be paid on 28 September 2018 to shareholders on the register at the close of business on 17 August 2018.  The ex-dividend date of the Company's shares is 16 August 2018. The Board will consider the full dividend for the year following the close of the financial year.

 

Current trading

 

In the first 21 days of trading in July 2018, Group RevPAR in constant currency decreased by 3.5%. RevPAR for New York down by 5.1%, Regional US down by 5.3%, London was flat, Rest of Europe up by 1.3%, Singapore down by 3.0%, Rest of Asia up by 8.1% and Australasia down by 9.9%.

 

Excluding Millennium Hotel Glasgow (116 rooms reduced to 60 rooms from July 2017), M Social Auckland (opened October 2017), our Mayfair hotel (closed from 1 July 2018) and Millennium New Plymouth NZ (acquired in February 2018), like-for-like Group RevPAR dropped by 1.0% with London up by 8.9%. Rest of Europe was up by 0.4%.  Australasia was down by 10.6%, in part attributable to strong comparatives in 2017due to the British and Irish Lions rugby tour.

 

 

This trading update contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of Millennium & Copthorne Hotels plc. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on forward looking statements which speak only as of the date of this document. The Group accepts no obligation to publicly revise or update these forward-looking statements or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

 

 

Condensed consolidated income statement (unaudited)

for the half year ended 30 June 2018

 

 

 

 

 

Notes

 

 

Second Quarter

2018

£m

 

 

Second Quarter

2017

£m

 

 

First

Half

2018

£m

 

 

First

Half

2017

£m

 

 

Full

Year

2017

£m

 

Revenue

 

  3

260

262

477

485

1,008

Cost of sales

 

(111)

(111)

(212)

(216)

(431)

Gross profit

 

149

151

265

269

577

 

 

 

 

 

 

 

Administrative expenses

 

(103)

(102)

(198)

(203)

(415)

Other operating income

4

-

12

3

12

30

Other operating expense

4

-

(9)

-

(9)

(47)

Operating profit

 

46

52

70

69

145

 

Share of profit of joint ventures and associates

 

 

3

2

8

6

22

 

 

 

 

 

 

 

Finance income

 

-

2

4

5

11

Finance expense

 

(10)

(6)

(17)

(17)

(31)

Net finance expense

 

(10)

(4)

(13)

(12)

(20)

 

 

 

 

 

 

 

Profit before tax

3

39

50

65

63

147

Income tax (expense)/credit

5

(8)

(2)

(12)

(4)

12

Profit for the period

 

31

48

53

59

159

 

Attributable to:

 

 

 

 

 

 

Equity holders of the parent

 

20

39

28

42

124

Non-controlling interests

 

11

9

25

17

35

 

 

31

48

53

59

159

 

 

 

 

 

 

 

Basic earnings per share (pence)

6

6.2p

11.9p

8.5p

12.8p

38.1p

Diluted earnings per share (pence)

6

6.2p

11.9p

8.5p

12.8p

38.1p

 

 

 

 

 

 

 

 

 

The financial results above were derived from continuing activities.

 

 

 

 

 

Condensed consolidated statement of comprehensive income (unaudited)

for the half year ended 30 June 2018

 

 

 

First

Half

2018

£m

 

First

Half

2017

£m

 

Full

 Year

2017

£m

 

Profit for the period

53

59

159

 

 

 

 

Other comprehensive expense, net of tax:

 

 

 

Items that are not reclassified subsequently to income statement:

 

 

 

Remeasurement of defined benefit plan actuarial net gains

-

-

4

 

-

-

4

Items that may be reclassified subsequently to income statement:

 

 

 

Foreign currency translation differences - foreign operations

(1)

(22)

(102)

Foreign currency translation differences - equity accounted investees

6

(9)

(16)

Net gain on hedge of net investments in foreign operations

(2)

8

12

 

3

(23)

(106)

Other comprehensive income/(expense) for the period, net of tax

3

(23)

(102)

Total comprehensive income for the period, net of tax

56

36

57

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Equity holders of the parent

33

11

22

Non-controlling interests

23

25

35

Total comprehensive income for the period, net of tax

56

36

57

 

 

Condensed consolidated statement of financial position (unaudited)

as at 30 June 2018

 

 

 

 

 

 

 

As at

30 June

 2018

£m

 

As at

30 June

 2017

£m

 

As at

31 Dec

 2017 

£m

Non-current assets

 

 

 

 

Property, plant and equipment

 

3,130

3,242

3,129

Lease premium prepayment

 

102

105

103

Investment properties

 

582

531

577

Investment in joint ventures and associates

 

369

317

324

 

 

4,183

4,195

4,133

Current assets

 

 

 

 

Inventories

 

5

5

4

Development properties

 

103

88

93

Lease premium prepayment

 

2

2

2

Trade and other receivables

 

102

122

88

Cash and cash equivalents

 

343

361

354

 

 

555

578

541

Assets held for sale

 

-

-

41

 

 

555

578

582

Total assets

 

4,738

4,773

4,715

 

Non-current liabilities

 

 

 

 

Interest-bearing loans, bonds and borrowings

 

(896)

(869)

(791)

Employee benefits

 

(18)

(23)

(19)

Provisions

 

(9)

(9)

(9)

Other non-current liabilities

 

(13)

(14)

(13)

Deferred tax liabilities

 

(188)

(213)

(188)

 

 

(1,124)

(1,128)

(1,020)

Current liabilities

 

 

 

 

Interest-bearing loans, bonds and borrowings

 

(121)

(226)

(213)

Trade and other payables

 

(210)

(227)

(208)

Provisions

 

(2)

(2)

(2)

Income taxes payable

 

(16)

(26)

(23)

 

 

(349)

(481)

(446)

Total liabilities

 

(1,473)

(1,609)

(1,466)

Net assets

 

3,265

3,164

3,249

 

Equity

 

 

 

 

Issued share capital

 

97

97

97

Share premium

 

843

843

843

Translation reserve

 

436

506

431

Treasury share reserve

 

(4)

(4)

(4)

Retained earnings

 

1,327

1,223

1,309

Total equity attributable to equity holders of the parent

 

2,699

2,665

2,676

Non-controlling interests

 

566

499

573

Total equity

 

3,265

3,164

3,249

 

 

 

 

Condensed consolidated statement of changes in equity (unaudited)

for the half year ended 30 June 2018

 

Share

capital

£m

Share

premium

£m

Translation

reserve

£m

 

 

 

 

Treasury

share

reserve

£m

Retained

earnings

£m

Total excluding non-controlling

interests

£m

 

 

 

 

Non- controlling interests

£m

Total equity

£m

 

 

 

 

 

 

 

 

 

Balance at 1 January 2018

97

843

431

(4)

1,309

2,676

573

3,249

Profit

-

-

-

-

28

28

25

53

Other comprehensive income/(expense)

-

-

5

-

-

5

(2)

3

 Total comprehensive income

-

-

5

-

28

33

23

56

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Dividends - equity holders

-

-

-

-

(14)

(14)

-

(14)

Dividends - non-controlling interests

-

-

-

-

-

-

(26)

(26)

Share-based payment transactions (net of tax)

-

-

-

-

1

1

-

1

Changes in ownership interests

 

 

 

 

 

 

 

 

Change in interests in subsidiaries without loss of control

-

-

-

-

3

3

(3)

-

Return of capital to non-controlling interests

-

-

-

-

-

-

(1)

(1)

Total transactions with owners

-

-

-

-

 

(10)

(10)

(30)

(40)

Balance at 30 June 2018

97

843

436

(4)

1,327

2,699

566

3,265

 

 

Share

capital

£m

Share

premium

£m

Translation

reserve

£m

 

 

 

 

Treasury

share

reserve

£m

Retained

earnings

£m

Total excluding non-controlling

interests

£m

 

 

 

 

Non- controlling interests

£m

Total equity

£m

 

 

 

 

 

 

 

 

 

Balance at 1 January 2017

97

843

537

(4)

1,195

2,668

502

3,170

Profit

-

-

-

-

42

42

17

59

Other comprehensive income/(expense)

-

-

(31)

-

-

(31)

8

(23)

 Total comprehensive income/(expense)

-

-

(31)

-

42

11

25

36

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Dividends - equity holders

-

-

-

-

(18)

(18)

-

(18)

Dividends - non-controlling interests

-

-

-

-

-

-

(23)

(23)

Changes in ownership interests

 

 

 

 

 

 

 

 

Change in interests in subsidiaries without loss of control

-

-

-

-

4

4

(4)

-

Return of capital to non-controlling interests

-

-

-

-

-

-

(1)

(1)

Total transactions with owners

-

-

-

-

 

(14)

(14)

(28)

(42)

Balance at 30 June 2017

97

843

506

(4)

1,223

2,665

499

3,164

 

Profit

-

-

-

-

82

82

18

100

Other comprehensive income/(expense)

-

-

(75)

-

4

(71)

(8)

(79)

 Total comprehensive income/(expense)

-

-

(75)

-

86

11

10

21

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Dividends - equity holders

-

-

-

-

(7)

(7)

-

(7)

Dividends - non-controlling interests

-

-

-

-

-

-

(17)

(17)

Changes in ownership interests

 

 

 

 

 

 

 

 

Change in interests in subsidiaries without loss of control

-

-

-

-

7

7

(7)

-

Rights issue by subsidiary with NCI

-

-

-

-

-

-

89

89

Return of capital to non-controlling interests

-

-

-

-

-

-

(1)

(1)

Total transactions with owners

-

-

-

-

-

-

64

64

Balance at 31 December 2017

97

843

431

(4)

1,309

2,676

573

3,249

 

 

Condensed consolidated statement of cash flows (unaudited)

for the half year ended 30 June 2018

 

 

 

First

Half

2018

£m

 

First

Half

2017

£m

 

Full

 Year

2017

£m

Cash flows from operating activities

 

 

 

Profit for the period

53

59

159

Adjustments for:

 

 

 

Depreciation and amortisation

34

37

75

Share of profit of joint ventures and associates

(8)

(6)

(22)

Other operating income

(3)

(12)

(30)

Other operating expense

-

9

47

Finance income

(4)

(5)

(11)

Finance expense

17

17

31

Income tax expense

12

4

(12)

Equity settled share-based transactions

1

-

-

Operating profit before changes in working capital and provisions

102

103

237

Movement in inventories, trade and other receivables

(15)

(15)

9

Movement in development properties

(12)

6

(4)

Movement in trade and other payables

3

16

(13)

Movement in provisions and employee benefits

-

-

1

Cash generated from operations

78

110

230

Interest paid

(11)

(11)

(21)

Interest received

2

2

4

Income tax paid

(20)

(18)

(33)

Net cash generated from operating activities

49

83

180

 

Cash flows from investing activities

 

 

 

Proceeds from sale of property, plant & equipment

44

-

-

Dividends received from joint ventures and associates

1

1

2

Proceeds from settlement of shareholder's loan

-

-

12

Acquisition of subsidiary, net of cash acquired

(6)

(52)

(52)

Increase in investment in joint ventures and associates

(32)

-

-

Acquisition of property, plant and equipment, lease premium prepayment and investment properties

(23)

(32)

(142)

Net cash used in investing activities

(16)

(83)

(180)

 

 

 

 

Cash flows from financing activities

 

 

 

Repayment of borrowings

(124)

(5)

(306)

Drawdown of borrowings

126

71

309

Dividends paid to non-controlling interests

(26)

(23)

(40)

Return of capital to non-controlling interests

(1)

(1)

(2)

Acquisition of non-controlling interests

(3)

-

-

Dividends paid to equity holders of the parent

(14)

(18)

(25)

Proceeds from issue of share capital

-

-

89

Net cash generated from/(used in) financing activities

(42)

24

25

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

(9)

24

25

Cash and cash equivalents at beginning of the period

354

337

337

Effect of exchange rate fluctuations on cash held

(2)

-

(8)

Cash and cash equivalents at end of the period

343

361

354

 

 

 

 

Reconciliation of cash and cash equivalents

 

 

 

Cash and cash equivalents shown in the consolidated statement of financial position

343

361

354

Bank overdrafts included in borrowings

-

-

-

Cash and cash equivalents for consolidated statement of cash flows

343

361

354

 

 

 

 

 

 

 

 

Notes to the condensed consolidated financial statements

 

1. General information

Basis of preparation

The consolidated financial statements in this interim management report for Millennium & Copthorne Hotels plc ("the Company") as at and for the half year ended 30 June 2018 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in joint ventures and associates. 

 

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2017 and during the three month period ended 30 June 2018 ("Second Quarter 2018").

 

The comparative figures for the financial year ended 31 December 2017 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

These interim financial statements were authorised for issue by the Company's Board of Directors on 2 August 2018.

 

Use of judgements and estimates

 

The financial statements were prepared on a going concern basis supported by the Directors' assessment of the Group's current and forecast financial position and forecast for the foreseeable future; and are presented in the Company's functional currency of sterling, rounded to the nearest million.

 

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2017.

 

Significant accounting policies

 

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2017.

 

New standards and interpretations

 

'IFRS 15 Revenue from Contracts with Customers' is effective from the start of the Group's current financial year. IFRS 15 provides a principles-based approach for revenue recognition and introduces the concept of recognising revenue for obligations as they are satisfied. The Group has assessed the requirements of the standard and the conclusion is that there is no material impact to revenue.

 

'IFRS 9 Financial Instruments: Recognition and Measurement' is effective from the start of the Group's current financial year. IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. Debt instruments currently classified as held-to maturity and measured at amortised cost will meet the conditions for classification at amortised cost under IFRS 9. The Group believes that its current hedge relationships will qualify as continuing hedges, upon the adoption of IFRS 9. The impact of this accounting standard on the Group's accounts for the current year is considered immaterial.

 

'IFRS 16 Leases' is effective for annual periods beginning on or after 1 January 2019 and results in lessees accounting for most leases within the scope of the standard in a manner similar to the way in which finance leases are currently accounted for under IAS 17 Leases. The Group is currently assessing the impact of this standard but it is not practicable to quantify the effect as at the date of the publication of this report.

 

 

Notes to the condensed consolidated financial statements

 

2. Foreign currency translation

 

The Company publishes its Group financial statements in sterling. However, the majority of the Company's subsidiaries, joint ventures and associates report their revenue, costs, assets and liabilities in currencies other than sterling. The Company translates the revenue, costs, assets and liabilities of those subsidiaries, joint ventures and associates into sterling, and this translation of other currencies into sterling could materially affect the amount of these items in the Group's financial statements, even if their values have not changed in their original currencies. The following table sets out the sterling exchange rates of the other principal currencies of the Group.

 

 

As at

30 June

As at 31 December

Average for 6 months

January-June

Average for 3 months April-June

Average for the year

Currency (=£)

2018

2017

2017

2018

2017

2018

2017

2017

 

US dollar

 

1.320

 

1.283

 

1.339

 

1.373

 

1.261

 

1.353

 

1.280

 

1.290

Singapore dollar

1.800

1.778

1.796

1.825

1.774

1.813

1.784

1.782

New Taiwan dollar

40.250

39.034

40.083

40.732

38.807

40.560

38.950

39.338

New Zealand dollar

1.935

1.766

1.896

1.929

1.778

1.938

1.807

1.814

Malaysian ringgit

5.318

5.515

5.473

5.426

5.535

5.371

5.542

5.544

Korean won

1,475.41

1,467.88

1,438.03

1,481.17

1,445.40

1,469.17

1,455.04

1,455.88

Chinese renminbi

8.708

8.722

8.779

8.782

8.677

8.703

8.778

8.722

Euro

1.134

1.127

1.127

1.138

1.162

1.140

1.156

1.143

Japanese yen

144.811

143.819

151.569

149.574

141.880

148.607

142.712

144.878

 

3. Operating segment information

 

Disclosure of segmental information is principally presented in respect of the Group's geographical segments.

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items principally comprise: interest-bearing loans, borrowings, cash and cash equivalents, net finance expense, taxation balances and corporate expenses.

 

Geographical segments

The hotel and property operations are managed on a worldwide basis and operate in seven principal geographical areas as follows:

·  New York

·  Regional US

·  London

·  Rest of Europe (including the Middle East)

·  Singapore

·  Rest of Asia

·  Australasia

 

The segments reported reflect the operating segment information included in the internal reports that the Chief Operating Decision Maker ("CODM"), which is the Board, regularly reviews.

 

The reportable segments are aligned with the structure of the Group's internal organisation which is based according to geographical region.  Discrete financial information is reported to and is reviewed by the CODM on a geographical basis. Operating segments have Chief Operating Officers ("COOs") or equivalent who are directly accountable for the functioning of their segments and who maintain regular contact with the Chief Executive Officer and Chairman of the CODM to discuss the operational and financial performance. The CODM makes decisions about allocation of resources to the regions managed by the COOs.

 

The results of CDLHT have been incorporated within the existing geographical regions. In addition, CDLHT operations are reviewed separately by its board on a monthly basis.

 

 

Notes to the condensed consolidated financial statements

 

3. Operating segment information (continued)

 

 

 

First Half 2018

 

New York

£m

Regional US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Central

Costs

£m

Total Group

£m

Revenue

 

 

 

 

 

 

 

 

 

Hotel

67

64

49

34

62

85

43

-

404

Property operations

-

2

-

-

1

5

33

-

41

REIT

-

-

-

14

8

7

3

-

32

Total revenue

67

66

49

48

71

97

79

-

477

Hotel gross operating profit

5

12

19

7

24

29

21

-

117

Hotel fixed charges 1

(16)

(12)

(11)

(5)

(2)

(17)

(3)

-

(66)

Hotel operating profit/(loss)

(11)

-

8

2

22

12

18

-

51

Property operating profit

-

1

-

-

1

5

18

-

25

REIT operating profit/(loss)

-

-

-

5

(2)

2

3

-

8

Central costs

-

-

-

-

-

-

-

(17)

(17)

Other operating income 2

-

-

-

-

-

-

-

-

-

Other operating expense 2

-

-

-

-

-

-

-

-

-

Other operating income - REIT 2

-

-

-

-

-

-

3

-

3

 Operating profit/(loss)

(11)

1

8

7

21

19

42

(17)

70

Share of joint ventures and

 

 

 

 

 

 

 

 

 

associates profit

-

-

-

3

-

5

-

-

8

Add: Depreciation and amortisation

5

6

3

1

6

10

2

1

34

Add: Impairment

-

-

-

-

-

-

-

-

-

EBITDA 3

(6)

7

11

11

27

34

44

(16)

112

Less: Depreciation, amortisation & impairment

 

 

 

 

 

 

 

 

(34)

Net finance expense

 

 

 

 

 

 

 

 

(13)

Profit before tax

 

 

 

 

 

 

 

 

65

 

 

 

First Half 2017

 

New York

£m

Regional

US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Central

Costs

£m

Total Group

£m

 

Revenue

 

 

 

 

 

 

 

 

 

 

Hotel

68

71

57

34

65

83

40

-

418

 

Property operations

-

2

-

-

1

5

30

-

38

 

REIT

-

-

-

7

8

10

4

-

29

 

Total revenue

68

73

57

41

74

98

74

-

485

 

Hotel gross operating profit

5

14

27

7

26

27

20

-

126

 

Hotel fixed charges 1

(17)

(13)

(13)

(4)

(1)

(19)

(3)

-

(70)

 

Hotel operating profit/(loss)

(12)

1

14

3

25

8

17

 

56

 

Property operating profit

-

-

-

-

1

5

15

-

21

 

REIT operating profit/(loss)

-

-

-

-

(2)

3

4

-

5

 

Central costs

-

-

-

-

-

-

-

(16)

(16)

 

Other operating income 2

-

-

-

-

-

12

-

-

12

 

Other operating expense 2

-

-

-

(4)

-

(5)

-

-

(9)

 

 Operating profit/(loss)

(12)

1

14

(1)

24

23

36

(16)

69

 

Share of joint ventures and

 

 

 

 

 

 

 

 

 

 

associates profit

-

-

-

2

-

4

-

-

6

 

Add: Depreciation and amortisation

5

7

3

2

7

11

1

1

37

 

Add: Impairment

-

-

-

4

-

5

-

-

9

 

EBITDA 3

(7)

8

17

7

31

43

37

(15)

121

 

Less: Depreciation, amortisation & impairment

 

 

 

 

 

 

 

 

(46)

 

Net finance expense

 

 

 

 

 

 

 

 

(12)

 

Profit before tax

 

 

 

 

 

 

 

 

63

 

 

 

1 Hotel fixed charges include depreciation, amortisation of lease premium prepayments, property rent, taxes and insurance, operating lease rentals and management fees.

 

2 See Note 4 for details of other operating income and expense.

 

3 EBITDA is earnings before interest, tax and, depreciation and amortisation.

 

 

 

 

 

Notes to the condensed consolidated financial statements

 

3. Operating segment information (continued)

 

Segmental assets and liabilities

 

At 30 June 2018

New

York

£m

Regional US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Total Group

£m

Hotel operating assets

619

324

505

235

21

659

179

2,542

REIT operating assets

-

-

-

207

595

119

153

1,074

Hotel operating liabilities

(32)

(45)

(14)

(43)

(20)

(62)

(9)

(225)

REIT operating liabilities

-

-

-

(5)

(6)

(3)

(4)

(18)

Investment in joint ventures

 

 

 

 

 

 

 

 

and associates

-

-

-

-

-

158

-

158

Total hotel operating net assets

587

279

491

394

590

871

319

3,531

Property operating assets

-

37

-

-

84

185

104

410

Property operating liabilities

-

(1)

-

-

(3)

(3)

(2)

(9)

Investment in joint ventures

 

 

 

 

 

 

 

 

and associates

-

-

-

67

-

144

-

211

Total property operating net assets

-

36

-

67

81

326

102

612

Deferred tax liabilities

 

 

 

 

 

 

 

(188)

Income taxes payable

 

 

 

 

 

 

 

(16)

Net cash

 

 

 

 

 

 

 

(674)

Net assets

 

 

 

 

 

 

 

3,265

 

 

 

As at 30 June 2017

New

York

£m

Regional US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Total Group

£m

Hotel operating assets

649

353

502

240

22

696

187

2,649

REIT operating assets

-

-

-

115

610

133

197

1,055

Hotel operating liabilities

(34)

(51)

(16)

(42)

(21)

(64)

(10)

(238)

REIT operating liabilities

-

-

-

(5)

(8)

(2)

(11)

(26)

Investment in joint ventures

 

 

 

 

 

 

 

 

and associates

-

-

-

-

-

155

-

155

Total hotel operating net assets

615

302

486

308

603

918

363

3,595

Property operating assets

-

41

-

-

85

177

88

391

Property operating liabilities

-

(1)

-

-

(5)

(3)

(2)

(11)

Investment in joint ventures

 

 

 

 

 

 

 

 

and associates

-

-

-

18

-

144

-

162

Total property operating net assets

-

40

-

18

80

318

86

542

Deferred tax liabilities

 

 

 

 

 

 

 

(213)

Income taxes payable

 

 

 

 

 

 

 

(26)

Net cash

 

 

 

 

 

 

 

(734)

Net assets

 

 

 

 

 

 

 

3,164

                     

 

 

4. Other operating income and expense

 

 

First

Half

2018

 

First

Half

2017

 

Full

Year

2017

 

Notes

£m

£m

£m

 

 

 

 

 

Net revaluation gain of investment properties

(a)

-

-

9

Reversal of impairment of loan

(b)

-

12

12

Impairment of assets

(c)

-

(9)

(38)

Gain from disposal of investment properties

(d)

3

-

-

 

 

 

 

 

 

(a) Net revaluation gain of investment properties

Based on external valuations, the revaluation gain or deficit was recorded as considered appropriate by the Directors.
 

Notes to the condensed consolidated financial statements

 

4. Other operating income and expense (continued)

 

(b) Reversal of impairment of loan

On 31 July 2017, the Group disposed of its 50% interest in Fena Estate Co. Ltd, owner of Pullman Bangkok Grande Sukhumvit (formerly Grand Millennium Sukhumvit Bangkok) in exchange for a token sum and repayment of the shareholder loan, which had been impaired in earlier years.  The Group re-instated the loan on its balance sheet during 2017 with an income of £12m recognised in the income statement.

 

(c) Impairment of assets

The total impairment charge for the first half of 2018 was £nil (H1 2017: £9m).

 

(d) Gain from disposal of investment properties

On 11 January 2018, CDLHT completed the divestment of two hotels in Australia, the Mercure Brisbane and Ibis Brisbane for A$77m (£44m) and a gain of £3m was recognised by the Group.

 

5.  Income tax expense

 

The Group recorded a tax expense of £12m for the first half of 2018 (H1 2017: £4m) excluding the tax relating to joint ventures and associates. The tax expense of £4m recorded during the first half of last year included the release of £4m provision in relation to an exposure in Singapore that was finalised in July 2017.

 

Income tax expense for the period is the expected income tax payable on the taxable income for the period, calculated at the estimated average underlying annual effective income tax rate applied to the pre-tax income for the period, and further adjusted to take into account the impact of over or under-provision adjustments for prior years.

 

6.  Earnings per share

 

Earnings per share are calculated using the following information:

 

 

 

First

 Half

2018

 

First

 Half

2017

 

Full

Year

2017

(a) Basic

 

 

 

Profit for the period attributable to holders of the parent (£m)

28

42

124

Weighted average number of shares in issue (m)

325

325

325

Basic earnings per share (pence)

8.5p

12.8p

38.1p

 

 

 

 

(b) Diluted

 

 

 

Profit for the period attributable to holders of the parent (£m)

28

42

124

Weighted average number of shares in issue (m)

325

325

325

Potentially dilutive share options under the Group's share option schemes (m)

-

-

-

Weighted average number of shares in issue (diluted) (m)

325

325

325

Diluted earnings per share (pence)

8.5p

12.8p

38.1p

 

 

7.  Dividends

 

First

Half

2018

pence

First

Half

2017

pence

Full

Year

 2017

pence

 

 

 

 

Final ordinary dividend paid

4.42

5.66

5.66

Interim ordinary dividend paid

-

-

2.08

 

4.42

5.66

7.74

 

Dividends paid to equity holders in the first half of 2018 totalled £14m (H1 2017: £18m).

 

 

 

Notes to the condensed consolidated financial statements

 

8.  Significant related parties' transactions

 

Identity of related parties

 

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of material transactions between the Group and other related parties are disclosed below. All transactions with related parties were entered into in the normal course of business and at arm's length.

 

The Group has a related party relationship with its joint ventures, associates, controlling shareholder and with its Directors and executive officers.

 

Significant transactions with ultimate holding company and other related companies

 

The Group has a related party relationship with certain subsidiaries of Hong Leong Investment Holdings Pte. Ltd. ("Hong Leong"), which is the ultimate holding and controlling company of Millennium & Copthorne Hotels plc and is deemed to have an interest of 65.2% (31 December 2017: 65.2%) of the Company's shares via City Developments Limited ("CDL"), the intermediate holding company of the Group. During the half year ended 30 June 2018, the Group had the following significant transactions with those subsidiaries:

 

The Group deposited certain surplus cash with Hong Leong Finance Limited, a subsidiary of Hong Leong, on normal commercial terms. As at 30 June 2018, £3m (December 2017: £4m) of cash was deposited with Hong Leong Finance Limited.

 

Fees paid/payable by the Group to CDL and its other subsidiaries were £1m (H1 2017: £1m) which included rentals paid for the Grand Shanghai restaurant and Kings Centre; property management fees for Tanglin Shopping Centre; charges for car parking, leasing commission and professional services.

 

9.  Risks and uncertainties

 

The Directors believe that the principal risks and uncertainties facing the Group are consistent with those outlined in the Annual Report and Accounts for the year ended 31 December 2017, with the Board further noting that:

 

Uncertainties concerning the outcome of Britain leaving the European Union have not been clarified, and may have a continuing impact on the value of the pound sterling and the supply and cost of labour in the UK.

 

Continuing geopolitical tensions and increasing protectionism may affect the global economic conditions negatively.

 

The EU General Data Protection Regulation ("GDPR") came into force in May 2018. The Group had implemented a comprehensive programme to assess and address the requirements under the GDPR, and this work continues on an on-going basis as the protection of personal data of our guests, employees and other stakeholders is of paramount importance to the Group.

 

The Group, led by its Audit and Risk Committee, continues to monitor the principal risks and work with the Group's Management Risk Committee, chaired by the Group Chief Executive Officer, to ensure that the Company's risk management framework remains effective.

 

10.  Financial commitments, contingencies and subsequent events

 

Except as stated below, there have been no material changes to commitments, contingencies and subsequent events as disclosed in the annual report and accounts for the year ended 31 December 2017:

 

Capital commitments

Contracts placed for future capital expenditure not provided in the financial statements amount to £60m at 30 June 2018 (31 December 2017: £70m).

 

Subsequent events

There are no events subsequent to the balance sheet date which require adjustments to or disclosure within these consolidated financial statements.

 

 

 

MILLENNIUM & COPTHORNE HOTELS plc

 

Responsibility statement of the Directors in respect of the interim management report

 

We confirm that to the best of our knowledge:

•     the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

•     the interim management report includes a fair review of the information required by:

 

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

By order of the board

 

 

Kwek Leng Beng                                               

Chairman                                                             

 

2 August 2018                                     

 

 

INDEPENDENT REVIEW REPORT TO MILLENNIUM & COPTHORNE HOTELS plc

 

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and consolidated statement of cash flows and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

 

Jonathan Downer (Senior Statutory Auditor)

for and on behalf of KPMG LLP

 

Chartered Accountants 

15 Canada Square

London

E14 5GL

  

2 August 2018 

 

 

APPENDIX 1: Key OPERATING STATISTICS

for the half year ended 30 June 2018

 

Owned or leased hotels*

 

First Half

2018

Reported

currency

First Half

2017

Constant

currency

First Half

2017

Reported

currency

 

Full Year 2017

Reported

currency

 

Occupancy (%)

 

 

 

 

 

 

New York

 

80.3

 

85.3

 

Regional US

56.4

 

59.3

 

60.0

 

Total US

64.9

 

66.2

 

68.3

 

London

71.9

 

81.5

 

83.0

 

Rest of Europe

70.7

 

69.7

 

70.5

 

Total Europe

71.3

 

75.7

 

76.9

 

Singapore

84.1

 

86.3

 

85.6

 

Rest of Asia

65.0

 

63.8

 

66.4

 

Total Asia

72.4

 

72.5

 

73.9

 

Australasia

84.5

 

83.3

 

81.2

 

Total Group

71.0

 

72.3

 

73.5

 

 

 

 

 

 

 

 

 

Average Room Rate (£)

 

 

 

 

 

 

 

New York

171.53

165.83

180.49

 

193.18

 

Regional US

97.89

94.76

103.13

 

103.23

 

Total US

128.60

123.14

134.03

 

140.23

 

London

119.69

124.33

124.33

 

132.47

 

Rest of Europe

77.37

74.77

74.28

 

76.16

 

Total Europe

99.25

101.81

101.59

 

107.15

 

Singapore

95.85

93.85

96.56

 

97.91

 

Rest of Asia

96.61

93.18

96.19

 

96.93

 

Total Asia

96.27

93.49

96.36

 

97.37

 

Australasia

88.33

83.50

90.58

 

90.01

 

Total Group

106.01

103.72

108.90

 

112.68

 

 

 

 

 

 

 

 

 

RevPAR (£)

 

 

 

 

 

 

 

New York

141.11

133.13

144.90

 

164.84

 

Regional US

55.25

56.16

61.12

 

61.90

 

Total US

83.52

81.50

88.70

 

95.79

 

London

86.06

101.38

101.38

 

109.98

 

Rest of Europe

54.67

52.10

51.76

 

53.66

 

Total Europe

70.76

77.06

76.89

 

82.35

 

Singapore

80.65

81.00

83.34

 

83.83

 

Rest of Asia

62.75

59.47

61.39

 

64.39

 

Total Asia

69.68

67.81

69.89

 

71.91

 

Australasia

74.64

69.55

75.45

 

73.06

 

Total Group

75.29

74.95

78.69

 

82.78

 

 

 

 

 

 

 

 

 

Gross Operating Profit Margin (%)

 

 

 

 

 

 

 

New York

7.6

 

 

6.6

 

15.1

 

Regional US

18.1

 

 

20.0

 

21.2

 

Total US

12.8

 

 

13.4

 

18.0

 

London

38.5

 

 

47.1

 

49.5

 

Rest of Europe

20.6

 

 

20.8

 

22.2

 

Total Europe

31.2

 

 

37.3

 

39.6

 

Singapore

39.0

 

 

40.3

 

40.5

 

Rest of Asia

33.8

 

 

32.4

 

34.1

 

Total Asia

36.0

 

 

35.8

 

36.9

 

Australasia

49.0

 

 

49.9

 

49.1

 

Total Group

28.9

 

 

30.0

 

32.2

 

                   

 

For comparability, the 30 June 2017 Average Room Rate and RevPAR have been translated at average exchange rates for the period ended 30 June 2018.

 

* excluding managed, franchised and investment hotels.

 

 

APPENDIX 2: Key OPERATING STATISTICS

for the quarter ended 30 June 2018

 

Owned or leased hotels*

 

Q2 2018

Reported

currency

Q2 2017

Constant

currency

Q2 2017

Reported

currency

 

FY 2017

Reported

currency

 

Occupancy (%)

 

 

 

 

 

 

New York

89.2

 

88.4

 

85.3

 

Regional US

62.2

 

66.1

 

60.0

 

Total US

71.1

 

73.5

 

68.3

 

London

74.5

 

86.6

 

83.0

 

Rest of Europe

76.6

 

75.1

 

70.5

 

Total Europe

75.5

 

80.9

 

76.9

 

Singapore

81.7

 

85.2

 

85.6

 

Rest of Asia

66.9

 

65.4

 

66.4

 

Total Asia

72.6

 

73.1

 

73.9

 

Australasia

77.9

 

76.2

 

81.2

 

Total Group

73.4

 

75.4

 

73.5

 

 

 

 

 

 

 

 

 

Average Room Rate (£)

 

 

 

 

 

 

 

New York

196.86

188.46

201.56

 

193.18

 

Regional US

103.94

101.87

108.72

 

103.23

 

Total US

142.34

136.19

145.53

 

140.23

 

London

125.23

133.61

133.61

 

132.47

 

Rest of Europe

81.07

78.93

78.52

 

76.16

 

Total Europe

103.41

108.57

108.38

 

107.15

 

Singapore

96.74

94.49

96.02

 

97.91

 

Rest of Asia

99.77

95.98

97.93

 

96.93

 

Total Asia

98.45

95.31

97.06

 

97.37

 

Australasia

78.75

78.62

83.98

 

90.01

 

Total Group

111.74

110.66

114.87

 

112.68

 

 

 

 

 

 

 

 

 

RevPAR (£)

 

 

 

 

 

 

 

New York

175.60

166.67

178.26

 

164.84

 

Regional US

64.60

67.33

71.86

 

61.90

 

Total US

101.15

100.04

106.90

 

95.79

 

London

93.32

115.71

115.71

 

109.98

 

Rest of Europe

62.07

59.24

58.93

 

53.66

 

Total Europe

78.09

87.84

87.68

 

82.35

 

Singapore

79.00

80.55

81.85

 

83.83

 

Rest of Asia

66.72

62.80

64.07

 

64.39

 

Total Asia

71.47

69.67

70.95

 

71.91

 

Australasia

61.37

59.87

63.95

 

73.06

 

Total Group

82.01

83.46

86.64

 

82.78

 

 

 

 

 

 

 

 

 

Gross Operating Profit Margin (%)

 

 

 

 

 

 

 

New York

21.7

 

 

21.9

 

15.1

 

Regional US

26.1

 

 

28.4

 

21.2

 

Total US

23.7

 

 

25.1

 

18.0

 

London

41.9

 

 

51.6

 

49.5

 

Rest of Europe

26.8

 

 

29.2

 

22.2

 

Total Europe

35.6

 

 

43.1

 

39.6

 

Singapore

37.7

 

 

39.7

 

40.5

 

Rest of Asia

35.2

 

 

34.5

 

34.1

 

Total Asia

36.2

 

 

36.7

 

36.9

 

Australasia

42.1

 

 

44.3

 

49.1

 

Total Group

32.0

 

 

34.5

 

32.2

 

                   

 

For comparability, the 30 June 2017 Average Room Rate and RevPAR have been translated at average exchange rates for the period ended 30 June 2018.

 

* excluding managed, franchised and investment hotels.

 

 

APPENDIX 3: HOTEL ROOM COUNT AND PIPELINE

as at 30 June 2018

 

 

Hotels

 

Rooms

 

Hotel and room count

30 June

 2018

31 Dec

2017

Change

30 June

2018

31 Dec

2017

Change

 

 

 

 

 

 

 

Analysed by region:

 

 

 

 

 

 

New York

4

4

-

2,238

2,238

-

Regional US

15

15

-

4,559

4,559

-

London

8

8

-

2,602

2,649

(47)

Rest of Europe

22

21

1

3,655

3,528

127

Middle East

32

31

1

10,521

10,346

175

Singapore

7

7

-

3,011

3,011

-

Rest of Asia

25

25

-

9,239

9,240

(1)

Australasia

24

25

(1)

3,461

3,831

(370)

Total

137

136

1

39,286

39,402

(116)

 

 

 

 

 

 

 

Analysed by ownership type:

 

 

 

 

 

 

Owned or Leased

67

66

1

19,710

19,672

38

Managed

15

15

 -

3,733

4,098

(365)

Franchised

40

38

2

11,605

10,982

623

Investment

15

17

(2)

4,238

4,650

(412)

Total

137

136

1

39,286

39,402

(116)

 

 

 

 

 

 

 

Analysed by brand:

 

 

 

 

 

 

Grand Millennium

9

9

-

3,733

3,734

(1)

Millennium

54

52

2

17,543

17,415

128

Copthorne

34

33

1

6,641

6,469

172

Kingsgate

7

7

-

671

671

-

Other M&C

15

15

-

4,838

4,838

-

Third Party

18

20

(2)

5,860

6,275

(415)

Total

137

136

1

39,286

39,402

(116)

               

 

 

 

 

Pipeline

 

30 June

2018

Hotels

31 Dec

 2017

 

Change

 

30 June

 2018

Rooms

31 Dec

 2017

 

Change

 

 

 

 

 

 

 

Analysed by region:

 

 

 

 

 

 

Middle East

8

10

(2)

2,790

3,239

(449)

Asia

5

4

1

1,726

1,594

132

Regional US

1

1

-

263

263

-

Rest of Europe

1

1

-

318

184

134

Australasia

-

1

(1)

-

42

(42)

Total

15

17

(2)

5,097

5,322

(225)

 

 

 

 

 

 

 

Analysed by ownership type:

 

 

 

 

 

 

Managed

4

3

1

1,184

1,052

132

Franchised

9

11

(2)

3,108

3,423

(315)

Owned

2

3

(1)

805

847

(42)

Total

15

17

(2)

5,097

5,322

(225)

 

 

 

 

 

 

 

Analysed by brand:

 

 

 

 

 

 

Grand Millennium

2

1

1

569

251

318

Millennium

8

9

(1)

2,761

2,789

(28)

Copthorne

2

2

-

666

666

-

Other M&C

3

5

(2)

1,101

1,616

(515)

Total

15

17

(2)

5,097

5,322

(225)

               

 

 

The Group's worldwide pipeline comprises 15 hotels offering 5,097 rooms, which are mainly franchise contracts.

 

 

 

 


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