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Friday 05 May, 2017

Millennium & Copthor

1st Quarter Results

RNS Number : 2612E
Millennium & Copthorne Hotels PLC
05 May 2017
 

                               

 

For Immediate Release                                                                                                           5 May 2017

 

 

 

MILLENNIUM & COPTHORNE HOTELS plc

TRADING UPDATE

First quarter results to 31 March 2017

 

 

Highlights for 1st quarter 2017:

 


 

Q1

2017

Reported Currency

Constant Currency

Q1

2016

Change

 

Q1

2016

Change

RevPAR

£70.66

£60.02

£10.64

17.7%

£67.56

£3.10

4.6%

Revenue - total

£223m

£192m

£31m

16.1%

£218m

£5m

2.3%

Revenue - hotel

£191m

£165m

£26m

15.8%

£186m

£5m

2.7%

Profit before tax

£13m

£18m

£(5)m

(27.8)%

£21m

£(8)m

(38.1)%

 

·        In constant currency, Group RevPAR grew by 4.6% with increases in both occupancy and average room rate of 2.9% points and 0.3% respectively. In reported currency, Group RevPAR increased by 17.7%.

 

·        London RevPAR growth of 14.5% reflected the lower pound boosting tourist numbers and a weak comparative quarter in the previous year.

 

·        New York RevPAR was higher by 7.0%, helped by improved trading at ONE UN New York after the completion of its refurbishment at the end of 2016. Despite improved revenues, the Group's New York hotels made an overall loss in the quarter.

 

·        Singapore RevPAR was down slightly by 0.9%. Occupancy increased by 4.7% points but average room rate dropped by 6.3%. 

 

·        Profit before tax fell by £5m or 27.8% for the period.  Excluding foreign exchange losses arising at CDL Hospitality Trusts ("CDLHT"), Group pre-tax profit for the period was £17m (Q1 2016: £18m).

 

 

 

 

               

Mr Kwek Leng Beng, Chairman commented:

               

"Group revenue improved during the first three months of 2017, particularly in London and New Zealand.  Singapore RevPAR continues to be under pressure as a result of increased room supply and uncertain economic conditions. Performance in Rest of Asia was negatively affected by geo-political tensions impacting inbound tourism into Seoul and Taipei.  Poor performance in the US region especially New York, remains a concern.  We are addressing the issues contributing to the under-performance in this region and our immediate focus is on the US management structure, which is currently under review."

 

 

 

 

 

 

 

Enquiries

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

Tan Kian Seng, Interim 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 three months ended 31 March 2017, Group reported revenue increased by 16.1% to £223m (Q1 2016: £192m).  On a constant currency basis, Group revenue increased by 2.3%.

 


 

Q1 2017

£m

Reported Currency

Constant Currency

Q1 2016

£m

Change

Q1 2016

£m

Change

£m

%

£m

%

Hotel

191

165

26

15.8

186

5

2.7

Property

18

13

5

38.5

16

2

12.5

REIT

14

14

-

-

16

(2)

(12.5)

Total Revenue

223

192

31

16.1

218

5

2.3

 

Hotel revenue for Q1 2017 increased by £5m or 2.7%, driven by higher contributions from the Group's hotels in London and New Zealand.

 

Property revenue for the period increased by £2m or 12.5%, mainly because of higher contribution from New Zealand land sales.

 

Profit before tax for the first three months of 2017 fell by 27.8% to £13m (Q1 2016: £18m). This includes £4m of foreign exchange losses arising at CDLHT and recorded as finance cost in the Group income statement.

 

Hotel operations

 


RevPAR

Occupancy

Average Room Rate


Q1 2017

£

#Q1 2016

£

Change

%

Q1 2017

%

Q1 2016

%

Change

%pts

Q1 2017

£

#Q1 2016

£

Change

%

  New York

111.16

103.89

7.0

72.0

64.1

7.9

154.33

162.03

(4.8)

  Regional US

50.25

49.01

2.5

52.4

51.4

1.0

96.00

95.27

0.8

Total US

70.31

67.08

4.8

58.8

55.6

3.2

119.51

120.61

(0.9)

  London

86.90

75.89

14.5

76.4

69.5

6.9

113.70

109.24

4.1

  Rest of Europe

44.51

44.88

(0.8)

64.2

64.3

(0.1)

69.27

69.75

(0.7)

Total Europe

65.97

60.58

8.9

70.4

66.9

3.5

93.69

90.51

3.5

  Singapore

84.84

85.65

(0.9)

87.4

82.7

4.7

97.10

103.60

(6.3)

  Rest of Asia

58.68

63.00

(6.9)

62.2

63.5

(1.3)

94.34

99.15

(4.9)

Total Asia

68.81

71.77

(4.1)

71.9

70.9

1.0

95.64

101.15

(5.4)

Australasia

87.07

74.20

17.3

90.5

91.2

(0.7)

96.20

81.31

18.3











Total Group

70.66

67.56

4.6

69.1

66.2

2.9

102.30

102.00

0.3

 

#       In constant currency whereby 31 March 2016 RevPAR and average room rates have been translated at average exchange rates for the period ended 31 March 2017. 

 

In constant currency, Group RevPAR increased by 4.6% to £70.66 (Q1 2016: £67.56). Like-for-like1 RevPAR increased by 1.8%.

 

Note 1: Like-for-like comparisons exclude the impact of acquisitions, closures and refurbishments; and they are stated in constant currency terms.

 

US

 

US RevPAR for the period increased by 4.8% to £70.31 (Q1 2016 £67.08). Occupancy increased by 3.2% points and average room rate was down by 0.9%.

 

New York RevPAR increased by 7.0% as a result of a 7.9% point rise in occupancy which was partially offset by a 4.8% drop in average room rate.  Excluding ONE UN New York where the east tower was closed for refurbishment during Q1 2016, RevPAR for US and New York increased by 1.7% and 0.8% respectively.

 

RevPAR for Regional US increased by 2.5% to £50.25 (Q1 2016: £49.01) with increases in both occupancy and average room rate.

 

Europe

 

Europe RevPAR for Q1 2017 increased by 8.9%, reflecting a better start to the year compared to Q1 2016 when the region was affected by terror attacks in Paris and Brussels. RevPAR for London grew by 14.5% to £86.90 (Q1 2016: £75.89) with increases in both average room rate and occupancy in line with the general market and a significantly higher contribution from The Bailey's Hotel London after its refurbishment, completed in Q1 2016.

 

RevPAR for  Rest of Europe reduced slightly by 0.8% mainly due to the Group's hotels in Paris where the pick-up has been slow as a result of the on-going terrorism threat. 

 

Asia

 

Asia RevPAR for Q1 2017 fell by 4.1% to £68.81 (Q1 2016: £71.77). Occupancy was maintained at around last year's rate but average room rate dropped by 5.4%.

 

Singapore RevPAR dropped slightly by 0.9% with average room rate lower by 6.3%. The Group deployed a competitive pricing strategy, which succeeded in lifting occupancy by 4.7% points, re-balancing the mix of guests in light of continuing pressure on corporate travel budgets and increased room inventory.  Rest of Asia RevPAR decreased by 6.9% in Q1 2017, mainly due to the lower number of Chinese visitors to Taipei and Seoul.

 

Australasia

 

Australasia RevPAR grew by 17.3% in Q1 2017, despite a dip in overseas visitor numbers in March 2017. The increase in RevPAR was mainly due to a successful rate-driven yield management strategy across the estate, with the recently opened Grand Millennium Auckland delivering a strong performance over the period. Excluding Grand Millennium Auckland, RevPAR for Australasia increased by 5.7%.

 

 

Developments

 

The tender for the Yangdong development project in Seoul is underway. Construction work is expected to start in the last quarter of this year.

 

The Group has adjusted the specifications slightly in relation to the mixed use development of its 35,717m2 freehold landsite at Sunnyvale California resulting in lower costs, compared to earlier projections.

 

Hotel refurbishments

Phased refurbishments of Millennium Hotel London Mayfair and Millennium Hotel London Knightsbridge are planned to commence later this year, after the Group has finalised the scope and cost of the works.

Refurbishment of guestrooms on levels 7 and 8 of Grand Millennium Kuala Lumpur will be completed this year.  Refurbishment of the guestrooms on levels 9 to 19 was completed last year.

Copthorne Hotel Auckland Harbourcity is in its final stage of construction and will soft-open in Q3 this year. It will be rebranded M Social Auckland.

 

Asset disposals

 

The Group continues to engage with the developer of Birmingham's Paradise Circus redevelopment scheme, under previously agreed commercial arrangements, regarding the closure and acquisition by the developer of the Copthorne Hotel Birmingham and possible acquisition by the Group of an alternative site for development of a new hotel within the scheme.

 

In March 2017 the Scottish Ministers approved an order that will allow Network Rail Infrastructure Limited ("Network Rail") to take permanently and to demolish the 1970s-built, 51-room extension of the Millennium Hotel Glasgow, in connection with the redevelopment of Queen Street Station. The Group will be entitled to compensation which will either be negotiated or settled at the Lands Tribunal.  If the decision is not appealed, separation works are anticipated to commence in the summer of 2017. The Group is continuing to consider its options, whilst maintaining a commercial dialogue with Network Rail.

 

Other Group operations

 

Joint ventures and associates contributed £4m to profit in Q1 2017 (Q1 2016: £3m). 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. 

 

Financial position

 

At 31 March 2017, the Group had net debt of £710m (Dec 2016: net debt £707m). Excluding CDLHT, the net debt at 31 March 2017 was £212m (Dec 2016: net debt £232m).

 

Current trading

 

On a constant currency basis, Group RevPAR was up by 4.7% for the three weeks ended 21 April 2017, with New York up by 19.9%, Regional US down by 1.8%, London up by 17.1%, Rest of Europe down by 8.9%, Singapore down by 10.8%, Rest of Asia down by 5.4% and Australasia up by 24.1%.

 

On a like-for-like basis excluding One UN New York and Grand Millennium Auckland, Group RevPAR increased by 1.3% with New York up by 8.7% and Australasia up by 10.6%.

 

 

 

 

 

 

 

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 three months ended 31 March 2017



 

 

First

 Quarter

2017

Unaudited

£m

 

 

First

 Quarter

2016

Unaudited

£m

 

 

Full

Year

2016

Audited

£m

 

Revenue


223

192

926

Cost of sales


(105)

(87)

(395)

Gross profit


118

105

531






Administrative expenses


(101)

(88)

(382)

Other operating income


-

-

13

Other operating expense


-

-

(55)

Operating profit


17

17

107






Share of profit of joint ventures and associates


4

3

26






Finance income


3

4

7

Finance expense


(11)

(6)

(32)

Net finance expense


(8)

(2)

(25)






Profit before tax


13

18

108

Income tax expense


(2)

(3)

(10)

Profit for the period


11

15

98

 

Attributable to:





Equity holders of the parent


3

6

78

Non-controlling interests


8

9

20



11

15

98






 

The financial results above were derived from continuing activities.

 

 

 

Condensed consolidated statement of financial position (unaudited)

as at 31 March 2017


 

 

 

 

 

 

As at

31 March

 2017

Unaudited

£m

 

 

As at

31 March

 2016

Unaudited

£m

 

 

As at

31 Dec

2016

Audited

£m

Non-current assets





Property, plant and equipment


3,277

2,884

3,238

Lease premium prepayment


108

100

107

Investment properties


551

545

534

Investment in joint ventures and associates


323

269

320



4,259

3,798

4,199

Current assets





Inventories


5

4

5

Development properties


90

83

93

Lease premium prepayment


2

2

2

Trade and other receivables


93

84

95

Cash and cash equivalents


354

260

337



544

433

532

Total assets


4,803

4,231

4,731

 

Non-current liabilities





Interest-bearing loans, bonds and borrowings


(966)

(720)

(951)

Employee benefits


(23)

(13)

(23)

Provisions


(9)

(8)

(10)

Other non-current liabilities


(14)

(13)

(14)

Deferred tax liabilities


(219)

(221)

(220)



(1,231)

(975)

(1,218)

Current liabilities





Interest-bearing loans, bonds and borrowings


(98)

(196)

(93)

Trade and other payables


(228)

(195)

(214)

Provisions


(1)

(2)

(1)

Income taxes payable


(31)

(31)

(35)



(358)

(424)

(343)

Total liabilities


(1,589)

(1,399)

(1,561)

Net assets


3,214

2,832

3,170

 

Equity





Issued share capital


97

97

97

Share premium


843

843

843

Translation reserve


569

287

537

Treasury share reserve


(4)

(4)

(4)

Retained earnings


1,201

1,152

1,195

Total equity attributable to equity holders of the parent


2,706

2,375

2,668

Non-controlling interests


508

457

502

Total equity


3,214

2,832

3,170

 

 

 

 

Segment results

 

 

 


Q1 2017

 


New York

£m

Regional US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Central

Costs

£m

Total Group

£m

Revenue










Hotel

26

29

25

14

33

41

23

-

191

Property operations

-

1

-

-

1

2

14

-

18

REIT

-

-

-

2

4

6

2

-

14

Total revenue

26

30

25

16

38

49

39

-

223

Hotel gross operating profit/(loss)

(5)

2

10

1

14

13

12

-

47

Hotel fixed charges 1

(8)

(6)

(5)

(2)

(2)

(10)

(1)

-

(34)

Hotel operating profit/(loss)

(13)

(4)

5

(1)

12

3

11

-

13

Property operating profit

-

-

-

-

1

2

6

-

9

REIT operating profit/(loss)

-

-

-

-

(1)

2

2

-

3

Central costs

-

-

-

-

-

-

-

(8)

(8)

 Operating profit/(loss)

(13)

(4)

5

(1)

12

7

19

(8)

17

Share of joint ventures and










associates profit

-

-

-

1

-

3

-

-

4

Add: Depreciation and amortisation

2

3

2

1

3

6

1

1

19

EBITDA 2

(11)

(1)

7

1

15

16

20

(7)

40

Less: Depreciation and amortisation









(19)

Net finance expense









(8)

Profit before tax









13

 

 

 


Q1 2016

 


New York

£m

Regional US

£m

London

£m

Rest of Europe

£m

 

Singapore

£m

Rest of Asia

£m

Australasia

£m

Central

Costs

£m

Total Group

£m

Revenue










Hotel

21

26

22

16

30

37

13

-

165

Property operations

-

1

-

-

1

2

9

-

13

REIT

-

-

-

2

3

5

4

-

14

Total revenue

21

27

22

18

34

44

26

-

192

Hotel gross operating profit/(loss)

(3)

2

9

2

12

12

6

-

40

Hotel fixed charges 1

(7)

(5)

(6)

(2)

(1)

(8)

(1)

-

(30)

Hotel operating profit/(loss)

(10)

(3)

3

-

11

4

5

-

10

Property operating profit

-

-

-

-

-

2

5

-

7

REIT operating profit/(loss)

-

-

-

-

(1)

2

3

-

4

Central costs

-

-

-

-

-

-

-

(4)

(4)

 Operating profit/(loss)

(10)

(3)

3

-

10

8

13

(4)

17

Share of joint ventures and










associates profit

-

-

-

2

-

1

-

-

3

Add: Depreciation and amortisation

2

3

2

1

3

5

-

-

16

EBITDA 2

(8)

-

5

3

13

14

13

(4)

36

Less: Depreciation and amortisation









(16)

Net finance expense









(2)

Profit before tax









18

 

 

 

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

 

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

 

 



 

for the three months ended 31 March 2017

 

Owned or leased hotels*

 

Q1 2017

Reported

currency

Q1 2016

Constant

currency

Q1 2016

Reported

currency


FY 2016

Reported

currency

 

Occupancy (%)







New York

72.0


77.9

 

Regional US

52.4


51.4


58.6

 

Total US

58.8


55.6


65.0

 

London

76.4


69.5


81.9

 

Rest of Europe

64.2


64.3


72.2

 

Total Europe

70.4


66.9


77.1

 

Singapore

87.4


82.7


84.2

 

Rest of Asia

62.2


63.5


65.4

 

Total Asia

71.9


70.9


72.7

 

Australasia

90.5


91.2


81.3

 

Total Group

69.1


66.2


71.8

 








 

Average Room Rate (£)






 

New York

154.33


186.85

 

Regional US

96.00

95.27

82.62


98.12

 

Total US

119.51

120.61

104.60


133.18

 

London

113.70

109.24

109.24


130.83

 

Rest of Europe

69.27

69.75

67.52


72.86

 

Total Europe

93.69

90.51

89.44


104.04

 

Singapore

97.10

103.60

90.85


95.22

 

Rest of Asia

94.34

99.15

84.81


92.66

 

Total Asia

95.64

101.15

87.53


93.81

 

Australasia

96.20

81.31

66.36


71.84

 

Total Group

102.30

102.00

90.62


106.78

 








 

RevPAR (£)






 

New York

111.16


145.64

 

Regional US

50.25

49.01

42.51


57.49

 

Total US

70.31

67.08

58.18


86.52

 

London

86.90

75.89

75.89


107.18

 

Rest of Europe

44.51

44.88

43.44


52.61

 

Total Europe

65.97

60.58

59.87


80.24

 

Singapore

84.84

85.65

75.11


80.21

 

Rest of Asia

58.68

63.00

53.89


60.63

 

Total Asia

68.81

71.77

62.10


68.21

 

Australasia

87.07

74.20

60.54


58.40

 

Total Group

70.66

67.56

60.02


76.71

 








 

Gross Operating Profit Margin (%)






 

New York

(17.9)


(14.3)


15.9

 

Regional US

                      8.2



7.7


20.9

 

Total US

(4.1)



(2.1)


18.4

 

London

41.3



40.9


49.8

 

Rest of Europe

9.2



12.5


19.1

 

Total Europe

29.6



28.9


37.8

 

Singapore

40.8



40.0


40.8

 

Rest of Asia

30.2



32.4


34.0

 

Total Asia

35.0



35.8


37.0

 

Australasia

54.2



46.2


46.5

 

Total Group

24.7



24.2


31.6

 

 

For comparability, the 31 March 2016 Average Room Rate and RevPAR have been translated at average exchange rates for the period ended 31 March 2017.

 

* excluding managed, franchised and investment hotels.



 

 


Hotels


Rooms


Hotel and room count

31 March

 2017

31 Dec

2016

Change

31 March

2017

31 Dec

2016

Change








Analysed by region:







New York

4

4

-

2,238

2,238

-

Regional US

15

15

-

4,559

4,559

-

London

8

8

-

2,651

2,651

-

Rest of Europe

19

19

-

3,081

3,081

-

Middle East

28

26

2

8,759

7,805

954

Singapore

7

7

-

3,011

3,011

-

Rest of Asia

27

27

-

10,022

10,036

(14)

Australasia

25

25

-

3,641

3,641

-

Total

133

131

2

37,962

37,022

940








Analysed by ownership type:







Owned or Leased

66

66

-

19,536

19,534

2

Managed

44

42

2

12,862

11,924

938

Franchised

7

7

-

1,091

1,091

-

Investment

16

16

-

4,473

4,473

-

Total

133

131

2

37,962

37,022

940








Analysed by brand:







Grand Millennium

9

9

-

3,734

3,732

2

Millennium

49

49

-

15,888

15,960

(72)

Copthorne

35

35

-

6,924

6,944

(20)

Kingsgate

7

7

-

671

671

-

Other M&C

14

12

2

4,647

3,617

1,030

Third Party

19

19

-

6,098

6,098

-

Total

133

131

2

37,962

37,022

940

 

 

 

 

Pipeline

 

31 March

2017

Hotels

31 Dec

 2016

 

Change

 

31 March 2017

Rooms

31 Dec

 2016

 

Change








Analysed by region:







Middle East

15

17

(2)

4,492

5,465

(973)

Asia

4

4

-

1,608

1,608

-

Regional US

1

1

-

263

263

-

Rest of Europe

1

1

-

153

153

-

Total

21

23

(2)

6,516

7,489

(973)








Analysed by ownership type:







Managed

19

21

(2)

5,711

6,684

(973)

Owned

2

2

-

805

805

-

Total

21

23

(2)

6,516

7,489

(973)








Analysed by brand:







Grand Millennium

2

2

-

847

847

-

Millennium

10

11

(1)

2,847

3,079

(232)

Copthorne

2

2

-

666

666

-

Kingsgate

2

2

-

559

559

-

Other M&C

5

6

(1)

1,597

2,338

(741)

Total

21

23

(2)

6,516

7,489

(973)

 

 

The Group's worldwide pipeline comprises 21 hotels offering 6,516 rooms, which are mainly management contracts.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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