Interim Results
August 07 2003 - 3:02AM
UK Regulatory
RNS Number:4218O
Millennium & Copthorne Hotels PLC
07 August 2003
7 August 2003
MILLENNIUM & COPTHORNE HOTELS PLC
RESULTS FOR THE SIX MONTHS ENDED
30 JUNE 2003
Millennium & Copthorne Hotels plc today presents its results for the six months
ended 30 June 2003.
Group results
* Group turnover #243.0m (2002: #283.8m)
* Group operating profit #15.5m (2002: #44.2m)
* Net profit on sale of fixed assets #0.4m (2002: #nil), principally:
- Profit of #6.1m on sale of non-core assets in London and China
- Provision of #4.8m against a loan note receivable on a hotel disposal
in Florida, USA
* Pre-tax loss #6.3m (2002: profit of #25.6m)
* Loss per share 2.2p (2002: Earnings per share of 4.6p)
* Interim dividend maintained at 4.2p per share (2002: 4.2p)
Operational overview
* Ongoing tight control on costs
* Asian business improving following the containment of SARS
* Improvement in trading in the United States and Europe since the end of the
war in Iraq
* Millenium Hilton in New York performing well following reopening in May
Commenting today, Mr Kwek Leng Beng, Chairman, said:
"Today's results reflect the significant impact of the war in Iraq and the
outbreak of SARS on the industry. I am glad to note that both the war and the
SARS epidemic, which lasted a shorter period than anticipated, are over now. I
believe that the hotel industry, barring circumstances beyond its control, is on
the road to recovery - with growing occupancies to be followed by better rates.
"There are relatively few new hotels being built and we remain confident that
our ownership of quality assets in key gateway cities makes us uniquely placed
to benefit from the continued improvement in trading."
Enquiries to:
John Wilson, Chief Executive 020 7404 5959 (7 August)
Millennium & Copthorne Hotels plc
David Thomas, Group Finance Director 020 7404 5959 (7 August)
Millennium & Copthorne Hotels plc
Nick Claydon/Kate Miller/Chi Lo 020 7404 5959
Brunswick Group Limited
A copy of the press release and analyst presentation will be available on
http:/ /www.millenniumhotels.com. An audio webcast of the results presentation
to analysts and investors will be available on www.millenniumhotels.com and
www.cantos.com
Photographs are available on www.newscast.co.uk
MILLENNIUM & COPTHORNE HOTELS PLC
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
OVERVIEW
On 21 May 2003 we provided a quarterly trading update in which we emphasised
that the build up to the war in Iraq and the subsequent conflict had a severe
impact on our results. The effect of the Iraq conflict was compounded by the
SARS outbreak in the second half of March which significantly affected our
operations in Asia. The virus had a major impact from the third week in March
through until mid-June and in the second quarter we saw a dramatic fall in
occupancy in our Asian properties.
Since the cessation of major hostilities in early May, there has been an
on-going improvement in the business environment in Europe and the USA from the
low point of April. The SARS outbreak has now been contained and all countries
in the Asia region have now been declared SARS free by the World Health
Organisation. In addition, governments in the region are investing substantial
resources in promoting tourism to their countries and business is improving
gradually. We are beginning to see a quicker return of corporate customers in
Asia than anticipated while we note the leisure market is coming back more
gradually.
The Millenium Hilton in New York has been closed since 11 September 2001. The
hotel was reopened in May and all of the rooms are now available. The property
is rapidly regaining its market share position and has had an average occupancy
during the opening period in excess of 70%.
Although the trading performance of the hotel since it reopened has been better
than expected, it incurred a net loss of US$11.3m (#7.0m) in the first half of
2003 due to on-going fixed expenses, pre-opening costs and legal fees, compared
to a net profit of US$4.5m (#3.1m) in 2002. This is reported as other operating
expenses. We expect the hotel to return to profitability during the second half
of 2003.
We have taken strong action to mitigate the effects of these challenging market
conditions. Throughout the period we remained committed to maintaining our
position in the marketplace by driving sales at a local level. Our cost base
was further reduced by reorganising certain functions in the business,
redundancies and restricting expenses. We also maintained a tight control on
capital expenditure.
The Group has considerable financial strength and, notwithstanding the impact on
the Group of the Iraq conflict and the SARS virus, the Group has net assets of
#1.4bn (30 June 2002: #1.5bn) and gearing stands at 54% (30 June 2002: 49%).
For the six months to 30 June 2003 we incurred a pre tax loss of #6.3m (2002:
profit of #25.6m). The loss per share was 2.2p (2002: earnings of 4.6p). Not
withstanding this loss we are maintaining the interim dividend at 4.2p per share
(2002: 4.2p per share). We will continue to keep our cash resources under close
review in these uncertain times.
REVIEW OF OPERATIONS
Group performance
Our turnover for the first six months of 2003 was #243.0m (2002: #283.8m).
Group operating profit was #15.5m (2002: #44.2m). Occupancy for the Group
(including the Millenium Hilton) was 61.1% (2002: 66.3%) and the average room
rate was #60.74 (2002: #67.26) resulting in a RevPAR of #37.11 (2002: #44.59).
The Group GOP margin was 27.5% (2002: 34.5%).
In order to assist the understanding of our key operating statistics we are
presenting "like for like" statistics in constant currency. These are set out
in the appendix.
On this like for like (LFL) basis, with constant rates of exchange, occupancy
was 61.0% (2002: LFL 65.9%) and the average room rate was 7.6% down at #60.38
(2002: LFL #65.36) resulting in a RevPAR of #36.83 (2002: LFL #43.07).
Our performance takes into account a profit on the sale of fixed assets of #0.4m
which principally comprises two items:
* the previously reported disposal of non-core assets; a staff hostel in
London and a partly built hotel in China. The combined net profit on these
sales was #6.1m.
* a provision against a loan note on a hotel in Florida sold as part of the
disposal programme following the Regal acquisition. Part of the
consideration was in the form of a loan note to the Group secured on the
property. The purchaser has now filed for protection from bankruptcy under
Chapter 11 and the Group has therefore decided that it is prudent to make a
provision of #4.8m against the loan note.
UNITED STATES
New York
Occupancy for the region was maintained at 82.6% (2002: LFL 82.6%). However,
the average rate was #96.20 (2002: LFL #108.42) and the resultant RevPAR was
#79.46 (2002: LFL #89.55).
Our occupancy has remained high, despite the severe winter weather in February
and the Iraq conflict, because we have consistently followed a policy of driving
volume through tactical marketing.
The Millenium Hilton re-opened on 5 May as a "brand new" hotel following US$35m
of capital expenditure. The rooms were brought into service on a rolling basis
and all rooms are now available. It is now the landmark hotel of the financial
district and is performing ahead of our expectations.
The legal action with the insurance company has not been settled and we have
therefore not recognised any business interruption income from this hotel in
2003. In the event that the dispute is settled and further insurance proceeds
are forthcoming, we will book them on a received basis. The court hearing is
currently scheduled for October 2003.
We are now seeing a number of external stimulants to the hotel industry in New
York City: flights are relatively cheap as the airlines try to attract business,
the Iraq war is over and people are more comfortable to travel as they become
accustomed to increased levels of airport security. Our expectation is that the
relatively high occupancy levels will eventually stimulate increases in average
rates.
Regional US
The occupancy for the region improved to 54.6% (2002: LFL 51.2%). The average
rate was #58.99 (2002: LFL #66.63) and the resultant RevPAR was #32.21 (2002:
LFL #34.11).
Overall the performance of the region's hotels was encouraging, given the
difficult circumstances in which they were operating. Significant rises in
occupancy offset the pressure on average rates to produce an increased RevPAR in
the first quarter, although the second quarter was more difficult as trading was
affected by the war in Iraq and SARS, particularly in Los Angeles which is a
gateway from Asia.
Whilst US domestic air travel volumes are still lower than in 2002, the position
is improving as business demand strengthens and internal travellers become
accustomed to the increased levels of security at airports. In June and July we
have seen some encouraging trends in the regional US market both in terms of
improved occupancy and rate at certain of our hotels. We completed our
extensive refurbishment of these properties in mid 2001 and, now that there are
clear signs of recovery in the regional US market, we are seeing the benefits of
our investment.
On 31 March 2003 we acquired the remaining 60% of the share capital held by the
limited partners in The Sunnyvale Four Points Hotel, California for a net
consideration of US$4.2m (#2.6m). This 378 room hotel is now wholly owned by
the Group and will give us greater flexibility going forward.
EUROPE
London
The occupancy for the region was 74.5% (2002: LFL 81.8%). The average rate was
#73.63 (2002: LFL #79.48) and the resultant RevPAR was #54.85 (2002: LFL
#65.01).
The London hotel market has been difficult for some time because, although
volume remains high, there is continued pressure on average rates. The first
half of 2003 saw in-bound business from the United States further reduced and
the SARS virus curtailed the number of visitors from Asia in the second quarter.
In spite of these factors we have continued with our policy of making tactical
price reductions rather than wholesale cuts.
Our results in this region are being significantly affected by the Copthorne
Tara in Kensington. The hotel lost 16,000 aircrew room nights in the first half
of 2003 as a consequence of the reduced numbers of flights to and from the UK.
Some of these were replaced by tour groups who, in turn, are also negotiating
lower rates as the group travel market remains highly competitive. We believe
that the worst is now behind us as flight schedules revert gradually back to
previous levels.
Our food and beverage revenue was given a significant boost by the opening of
Brian Turner's restaurant at the Millennium Hotel London Mayfair in April.
Brian Turner's unique style of cuisine is attracting significant new business
into the restaurant and hotel.
Rest of Europe
The occupancy for the region was 68.4% (2002: LFL 67.7%). The average rate was
#68.31 (2002: LFL #72.63) and the resultant RevPAR was #46.72 (2002: LFL
#49.17). Whilst occupancies are being maintained at 2002 levels we are still
seeing some pressure on rate, although not to the same degree as in other
regions.
Provincial UK business levels are less affected by air travel and occupancies
improved marginally, although our two hotels near Gatwick airport continue to
experience pressure on RevPAR. The leisure market in Provincial UK is very
price sensitive and the market has seen a number of special offers which have
had the effect of reducing our average rate for these hotels by 6.7%.
Our Paris hotels saw a combined fall in RevPAR of #5.68, due largely to the
oversupply at Charles de Gaulle airport which has affected our Millennium hotel
there. The Millennium Paris Opera is trading well in a difficult market. The
RevPAR of our two properties in Germany remained approximately the same as in
2002 and the operating loss in our German hotels was #1.8m (2002: #1.8m).
ASIA
The occupancy for the region was 48.0% (2002: LFL 66.2%). The average rate was
#52.79 (2002: LFL #59.22) and the resultant RevPAR was #25.34 (2002: LFL
#39.20).
The SARS virus had a major effect on Singapore and Hong Kong from the second
half of March and other countries, such as Taiwan, were not affected until
April. The impact of both the war and SARS were mitigated by cost cutting
measures such as a shorter working week for staff, moth-balling of guest rooms
and the closure of unprofitable outlets. It is encouraging to report that
business levels in the Asia region are clearly recovering, although the leisure
market is still feeling the effects of SARS.
In Singapore, occupancies are now starting to recover from the effect of SARS.
At the height of the epidemic they were running at around 25% but improved to
nearly 44% in June and we have re-opened floors that were closed during the SARS
crisis. RevPAR from 1 April to 30 June dropped 54% compared to the first
quarter and GOP fell by 64%. We are beginning to see the return of corporate
customers and, although room rates remain under pressure, we expect to see
upward movements once occupancies return to more normal levels.
Prior to the SARS outbreak we were in the process of completely refurbishing The
Kings Hotel Singapore. However, as a result of SARS, we felt it prudent to
delay some of the capital expenditure until trading conditions improved. We now
expect to complete the work by the year end.
In the first quarter the Grand Hyatt Taipei was our best performing Asian hotel
with a 4% increase in RevPAR. However, the SARS virus affected the second
quarter performance significantly and we are only now beginning to see a
recovery in the position. Taiwan was impacted by SARS later than most other
Asian countries and, although it will therefore be one of the last to recover,
it is doing so quickly. Rooms revenue in the second quarter fell by 74% and
food and beverage revenue was down 46%. RevPAR at the hotel in the month of
July was down by 14% compared to a 79% fall in June. Given the quality of this
property we are confident that it will return to the business levels previously
experienced and the outlook for the remainder of 2003 at this property is more
encouraging, particularly for the banqueting business in the last quarter.
Given that South Korea was not affected by SARS, we are disappointed with the
performance of our hotel in Seoul. Volumes and average rates have reduced due,
in part, to a decline in intra-regional travel, particularly from Japan. We are
beginning to see more intra-regional travel to Seoul.
Our two properties in Hong Kong were our worst affected assets during April and
May but occupancies have improved in June and July.
AUSTRALASIA
The occupancy for the region was 68.4% (2002: LFL 70.7%). The average rate was
#36.29 (2002: LFL #34.70) and the resultant RevPAR was #24.82 (2002: LFL
#24.53).
We remain very pleased with the performance of our New Zealand properties which
have increased their RevPAR by 1.2%, despite a fall in the number of in-bound
Asian visitors following the SARS epidemic.
The Millennium Sydney has now closed and the conversion of one of the towers to
residential accommodation has begun. Early sales of the apartments progressed
well and we had expressions of interest on over half of them before the hotel
closed. However, in the wake of SARS, we had a number of cancellations. We are
now encouraged by the pick up in sales again, following the containment of the
virus. We are continuing to evaluate our options regarding the second tower.
Our retail centres in Sydney continue to perform well and we have seen good
results from our land redevelopment business in New Zealand.
CURRENT TRADING AND PROSPECTS
The first six months of 2003 has been particularly difficult for the Group. The
build-up to and the subsequent conflict in Iraq was accompanied by the dramatic
effect of SARS in Asia. The Group has continued to drive sales at our hotels
and maintain a sharp focus on our costs.
Group RevPAR for the month of July was 8% down compared to 2002. We are making
steady progress in all of our regions, particular in Asia where airlines are
reinstating flights cancelled during the SARS epidemic, intra-regional travel is
rising and economic growth expectations are improving.
However, the market remains challenging and in the medium term we retain our
conservative outlook, but expect the Group to return to profit in the second
half of the year.
There are relatively few new hotels being built and we remain confident that our
ownership of quality assets in key gateway cities makes us uniquely placed to
benefit from the continued improvement in trading.
Our next trading update will be in November when we will announce the trading
results for the third quarter.
Kwek Leng Beng
Chairman
7 August 2003
REVIEW OF FINANCE
Results
The total turnover for the six months was #268.7m (2002: #320.2m) including
#25.7m (2002: #36.4m) as a share of the turnover of joint ventures. The Group
operating profit was #15.5m (2002: #44.2m).
Joint ventures and associates
The share of operating profits of joint ventures and associates for the six
months were #0.6m (2002: #5.2m) and #nil (2002: #0.2m) respectively. The
reduction in the share of operating profit principally reflects the effect of
the Iraq war and the SARS virus on these hotels.
Gain on sale of fixed assets
This is comprised of:
* a #6.1m profit on sale of a staff hostel in London and a partly built hotel
in China;
* a #4.8m provision against a loan note on a hotel in Florida sold as part of
the disposal programme following the Regal acquisition. Part of the
consideration was in the form of a loan note to the Group secured on the
property. The purchaser has now filed for protection from bankruptcy under
Chapter 11 and the Group has therefore decided that it is prudent to make
this provision;
* #0.9m of other losses on disposal.
Interest
Group total interest receivable and similar income was #2.2m (2002: #4.7m).
Total interest payable was #25.0m (2002: #28.7m).
The Group interest payable (excluding joint ventures and associates) was #22.4m
(2002: #25.2m). The reduction in interest payable compared to last year is
largely as a result of lower average interest rates during the period.
Of the total interest payable, #2.6m (2002: #3.3m) was in respect of the Group's
share of the interest payable by joint ventures and #nil (2002: #0.2m) was in
respect of the Group's share of the interest payable by associated undertakings.
The total interest payable for associates and joint ventures reduced as a result
of the reduction of prevailing interest rates in the US and Hong Kong.
The total net interest cost for the year was #22.8m (2002: #24.0m), which was
covered 0.7 times (2002: 2.1 times) by profits, including our share of operating
profits of joint ventures and associated undertakings, of #16.1m (2002: #49.6m).
The Group (excluding joint ventures and associates) has fixed and variable rate
interest hedging arrangements on US dollar loans outstanding at 30 June of
US$526m. These US$ hedging arrangements were entered into in September 2000.
They have a blended cost of 6.8% compared to 2.7% if no such arrangements were
in place. The increased annual cost is approximately #13m. This arrangement
will cease in December 2005 when the interest rate will become US Federal rate
plus between 150 and 200 basis points. The other group loans have a blended
cost of approximately 4.6%.
Taxation
The effective rate of taxation for the period is 25.4% (Full year 2002: 23.9%)
and we are reporting a tax credit of #1.6m (six months to 30 June 2002: charge
of #7.3m).
Capital expenditure
The cash outflow on capital expenditure for the period was #20.5m (2002:
#12.4m), of which #11.6m (2002: #1.1m) related to the refurbishment of the
Millenium Hilton. Our already well maintained portfolio and the completion of a
number of major capital programmes in earlier years have meant that we have been
able to reduce our capital spending without having an adverse effect on the
business. We anticipate that our expenditure for the year, including that amount
spent on the Millenium Hilton of US$25m, will be around #30m.
Dividends and earnings per share
The directors are proposing an interim dividend of 4.2p per share (2002: 4.2p).
The interim dividend will be paid on 8 October 2003 to shareholders on the
register as at close of business on 22 August 2003. For the first time the
Group will be offering shareholders the option of a scrip dividend.
The basic loss per share was 2.2p (2002: earnings per share of 4.6p).
Acquisition of Four Points Sunnyvale
On 31 March 2003 we acquired the remaining 60% of the share capital held by
limited partners in The Sunnyvale Four Points Hotel, California for a net
consideration of US$4.2m (#2.6m). The preliminary fair value of the net assets
acquired was US$24.5m. The acquisition was funded from existing cash resources
and the drawdown of US$20.3m of additional debt.
This 378 room hotel is now wholly owned by the Group.
Treasury
The net borrowings of the Group, as at 30 June 2003, were #712.2m (31 December
2002: #675.5m). The movement in borrowings reflects an increase in underlying
net debt of #31.7m, debt of #12.6m acquired on the purchase of the Four Points
Sunnyvale and underlying currency movements.
Cash flow and gearing
Net cash inflow from operations was #30.6m (2002: #59.7m). There was an overall
net decrease in cash of #31.6m (2002: decrease of #14.7m), which, together with
an increase of #8.5m in short term deposits, gives rise to cash balances at 30
June 2003 of #32.7m (2002: #62.5m).
The Group gearing as at 30 June 2003 was 54% (30 June 2002: 49%).
David Thomas
Group Finance Director
7 August 2003
Appendix
Consolidated profit and loss account
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
TURNOVER
Group and share of joint ventures 268.7 320.2 641.1
Less share of turnover of joint ventures (25.7) (36.4) (73.6)
_______ _______ _______
GROUP TURNOVER 243.0 283.8 567.5
Cost of sales (113.7) (126.6) (252.1)
_______ _______ _______
GROSS PROFIT 129.3 157.2 315.4
Administrative expenses (106.8) (116.1) (225.6)
Other operating (expense)/income (7.0) 3.1 6.5
_______ _______ _______
GROUP OPERATING PROFIT 15.5 44.2 96.3
Share of operating profits of joint ventures 0.6 5.2 12.2
Share of operating profits of associated undertakings - 0.2 0.4
_______ _______ _______
TOTAL OPERATING PROFIT 16.1 49.6 108.9
Profit on sale of fixed assets 0.4 - -
Interest payable less receivable
Group (20.2) (20.5) (41.8)
Joint ventures (2.6) (3.3) (6.5)
Associated undertakings - (0.2) (0.4)
_______ _______ _______
(22.8) (24.0) (48.7)
_______ _______ _______
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (6.3) 25.6 60.2
Tax on (loss)/profit on ordinary activities 1.6 (7.3) (14.4)
_______ _______ _______
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (4.7) 18.3 45.8
Minority interests - equity (1.6) (5.3) (7.8)
_______ _______ _______
(Loss)/profit for the financial period (6.3) 13.0 38.0
Dividends paid and proposed (11.9) (11.9) (35.3)
_______ _______ _______
RETAINED (LOSS)/PROFIT FOR THE FINANCIAL PERIOD (18.2) 1.1 2.7
_______ _______ _______
Basic (loss)/earnings per share (2.2p) 4.6p 13.4p
Diluted (loss)/earnings per share (2.2p) 4.6p 13.4p
Dividends per share 4.2p 4.2p 12.5p
Consolidated statement of total recognised gains and losses
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
(Loss)/profit for the financial period (6.3) 13.0 38.0
Loss on foreign currency translation (17.2) (20.4) (62.6)
Deficit on revaluation of fixed assets - (2.0) (0.3)
_______ _______ _______
Total gains and losses relating to the financial period (23.5) (9.4) (24.9)
Prior year adjustment - (62.5) (62.5)
_______ _______ _______
Total gains and losses recognised since last annual report (23.5) (71.9) (87.4)
_______ _______ _______
Note of historical cost profits and losses
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
Reported (loss)/profit on ordinary activities before taxation (6.3) 25.6 60.2
Difference between a historical cost depreciation charge
and the actual depreciation charge for the period calculated
on the revalued amount 0.2 0.2 0.5
_______ _______ _______
Historical cost (loss)/profit on ordinary activities before (6.1) 25.8 60.7
taxation
_______ _______ _______
Historical cost (loss)/profit for the period retained after
taxation, minority interests and dividends (18.0) 1.3 3.2
_______ _______ _______
Consolidated balance sheet
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
FIXED ASSETS
Tangible assets 2,178.9 2,263.0 2,185.4
Investments in joint ventures
Share of gross assets 273.5 300.5 288.1
Share of gross liabilities (192.3) (215.0) (205.1)
Share of minority interests (20.5) (21.4) (21.2)
Loans to joint ventures 35.8 38.9 36.1
_______ _______ _______
96.5 103.0 97.9
Investment in associated undertakings 1.4 5.1 6.2
Investments 0.5 0.3 0.3
_______ _______ _______
98.4 108.4 104.4
_______ _______ _______
2,277.3 2,371.4 2,289.8
_______ _______ _______
CURRENT ASSETS
Stocks 15.1 17.8 15.7
Debtors falling due within one year 68.3 70.9 75.6
Debtors falling due after more than one year 2.1 9.0 2.0
_______ _______ _______
70.4 79.9 77.6
Cash and short term deposits 32.7 62.5 59.1
_______ _______ _______
118.2 160.2 152.4
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans, overdrafts and finance lease obligations (88.4) (189.9) (115.8)
Other liabilities (146.8) (179.9) (176.4)
_______ _______ _______
(235.2) (369.8) (292.2)
_______ _______ _______
NET CURRENT LIABILITIES (117.0) (209.6) (139.8)
_______ _______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 2,160.3 2,161.8 2,150.0
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loans, overdrafts and finance lease obligations (656.5) (551.7) (618.8)
Other liabilities (13.2) (17.3) (15.2)
_______ _______ _______
(669.7) (569.0) (634.0)
PROVISIONS FOR LIABILITIES AND CHARGES (54.5) (47.9) (49.7)
_______ _______ _______
NET ASSETS 1,436.1 1,544.9 1,466.3
_______ _______ _______
CAPITAL AND RESERVES
Called up share capital 84.8 84.8 84.8
Share premium account 845.6 845.6 845.6
Revaluation reserve 306.5 313.0 308.4
Profit and loss account 78.6 146.4 112.1
_______ _______ _______
SHAREHOLDERS' FUNDS - EQUITY 1,315.5 1,389.8 1,350.9
MINORITY INTERESTS - EQUITY 120.6 155.1 115.4
_______ _______ _______
TOTAL CAPITAL EMPLOYED 1,436.1 1,544.9 1,466.3
_______ _______ _______
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
CASH FLOW STATEMENT
Net cash inflow from operating activities 30.6 59.7 122.2
Dividends received from associated undertakings - - 0.2
Dividends received from joint ventures - - 0.1
Returns on investments and servicing of finance (23.4) (25.6) (50.0)
Taxation paid (0.6) (5.7) (11.6)
Capital expenditure and financial investment (12.2) (9.6) (12.2)
Acquisitions and disposals (2.6) - -
Equity dividends paid (23.5) (23.5) (35.3)
_______ _______ _______
Cash (outflow)/inflow before use of liquid resources and financing (31.7) (4.7) 13.4
Management of liquid resources (8.5) - 30.6
Financing
Net cash from the issue of shares and purchase
of minority interests - 0.2 (37.2)
Increase/(decrease) in debt and lease financing 8.6 (10.2) 8.1
_______ _______ _______
Net cash inflow/(outflow) from financing 8.6 (10.0) (29.1)
_______ _______ _______
(Decrease)/increase in cash in the period (31.6) (14.7) 14.9
_______ _______ _______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
(Decrease)/increase in cash in the period (31.6) (14.7) 14.9
Cash outflow/(inflow) from increase/(decrease) in
liquid funds 8.5 - (30.6)
Cash (inflow)/outflow from the (increase)/decrease
in debt and lease financing (8.6) 10.2 (8.1)
_______ _______ _______
Change in net debt resulting from cash flows (31.7) (4.5) (23.8)
Acquisitions (12.6) - -
Deferred finance costs 0.3 - 0.2
Translation differences and other non cash movements 7.3 10.8 33.5
_______ _______ _______
Movement in net debt in the period (36.7) 6.3 9.9
Net debt at beginning of the period (675.5) (685.4) (685.4)
_______ _______ _______
Net debt at end of the period (712.2) (679.1) (675.5)
_______ _______ _______
RECONCILIATION OF OPERATING PROFIT TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
Operating profit 15.5 44.2 96.3
Depreciation 19.9 19.8 39.8
Loss on disposal of fixed - 0.2 0.4
assets
Decrease in stocks 0.6 0.2 0.1
Decrease/(increase) in 4.9 (8.3) (4.3)
debtors
(Decrease)/increase in (10.0) 3.8 (9.7)
creditors
Decrease in provisions (0.3) (0.2) (0.4)
_________ _________ _________
Net cash inflow from
operating activities 30.6 59.7 122.2
_________ _________ _________
ANALYSIS OF NET DEBT
Translation
Acquisitions differences
As at Deferred excluding and other As at
1 January finance cash and non cash 30 June
2003 Cash flow costs overdrafts movements 2003
#m #m #m #m #m #m
Cash 46.2 (31.6) (3.0) 11.6
Overdrafts (1.8) _______ (1.8)
(31.6)
Short term deposits 12.9 8.5 (0.3) 21.1
Debt due after one year (465.0) (47.1) 0.3 4.1 (507.7)
Debt due within one year (86.5) 85.3 (12.6) (0.3) (14.1)
Finance Leases (18.3) 0.2 (0.5) (18.6)
Bonds due after one year (147.4) - 5.4 (142.0)
Bonds due within one year (15.6) (47.0) 1.9 (60.7)
(8.6)
(675.5) (31.7) 0.3 (12.6) 7.3 (712.2)
ANALYSIS OF CASH FLOW FOR HEADINGS NETTED 6 months 6 months Year
IN THE CASH FLOW STATEMENT ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Unaudited Unaudited Audited
Returns on investments and servicing of finance
Interest received 0.8 2.5 4.6
Interest paid (21.4) (23.5) (46.5)
Loan arrangement fees paid (0.3) - (2.9)
Interest element of finance lease rental payments (0.6) (0.6) (1.2)
Dividends paid to minorities (1.9) (4.0) (4.0)
__________ __________ __________
Net cash outflow for returns on investments and
servicing of finance (23.4) (25.6) (50.0)
__________ __________ __________
Capital expenditure and financial investment
Purchase of tangible fixed assets (8.9) (11.3) (28.6)
Millenium Hilton New York capital expenditure (11.6) (1.1) (5.1)
Insurance capital claim receipts - - 18.9
Purchase of development properties - - (2.1)
Proceeds from the sale of development properties 1.6 2.7 0.3
Proceeds from sale of investments 2.5 - -
Sale of properties held for resale - - 3.2
Sale of other fixed assets 4.2 0.1 0.3
Repayment from loans to associated undertakings and - - 0.9
joint ventures
__________ __________ __________
Net cash outflow for capital expenditure and financial (12.2) (9.6) (12.2)
investment
__________ __________ __________
Acquisitions and disposals
Acquisition of subsidiary undertakings (2.6) - -
__________ __________ __________
Net cash outflow for acquisitions and disposals (2.6) - -
__________ __________ __________
Management of liquid resources
Cash withdrawn from short term deposit (8.5) - 30.6
__________ __________ __________
Net cash inflow from management of liquid resources (8.5) - 30.6
__________ __________ __________
Financing
Issue of shares from the exercise of options - 0.2 0.2
Purchase of shares in minorities - - (37.4)
__________ __________ __________
- 0.2 (37.2)
__________ __________ __________
Drawdown of third party loans 150.6 29.8 165.2
Repayment of third party loans (141.8) (38.7) (155.0)
Capital element of finance lease repayment (0.2) (1.3) (2.1)
__________ __________ __________
8.6 (10.2) 8.1
__________ __________ __________
Net cash inflow/(outflow) from financing 8.6 (10.0) (29.1)
__________ __________ __________
Segmental Analysis
6 months 6 months
ended ended Year ended
30 June 2003 30 June 2002 31 Dec 2002
Reported Reported Reported
currency currency currency
Unaudited Unaudited Audited
#m #m #m
GROUP TURNOVER
New York 28.7 33.9 68.0
Regional US 52.6 60.0 119.7
London 31.3 36.4 75.3
Regional Europe 43.7 43.5 88.6
Asia 57.1 81.4 157.6
Australasia 29.6 28.6 58.3
__________ __________ __________
Group 243.0 283.8 567.5
__________ __________ __________
OPERATING PROFIT
New York 1.8 4.6 10.7
Regional US 0.7 4.0 8.1
London 9.9 11.5 24.6
Regional Europe 3.4 4.4 9.3
Asia 5.5 16.2 34.9
Australasia 7.1 6.8 14.4
__________ __________ __________
Group 28.4 47.5 102.0
Other operating (expense)/income (7.0) 3.1 6.5
Central costs and other items (5.9) (6.4) (12.2)
__________ __________ __________
GROUP OPERATING PROFIT 15.5 44.2 96.3
Share of operating profits of joint ventures 0.6 5.2 12.2
Share of operating profits of associated undertakings - 0.2 0.4
Profit on sale of fixed assets 0.4 - -
Interest payable less receivable (22.8) (24.0) (48.7)
__________ __________ __________
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (6.3) 25.6 60.2
__________ __________ __________
In the six month period ended 30 June 2003 other operating expenses comprises
the costs incurred as a result of the closure and reopening of the Millenium
Hilton in New York. No business interruption income was recognised in the
period. In both comparative periods, operating income comprises business
interruption proceeds recognised in relation to the Millenium Hilton, net of
depreciation, employment expenses and other variable and fixed operating costs
incurred during the hotel's closure.
Notes
1. Date of approval These interim statements were approved by the directors on
6 August 2003. Further copies of the statements can be obtained from
Millennium & Copthorne Hotels plc at Victoria House, Victoria Road, Surrey,
RH6 7AF.
2. Basis of preparation These statements have been prepared under the historic
cost convention, modified to include the revaluation of certain hotels.
Preparation is in accordance with the Group's accounting policies as set
out in the financial statements for the year ended 31 December 2002.
The comparative figures for the financial year ended 31 December 2002 are
not the Group's statutory accounts for that financial year but are abridged
from them. Those accounts have been reported on by the Group's auditors
and delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237 (2) and (3)
of the Companies Act 1985.
3. Basis of consolidation The interim statements consolidate the accounts of
Millennium & Copthorne Hotels plc and its subsidiary undertakings together
with the Group's share of the net assets and results of its joint ventures
and associated undertakings.
The results of the subsidiary undertakings acquired are included in the
profit and loss account from the effective date of acquisition. The Group's
share of the results and the net assets of its associated undertakings and
joint ventures are included in the consolidated profit and loss account and
balance sheet under the equity method of accounting.
4. Taxation A tax credit has been accrued at a rate of 25.4% (2002 full year:
23.9%).
5. Dividends The interim dividend of 4.2p per share will be paid on 8 October
2003 to shareholders on the register as at close of business on 22 August
2003. The ex-dividend date for the shares will be 20 August 2003. For the
first time the Group will be offering shareholders the option of a scrip
dividend.
6. Earnings per share The basic loss per share of 2.2 p (2002: earnings of
4.6p) are based on a loss of #6.3 million (2002: profit of #13.0 million)
and a weighted average number of shares in issue of 282.6 million (2002:
282.6 million) being the average number of shares in issue in the period.
Fully diluted loss per share of 2.2p (2002: earnings of 4.6p) are based on
a weighted average number of shares in issue of 282.8 million (2002: 285.0
million) being the average number of shares in issue during the period
adjusted for the exercise of share options.
Key Operating Statistics
6 months ended 6 months ended 6 months ended Year ended
30 June 30 June 30 June 31 December
2003 2002 2002 2002
Excluding
Millenium Hilton Like For Like
Reported Constant Reported Reported
Currency Currency Currency Currency
OCCUPANCY (%)
New York 82.6 82.6 82.6 83.3
Rest of USA 54.6 51.2 51.6 54.0
USA 59.8 57.0 57.6 59.7
London 74.5 81.8 81.8 83.1
Rest of Europe 68.4 67.7 67.7 68.6
Europe 71.1 74.0 74.0 75.0
Asia 48.0 66.2 66.2 66.4
Australasia 68.4 70.7 70.8 70.4
Group 61.0 65.9 66.3 67.2
_____________ _____________ _____________ _____________
AVERAGE ROOM RATE (#)
New York 96.20 108.42 120.63 120.28
Rest of USA 58.99 66.63 74.07 70.83
USA 68.44 77.76 87.10 84.29
London 73.63 79.48 79.48 79.86
Rest of Europe 68.31 72.63 70.06 68.94
Europe 70.78 75.99 74.68 74.30
Asia 52.79 59.22 63.05 59.26
Australasia 36.29 34.70 30.91 31.46
Group 60.38 65.36 67.26 65.73
_____________ _____________ _____________ _____________
REVENUE PER AVAILABLE ROOM
(#)
New York 79.46 89.55 99.64 100.19
Rest of USA 32.21 34.11 38.22 38.25
USA 40.93 44.32 50.17 50.32
London 54.85 65.01 65.01 66.36
Rest of Europe 46.72 49.17 47.43 47.29
Europe 50.32 56.23 55.26 55.73
Asia 25.34 39.20 41.74 39.35
Australasia 24.82 24.53 21.88 22.15
Group 36.83 43.07 44.59 44.17
_____________ _____________ _____________ _____________
GROSS OPERATING PROFIT
MARGIN (%)
New York 25.6 26.1 32.5
Rest of USA 19.4 24.2 23.7
USA 21.5 24.9 27.0
London 47.9 51.2 51.4
Rest of Europe 28.3 30.5 30.5
Europe 36.5 39.9 40.1
Asia 27.2 39.5 38.8
Australasia 38.6 37.3 37.3
Group 29.4 34.5 35.1
_____________ _____________ _____________ _____________
Like for like statistics include
- Four Points Sunnyvale for the six months to 30 June 2002 and 2003
- Millennium Hotel Sydney for the three months ended 31 March 2002 and
2003
- Quality Hotel Willis Street Wellington for the three months ended 31
March 2002 and 2003
The Millenium Hilton is excluded from both 2002 and 2003 statistics. Including
the Millenium Hilton in 2003 would produce the following statistics
OCCUPANCY (%)
New York 82.3
USA 60.1
Group 61.1
AVERAGE ROOM RATE (#)
New York 97.24
USA 69.34
Group 60.74
REVPAR (#)
New York 80.03
USA 41.67
Group 37.11
GROSS OPERATING PROFIT MARGIN
(%)
New York 11.1
USA 16.4
Group 27.5
This information is provided by RNS
The company news service from the London Stock Exchange
END
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