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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Millennium & Copthorne Hotels Plc | LSE:MLC | London | Ordinary Share | GB0005622542 | ORD 30P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 687.00 | 685.00 | 689.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMMLC
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:
Hot Features
Premium
Reported Currency Constant Currency
H1 H1 Change H1 Change
2018 2017 2017
----------- ------------------------ ----------- ----------------------
RevPAR GBP75.29 GBP78.69 GBP(3.40) (4.3)% GBP74.95 GBP0.34 0.5%
----------- ----------- ------------ ---------- ----------- ---------- ----------
Revenue - total GBP477m GBP485m GBP(8)m (1.6)% GBP463m GBP14m 3.0%
----------- ----------- ------------ ---------- ----------- ---------- ----------
Revenue - hotel GBP404m GBP418m GBP(14)m (3.3)% GBP399m GBP5m 1.3%
----------- ----------- ------------ ---------- ----------- ---------- ----------
Profit before
tax (Note 1) GBP65m GBP63m GBP2m 3.2% GBP61m GBP4m 6.6%
----------- ----------- ------------ ---------- ----------- ---------- ----------
Basic earnings
per share 8.5p 12.8p (4.3)p (33.6)%
----------- ----------- ------------ ---------- ----------- ---------- ----------
Interim dividend 2.08p 2.08p - -
----------- ----------- ------------ ---------- ----------- ---------- ----------
Second quarter 2018:
Reported Currency Constant Currency
Q2 Q2 Change Q2 Change
2018 2017 2017
------------ ------------------------- ----------- ------------------------
RevPAR GBP82.01 GBP86.64 GBP(4.63) (5.3)% GBP83.46 GBP(1.45) (1.7)%
------------ ------------ ------------- ---------- ----------- ------------ ----------
Revenue - total GBP260m GBP262m GBP(2)m (0.8)% GBP253m GBP7m 2.8%
------------ ------------ ------------- ---------- ----------- ------------ ----------
Revenue - hotel GBP217m GBP227m GBP(10)m (4.4)% GBP219m GBP(2)m (0.9)%
------------ ------------ ------------- ---------- ----------- ------------ ----------
Profit before
tax (Note 1) GBP39m GBP50m GBP(11)m (22.0)% GBP48m GBP(9)m (18.8)%
------------ ------------ ------------- ---------- ----------- ------------ ----------
Note 1: Pre-tax profit for H1 2018 includes gain of GBP3m 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 GBP12m and impairment of assets of GBP9m, with a net credit of GBP3m recognised in the income statement.
-- In reported currency, Group RevPAR decreased by 4.3% in H1 2018 to GBP75.29 (H1 2017: GBP78.69). 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 GBP404m (H1 2017: GBP418m). 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 GBP19m. 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 GBP8m or 1.6% to GBP477m (H1 2017: GBP485m). In constant currency, total revenue for H1 2018 increased by GBP14m or 3.0%. Increased residential section sales in New Zealand added GBP5m, whilst CDLHT added GBP3m, 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 GBP2m to GBP65m (H1 2017: GBP63m). In constant currency, pre-tax profit for the period increased by GBP4m to GBP65m (H1 2017: GBP61m).
-- Pre-tax profit in Q2 2018 declined, on a constant currency basis, by GBP9m versus Q2 2017. This decline largely resulted from weaker hotel performance, notably in London, as well as a GBP3m 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 GBP477m (H1 2017: GBP485m). On a constant currency basis, Group revenue increased by GBP14m or 3.0%.
Reported Currency Constant Currency
H1 2017 Change H1 2017 Change
GBPm GBPm
---------- ----------------- ---------- ----------------
H1 2018 GBPm %
GBPm GBPm %
---------- ------- -------- ---------- ------- -------
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 GBP5m and GBP3m 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 GBP3m from CDLHT's disposal of two Australian hotels. During the same period last year, pre-tax profit included reversal of loan impairment of GBP12m and impairment of assets of GBP9m, with a net credit of GBP3m recognised in the income statement.
Hotel operation
In constant currency, Group RevPAR for H1 2018 was flat at GBP75.29 (H1 2017: GBP74.95). Like-for-like(*) Group RevPAR increased by 2.0%.
RevPAR Occupancy Average Room
Rate
H1 #H1 H1 H1 H1 #H1
2018 2017 Change 2018 2017 Change 2018 2017 Change
GBP GBP % % % %pts GBP GBP %
------- ------ ------ ------- ------- ------- -------
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 #Q2 Q2 Q2 Q2 #Q2
2018 2017 Change 2018 2017 Change 2018 2017 Change
GBP GBP % % % %pts GBP GBP %
------- ------ ------ ------- ------- ------- -------
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 GBP83.52 (H1 2017: GBP81.50). 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 GBP55.25 (H1 2017: GBP56.16) 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 GBP69.68 (H1 2017: GBP67.81) 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 35,717m(2) 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 (GBP152m).
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 GBP40m 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 (GBP61m) 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 GBP8m to profit in H1 2018 (H1 2017: GBP6m). 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 (GBP32m) and the PCCS were allotted on 19 April 2018.
Financial position
At 30 June 2018, the Group had net debt of GBP674m (Dec 2017: net debt of GBP650m). Excluding CDLHT, net debt at 30 June 2018 was GBP232m (Dec 2017: net debt of GBP186m).
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
Second Quarter Second Quarter First First Full
2018 2017 Half Half Year
Notes GBPm GBPm 2018 2017 2017
GBPm GBPm GBPm
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 First Full
Half Half Year
2018 2017 2017
GBPm GBPm GBPm
----------------------------------------- -------- -------- -------
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 As at As at
30 June 30 June 31 Dec
2018 2017 2017
GBPm GBPm GBPm
------------------------------- ---------- ---------- ---------
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
Treasury Total excluding Non-
Share Share Translation share Retained non-controlling controlling Total
capital premium reserve reserve earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ------------ ---------- --------- ---------------- ------------- --------
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
------------------ -------- -------- ------------ ---------- --------- ---------------- ------------- --------
Treasury Total excluding Non-
Share Share Translation share Retained non-controlling controlling Total
capital premium reserve reserve earnings interests interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- -------- -------- ------------ ---------- --------- ---------------- ------------- -------
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 First Full
Half Half Year
2018 2017 2017
GBPm GBPm GBPm
------------------------------------------- -------- -------- -------
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 As at Average for Average Average
30 June 31 December 6 months for 3 months for
January-June April-June the
year
Currency 2018 2017 2017 2018 2017 2018 2017 2017
(=GBP)
------------- --------- --------- ------------- --------- --------- --------- --------- ---------
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
Rest Rest Central
New Regional of Singapore of Costs Total
York US London Europe GBPm Asia Australasia GBPm Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------ --------- ------- -------- ------------ ------ ------------ -------- -------
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
Rest Rest Central
New Regional of Singapore of Costs Total
York US London Europe GBPm Asia Australasia GBPm Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ------ --------- ------- -------- ------------ ------ ------------ -------- -------
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
Rest Rest
New Regional of Singapore of Total
York US London Europe GBPm Asia Australasia Group
At 30 June 2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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
----------------------- ------ --------- ------- -------- ------------ ------ ------------ -------
Rest Rest
New Regional of Singapore of Total
As at 30 June York US London Europe GBPm Asia Australasia Group
2017 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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 First First Full
and expense Half Half Year
2018 2017 2017
Notes GBPm GBPm GBPm
------------------------------------- ------- ------ -------- -------
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 (d)
properties 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 GBP12m recognised in the income statement.
(c) Impairment of assets
The total impairment charge for the first half of 2018 was GBPnil (H1 2017: GBP9m).
(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 (GBP44m) and a gain of GBP3m was recognised by the Group.
5. Income tax expense
The Group recorded a tax expense of GBP12m for the first half of 2018 (H1 2017: GBP4m) excluding the tax relating to joint ventures and associates. The tax expense of GBP4m recorded during the first half of last year included the release of GBP4m 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 First Full
Half Half Year
2018 2017 2017
------------------------------------------------------------------------------- -------- -------- -------
(a) Basic
Profit for the period attributable to holders of the parent (GBPm) 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 (GBPm) 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 First Full
Half Half Year
2018 2017 2017
pence pence 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 GBP14m (H1 2017: GBP18m).
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, GBP3m (December 2017: GBP4m) of cash was deposited with Hong Leong Finance Limited.
Fees paid/payable by the Group to CDL and its other subsidiaries were GBP1m (H1 2017: GBP1m) 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 GBP60m at 30 June 2018 (31 December 2017: GBP70m).
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
INDEPENT 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
APPIX 1: Key OPERATING STATISTICS
for the half year ended 30 June 2018
First Half First Half First Half Full
2018 2017 2017 Year
Reported Constant Reported 2017
currency currency currency Reported
Owned or leased hotels* currency
------------------------ ---------- ---------- ---------- ---------
Occupancy (%)
New York 82.3 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
(GBP)
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 (GBP)
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.
APPIX 2: Key OPERATING STATISTICS
for the quarter ended 30 June 2018
Q2 2018 Q2 2017 Q2 2017 FY 2017
Reported Constant Reported Reported
Owned or leased hotels* currency currency currency 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 (GBP) 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 (GBP) 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 30 June 31 Dec Change 30 June 31 Dec Change
room count 2018 2017 2018 2017
------------------ -------- ------- ------- -------- ------- -------
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)
------------------ -------- ------- ------- -------- ------- -------
Hotels Rooms
Pipeline 30 June 31 Dec Change 30 June 31 Dec Change
2018 2017 2018 2017
------------------ ---------- -------- --------- ---------- -------- ---------
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR DGGDIGBGBGID
(END) Dow Jones Newswires
August 03, 2018 02:00 ET (06:00 GMT)
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