Registered number: 03004377
MILLENNIUM & COPTHORNE HOTELS LIMITED
ANNUAL REPORT & ACCOUNTS
For the Year Ended 31 December 2019
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONTENTS
STRATEGIC REPORT
03
Statement under section 172(1) of the Companies Act 2006
07
09
11
Business review
Key performance indicators
Our risks
GOVERNANCE
18
Statement of Governance Arrangements for Directors’ report
22
Directors’ report
26
27
Statement of Directors’ responsibilities in respect of the annual report and accounts
Independent auditor’s report to the Members of Millennium & Copthorne Hotels Limited
FINANCIAL STATEMENTS
31
32
33
35
36
38
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
109 Company statement of financial position
110 Company statement of changes in equity
111 Notes to the Company financial statements
FURTHER INFORMATION
114 Group financial record
115
Key operating statistics
117 Major Group properties
124 Millennium & Copthorne hotels worldwide
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MILLENNIUM & COPTHORNE HOTELS LIMITED
STRATEGIC REPORT
03
Statement under section 172(1) of the Companies Act 2006
07
09
11
Business review
Key performance indicators
Our risks
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MILLENNIUM & COPTHORNE HOTELS LIMITED
STATEMENT UNDER SECTION 172(1) OF THE COMPANIES ACT 2006
In accordance with The Companies (Miscellaneous Reporting) Regulations 2018 and the Financial Reporting
Council’s Guidance on the Strategic Report issued in July 2018, the Directors must now include a statement within
the Strategic Report describing how the Directors have had regard to the matters set out in Section 172(1)(a) to (f)
of the Companies Act 2006 (“Section 172(1) Statement”). The Directors set out their Section 172(1) Statement
below.
During the year, the Directors were briefed on their duties under Section 172 of the Companies Act 2006 and more
specifically, their duty to “act in the way each director considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other
matters) to -
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with suppliers, customers and others,
(d) the impact of the company's operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the company.”
Over the course of the year, the Board considered matters that fit broadly within the following topics:
• Board governance, including the commitment of the Board to diversity and the mix of the skills and
experience of the Directors;
• Organisational structure and succession planning and engagement with the workforce;
•
•
•
The competitiveness of the Group’s business;
Impact of the Group’s business on the environment and the communities in which we operate; and
The Final Offer, which was announced in June 2019 and completed in September 2019, and subsequent
Delisting of the Company, as well as the integration of the Group within City Developments Limited
(“CDL”). Further information about the Final Offer and Delisting can be found in the Directors’ Report, on
page 22.
The various matters were reviewed against the backdrop of the principal risks and uncertainties facing the business
and the Group’s relationships with its primary stakeholders, including its employees, customers, suppliers,
shareholders, regulators and the communities in which we operate. Set out below is a chart summarising these
relationships, including how the Company engages with each stakeholder, what they care about and why they are
important. Secondary stakeholders for the Group include trade associations, the media, non-governmental
organisations and charitable organisations.
Key
stakeholder
Touch points / Methods of
engagement
What do they care about?
Why are they important?
Employees
Customers
• Recruitment and induction
•
Internal communications
(intranet sites, newsletters,
email, meetings, etc.)
Training and development
•
• Performance management
• Relations with trade unions
Job security
•
• Reputable employer
• Safe working environment
• Skills training and career
development
• Operational excellence
•
Fair wages
•
• Direct sales and marketing
(website, advertising
campaigns, etc.)
Indirect sales and marketing
(public relations, agencies,
corporate groups,
partnerships/sponsorships,
etc.)
• Booking process
• Pre-stay communications
• Meeting and event
management
• Stay or meetings and
events (on-site use of
facilities)
• Post-stay communications
(e.g., quality survey)
Loyalty programme
•
• Value for money
• Clean and safe environment
•
Friendly and
accommodating service that
anticipates customer needs
and wants
Location and proximity to
relevant destinations (work
and leisure)
•
• Unique experiences
• Useful facilities and
technologies (gym, business
centre, restaurants, WiFi
access, etc.)
• Sustainable operations
• Serve as key brand
ambassadors
Front-line service delivery
•
• Critical to service/hospitality
culture
• Ability to create unique and
memorable experiences for
customers
Lifeblood of the business
and driver of business
growth
•
• Serve as key brand
ambassadors
• Help to foster improvement
and innovation through
feedback regarding product
and service quality
• Support for sustainable
operations
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MILLENNIUM & COPTHORNE HOTELS LIMITED
• Bidding/tender process with
operations and procurement
teams
• Provision and receipt of
goods and services on-site
(hotel and corporate office)
• Account management
Development and growth of a
business relationship
Safe working environment
Fair price and payment terms
Meeting sustainable sourcing
requirements
Suppliers
•
•
•
Financial communications
(annual report, results
announcements and
regulatory announcements)
Investor presentations
Investor road shows,
meetings and conference
calls
• Annual and Extraordinary
General Meetings
Shareholders
•
Licensing and compliance
activities
• Regulatory reporting
• Voluntary and mandatory
surveys and consultations
• Engagement through trade
Regulators
associations
• Assistance with economic
development initiatives
• Good governance
Transparency and
•
accountability
• Sustainable operations,
strategy and business
model underpinning long-
term value creation
• Profitability and growth
• Access to management and
relevant and accurate
information
• Alignment of remuneration
with the interests of
shareholder
development (through tax
revenue, creation of jobs,
etc.)
Transparency and
accountability
•
• Regulatory compliance
• Environmentally friendly and
sustainable operations
• Minimise use of state
resources
• Meetings and events at the
• Environmental impact of the
hotel
business
• Participation in local
outreach programmes
• Good corporate citizen
• Economic development
Communities
• Support of charitable
organisations
(creation and maintenance
of good jobs, local sourcing,
etc.)
• Minimising disruption (noise,
traffic, etc.)
Looking at each topic in turn:
• Key part of responsible
sourcing efforts and ethical
business practices
• Potential business
opportunities
• A component of service and
product quality
• Help to support health and
safety regime and
operational excellence
Funding for business
expansion
•
• Promote management
accountability as the owners
of the company
• Provide for enhanced
governance
• Support sustainable
operations
• Help to drive economic
development and societal
change
governance leads to greater
investor and customer
confidence
• Develop policies to help
foster growth (economic
incentives, such as tax
credits, subsidies, trade
policies, etc)
• Support sustainability
through legislation
• Help to ensure safety of
employees and customers
• Source of talent and other
resources
• Provide potential business
opportunities and word-of-
mouth marketing channels
• Assist with and support the
Group’s sustainability efforts
• Social and economic
• Promotion of good
Board governance, including the commitment of the Board to diversity and the mix of the skills and
experience of the Directors
Following a governance review by the Board in December 2018, in early 2019 the Board, led by the Nominations
Committee, had an opportunity to consider potential changes to the composition of the Board. As part of this
process, members of the Board heard from shareholders and even communicated with representatives from the
Hampton-Alexander Review, which focuses on increasing gender diversity on Boards, and the Investment
Association, a trade body that represents investment managers and asset management firms in the UK. As a
result of this review, two new Directors were appointed in early 2019, Ms Paola Bergamaschi Broyd was appointed
on 21 March 2019 and Mrs Vicky Williams was appointed effective as of 10 May 2019, and the Board adopted a
revised diversity policy. Following these two appointments, women represented over 20% of the Directors until the
eventual Delisting of the Company. After the Delisting, the Board continued to recognise the importance of gender
diversity and as at the date of this Strategic Report, the Board of the Company was comprised of two women and
four men.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
Organisational structure and succession planning
Since an interim Group Chief Executive Officer was in place at the start of 2019, the Board undertook an exercise
to review the capabilities of the senior management team and whether the organisational structure was appropriate
to execute the Group’s strategy and grow the business, whilst doing so in a prudent way that would serve to
minimise the principal risks and uncertainties facing the Group. Shareholder feedback on the Group’s management
team was received and noted by the Directors. Taking into account that feedback and the needs of the Group, the
Nominations Committee developed a role profile for the next permanent Group Chief Executive Officer and
commenced a search to fill the role. Internal candidates were considered as well as external ones, and several
premium executive search agencies were consulted during this process. However, given the recent changes to
the management team, the Nominations Committee members determined that the interim Group Chief Executive
Officer at the time, Tan Kian Seng, helped to provide stability and continuity to the management team and that it
was important not to rush the appointment. Also, in late 2018 and early 2019, based on the succession planning
conducted by the Board, some key gaps within the senior executive team were filled, including the appointment of
a new global head of Human Resources and the appointment of Kieran Twomey as the Group Chief Operating
Officer. Then, following the privatisation of the Company, the interim Group CEO decided to retire and the senior
management structure of the Group was rationalised and streamlined with the formation of a new, smaller
Executive Committee, comprised of two Executive Directors, Kwek Leng Beng and Kwek Eik Sheng as well as Mr
Twomey, to help drive operational efficiency and excellence.
The competitiveness of the Group’s business
The Directors considered commentary from various stakeholders, including the Company’s shareholders and its
customers, and examined different business models in an effort to improve the performance of the Group and offer
its customers service, brand and product offerings more closely aligned with their expectations. The Board
determined that in certain locations and for certain types of properties within the Group’s portfolio, a third party
management or affiliation model would provide a more compelling guest experience and distribution offering. As
mentioned above, this resulted in, among other things, the repositioning of certain of the Group’s strategic assets,
such as the conversion of the Millennium Mayfair Hotel London to the Biltmore, Mayfair, which is operated by Hilton
under its new LXR Hotels & Resorts luxury hotel collection and reopened in September 2019, the commencement
and/or completion of several other refurbishment projects, and the execution in May 2019 of an affiliation
arrangement with Hilton in respect of the Millennium Times Square New York. The Group will continue to explore
alternative business models, on an asset-by-asset basis, throughout the course of 2020.
Impact of the Group’s business on the environment and the communities in which we operate
During the year, the Board received several presentations and updates on the Group’s sustainability initiatives.
These included the following:
First, in recognition of the Group’s sustainability efforts in 2019, in January 2020 the Company received a very
respectable score of “B“ by the Carbon Disclosure Project (“CDP”), a not-for-profit charity that operates a global
disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. In
terms of CDP rankings, this score put the Group ahead of many of its peers.
Second, in March 2019, the Science Based Target initiative approved the Company’s Science Based Target
submission, which had been reviewed and approved by the Board in December 2018 and included a target to
reduce the Group’s Scope 1, 2 and 3 greenhouse gas emissions by 27% by 2030, using 2017 as the base year.
Science Based Targets are targets that are developed in conjunction with the Science Based Target initiative,
based on the latest climate science and standards adopted as part of the “Paris Agreement” approved at the 2015
United Nations Climate Change Conference held in Paris, France, and are intended to limit global warming to well-
below two degrees Celsius above pre-industrial levels.
Third, in May 2019, the Board considered and adopted the Group’s annual supply chain transparency statement.
In accordance with the Modern Slavery Act 2015, the Company produces an annual statement, that can be found
at https://investors.millenniumhotels.com/corporate-responsibility/supply-chain-transparency-statement, detailing
the steps taken by the Company and its subsidiaries over the previous year, and the steps the Group intends to
take over the coming year, to prevent slavery and human trafficking occurring in our business and supply chains.
Fourth, in November 2019, members of the Board and senior management received a presentation on the findings
of, and endorsed the general recommendations arising from, energy savings audits of several of the Group’s UK
hotels pursuant to the second phase of the mandatory Energy Savings Opportunity Scheme promulgated by the
UK government’s Department for Business, Energy & Industrial Strategy. While the recommendations will require
some capital investment, if implemented, they are expected to produce material efficiencies and cost savings for
the Group’s UK hotel estate.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
Finally, in the first quarter of 2020, management intends to launch an updated set of sustainability policies and
elective initiatives, which collectively are known as “Responsible Hospitality”, following a previous sustainability
audit of the Group’s owned and operated hotels. These policies and initiatives, which have been endorsed by the
Board, focus on the following key areas and are intended to help our hotels improve their sustainability efforts:
•
•
•
•
reducing waste, laundry activity, water usage, energy and greenhouse gas emissions
promoting more sustainable procurement activities;
employee training and engagement on the impact on the environment of the Group’s operations; and
supporting our community.
Management anticipate conducting future sustainability audits to review the effectiveness of the Responsible
Hospitality policies and initiatives and to help to foster healthy competition among the hotels and regions.
The Group’s sustainability programme, which is more fully outlined in the Company’s Corporate Responsibility
Report located at https://investors.millenniumhotels.com/corporate-responsibility, supports the interests of all of its
stakeholders, including its shareholders, its customers, its employees, its suppliers, the communities in which the
Group operates and even regulators. The Directors recognised that the Group does not operate in a vacuum and
that in order for the business to grow and prosper over the long term, the business must be conducted in a
sustainable way.
The Final Offer and subsequent Delisting of the Company, as well as the subsequent integration of the
Group within CDL
When the Final Offer was made, the Company’s Independent Non-Executive Directors formed an independent
committee of the Board to consider the offer and whether its terms were fair and reasonable and recommendable
to shareholders. The views of the Company’s shareholders were considered and legal and financial advisors were
consulted. In addition, the Directors also took into account the impact of the Final Offer and subsequent Delisting
on the business and employees of the Group and sought certain protections from the Offeror in that regard.
Based on the value of the Final Offer and the ability of investors to realise that value over the medium term under
the then current ownership structure, the execution risk associated with the Group’s strategy in light of the
Company’s management capabilities, the views of shareholders (as evidenced, in some cases, by undertakings to
accept the Final Offer provided by certain key shareholders) as well as intention statements made by the Offeror
and CDL in respect of the Group’s business and employees, including certain protections provided in respect of
certain employment, pension and share scheme rights. The reasoning behind the Independent Committee’s
recommendation, including the interests that were taken into account by the Directors when assessing the Final
Offer, is described in more detail in the offer document that was published on 15 August 2019.
Over the course of the year, representatives of the Board as well as members of the Group’s senior executive
team, met with or spoke to many of the Group’s top institutional shareholders regarding both the Group’s
governance regime and the effectiveness of its operations. Often these interactions occurred on a one-on-one
basis, so a constructive dialogue could be had. The Group also held an investor presentation in February 2019,
following the release of the Company’s 2018 financial results, and Directors had a chance to meet with investors
at its Annual General Meeting in May 2019. The Directors’ Report further describe the ways in which the Board
and senior management team engaged with employees, suppliers and other stakeholders during the year.
Following the Delisting in October 2019, the Company’s Independent Directors stepped down and new Directors
joined the Board of the Company. Whilst the Company no longer has any minority shareholders, since it is fully
owned by subsidiaries of CDL, engagement with the Company’s other stakeholders remains a priority for the Board,
and the Directors will look for ways to improve its stakeholder understanding and engagement in 2020.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
BUSINESS REVIEW
GROUP RESULTS
In constant currency, hotel revenue increased by £2m or 0.2%. Reported hotel revenue in 2019 increased by £21m
or 2.4% with the impact from a weaker pound sterling against the Group’s main trading currencies. Group RevPAR
increased by 0.6% in constant currency.
In constant currency, total revenue for the year increased by £6m or 0.6%. Reported total revenue for 2019
increased by £28m or 2.8% to £1,025m (2018: £997m).
Pre-tax profit for 2019 decreased by £4m to £102m (2018: £106m) and included net valuation and impairment
charges of £34m (2018: £36m). After removing the effects of impairment losses and net revaluation gains, the
Group’s reported profit before tax was £136m (2018: £142m).
HOTEL OPERATIONS
The refurbishment work of the Mayfair hotel in London started during the fourth quarter of 2017 on a phased basis
with partial closures of guest rooms. The property was then fully closed in July 2018 to facilitate on-going
refurbishment work. It re-opened in September 2019. Total project cost is around £60m.
The Group’s New York hotels are still loss making. The Group’s revenue recovery strategy for Millennium Times
Square New York (formerly the Millennium Broadway New York Times Square) whereby the hotel joined Hilton as
an affiliate with access to its reservation channels and loyalty programme, has yet to show significant improvement
in its trading performance. Broadway implemented a union buyout costing about US$1.2m in 2019 and it also
incurred about US$2.2m on other union related costs.
DEVELOPMENTS
The Sunnyvale California project comprises the construction of a 263-room hotel and a 250-unit residential
apartment block on 35,717m2 mixed use freehold landsite. The ground-breaking ceremony was held on 16 October
2018 and the project is scheduled to complete in Q1 2021. The construction cost is estimated at US$180m (£139m).
The residential apartment block commenced construction in July 2019. The hotel is currently planned to be branded
as a M Social to fit with the expected guest profile. The Group hopes to capitalise from the location of this project
as Sunnyvale is the headquarters of many technology companies and is part of California’s high-tech area of Silicon
Valley. Construction has commenced and the project is expected to complete in the next two years.
No further progress on the architecture and engineering designs in relation to the construction of a 300-room hotel
and a 250-unit serviced apartment complex on Yangdong development land, situated adjacent to Millennium Seoul
Hilton. Review is still on-going to ensure efficiency in the design with minimum basement excavation due to the
challenging surrounding site and soil conditions. Total construction cost is anticipated to be around KRW130b
(£86m). The start date is not expected to be earlier than in 2021.
HOTEL REFURBISHMENTS
Current major on-going phased refurbishment includes Millennium Hotel Paris Opera (£5m), Millennium Gloucester
Hotel London Kensington (£12m) and Millennium Hilton New York One UN Plaza (£9m).
ACQUISITIONS
On 1 February 2018, the Group acquired The Waterfront Hotel in New Plymouth, New Zealand, for a purchase
consideration of NZ$11m (£6m). The iconic 42-room hotel was rebranded a Millennium hotel in Q2 of 2018.
On 27 November 2018, CDL Hospitality Trust (“CDLHT”) acquired 95.0% of the shares and voting interest in Event
Hospitality Group III B.V., which wholly owns Event Hospitality Group III Italy SRL, sole shareholder of NKS
Hospitality III for a purchase consideration of €33m (£29m). NKS Hospitality III SRL is the legal owner of “Hotel
Cerretani Florence, MGallery by Sofitel” and the fixtures, furniture and equipment therein.
There were no acquisitions during 2019.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
DISPOSALS
Copthorne Hotel Birmingham
In December 2013 the Group entered into various commercial arrangements with Birmingham City Council and
Paradise Circus Limited Partnership, the developer of Birmingham’s Paradise Circus redevelopment scheme
(“PCLP”), now known as Paradise Birmingham, as a result of a compulsory purchase order by Birmingham City
Council that covered the Copthorne Hotel Birmingham and other properties in its vicinity. Those arrangements
include put and call options that provide for the sale of the existing hotel to PCLP for £17.2m. Currently, the Group
continues to own and operate the hotel until such time as one of those options is exercised. The arrangements
also included a call option for the Group to acquire an alternate site in the scheme for the development of a new
250-room hotel. In December 2018, the Group exercised that option, subject to the parties agreeing to the
preliminary design and costing for the new hotel and the execution of a development agreement by the parties. As
the parties had not entered into the development agreement by the required deadline, on 2 April 2020 the Group
terminated its option to acquire the alternative site and as a result, that option is no longer valid.
Millennium Hotel Glasgow
In March 2017 Scottish Ministers approved a compulsory purchase order impacting the Millennium Hotel Glasgow
pursuant to which Network Rail Infrastructure Limited ("Network Rail") subsequently acquired and demolished the
1970s-built, 51-room extension of the hotel as part of the redevelopment of Queen Street Station. In November
2018, Network Rail paid to the Group, on a without prejudice basis, an interim compensation payment of £2.52m.
Negotiations are ongoing with Network Rail regarding the full level of compensation payable to the Group in
connection with the taking. If the parties are unable to agree a value, the matter will be settled at the Lands
Tribunal. Meanwhile, the Group continues to consider its options with respect to the refurbishment and
repositioning of the existing hotel.
Millennium Cincinnati
A previously announced by the Company, effective as of 1 July 2019 a subsidiary of the Company entered into a
purchase and sale agreement ("PSA") with a Cincinnati-based development company for the sale to the purchaser
or its designee of the Group's interest in the Millennium Cincinnati hotel. The purchaser subsequently assigned its
interest in the PSA to The Port of Greater Cincinnati Development Authority and completion of the sale, which was
subject to the satisfaction of certain conditions, completed on 14 February 2020. Refer to Note 36 of the financial
statements for further detail.
CDLHT
During Q1 2018, CDLHT disposed of its investment in two hotels in Australia, the Mercure Brisbane and Ibis
Brisbane for A$77m (£45m) generating a profit of £3m.
On 21 November 2019, CDLHT announced its proposed disposal of Novotel Singapore Clarke Quay. Accordingly,
the property with a total carrying value of S$160m (£91m) was classified as asset held for sale in the statement of
financial position as at 31 December 2019. The disposal is expected to be completed in 2020.
COVID-19
The novel coronavirus, COVID-19, is having a material impact on the Group’s operations and, in particular, its
hospitality operations. The lockdowns and social distancing guidelines and requirements in Europe, the US, Asia
and Australasia, as well as the travel restrictions in various jurisdictions, have resulted in hotel closures and, where
hotels remain open, significantly low occupancy levels. This has resulted in significantly lower revenue and profit
since the end of 2019 and continues to affect the Group’s performance.
Whilst the full financial impact of the pandemic on the current financial year ending 31 December 2020 is impossible
to predict with a high degree of certainty, we have considered a range of scenarios to understand the potential
impact on our business and have implemented appropriate mitigation measures, including the consideration of
alternative customer segments and revenue opportunities, such as housing patients and supporting healthcare and
other essential workers, as well as the implementation of robust cost control measures.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
KEY PERFORMANCE INDICATORS
We use a set of carefully selected key performance indicators (“KPIs”) to monitor our success. These KPIs are
used to measure the Group’s progress year-on-year against those strategic priorities, and are set out below:
GROWTH
To achieve profitable growth and improved asset returns for our hospitality business.
Revenue per Available Room -
Average room rate multiplied by
occupancy percentage.
Occupancy – Percentage of
rooms available for sale that
were actually sold to our guests.
Hotel revenue – Includes room,
food & beverage and meetings &
events.
Average room rate – Revenue
from sales, divided by number of
room nights sold.
*These are shown at constant rate of exchange.
FINANCIAL LEVERAGE
To ensure a sound financial base in order to provide a solid platform for the development and growth of the
Group.
Gearing – Net debt over total
to equity
equity attributable
holders of the parent.
Net Debt – Total borrowings less
total cash. Refer to Note 21 for
further details.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
COST CONTROL
To ensure costs remain in line with revenue movements through a decentralised model, technological
enhancements to drive efficiencies and rigorous monitoring of spending.
The Group believes that the KPIs provide useful and necessary information on the underlying trends
and are used by the Group for internal performance analysis. Given the decentralised model of the
Group, regional management focuses on operational KPIs. These include customer feedback, hotel
gross operating profit and staff retention. General Managers report their operating KPIs to Regional
Managers on a regular basis with the comparison numbers for the local competitive set of each hotel.
The hotel performance numbers are then consolidated into regional and Group-wide figures.
The Group has a flexible and robust business model that generates profit predominately through its
portfolio of owned and managed hospitality assets. These assets are diversified by brand, market,
geography and customer offering according to what we judge to be the most appropriate means of
optimising their earnings. We aim to hold our assets for the long term, especially those in key gateway
cities. We employ complementary business models in certain circumstances. For example, we may
engage third party operators on a selective basis to manage our brand assets that we own. We also
may operate through a licensing model, through joint ventures or through arrangements where we
manage hotels on behalf of other third party owners. We regard the flexibility of our business models
as an essential strength in a varied and rapidly changing global hospitality market.
Our strategy is to maximise returns on shareholder’s capital through the ownership and operation of
hospitality assets in key gateway cities and other prime locations across the world that naturally attract
large numbers of business and leisure travellers. Underpinning this strategy are the twin aims of
operational excellence and prudent asset management. We seek to increase returns through quality
service and efficient operations—by developing our people, processes and technology—as well as
through investment in the material fabric of our hotel estate. We also look to grow the business through
asset acquisition in strategic locations.
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MILLENNIUM & COPTHORNE HOTELS LIMITED
OUR RISKS
Financial and operational risks are an inherent part of conducting business in a challenging and dynamic business
environment. Many of our principal risks will be the same risks faced by similar businesses in the hospitality
industry.
In this section, we describe the principal risks and uncertainties that could affect the Group’s ability to deliver
against its strategy together with the controls and risk management framework in place to mitigate such risks.
Management of risk
The Group’s risk management framework has been developed to align with the best practice risk management
standard ISO 31000. The framework consists of a group risk management process for standardized assessment,
reporting and monitoring of risks to ensure a robust and consistent standard in line with the Group’s risk appetite.
Under the Group’s risk management framework, there are three levels of risks. Level 1 risks represent the principal
risks that are monitored closely at Board level. Level 2 risks are those within the areas of responsibility of the
regional and functional heads. Finally, Level 3 risks encompass hotel-level and project-specific risks.
The Board have established a clear organizational structure for the management of these risks in the Group, with
well-defined roles and responsibilities. The Board retains overall responsibility and accountability for the
effectiveness of the risk management framework and internal control systems.
Supporting the Board, the Group Management Risk Committee has accountability for ensuring effective risk
management at the operational level in line with the Board-approved risk appetite limits. The Group Management
Risk Committee is led by the Group Chief Operating Officer.
To support this structure, a Global Director of Compliance and Risk Management was appointed to work with the
Group Management Risk Committee and the business to help strengthen and further embed the Group’s regulatory
compliance and enterprise risk management framework. As risks continue to evolve and grow in complexity, so
too do our risk management processes, ensuring continual improvement, and growth in the organisation’s risk
maturity. Work on these initiatives will continue over the course of 2020.
Risk Management Framework
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MILLENNIUM & COPTHORNE HOTELS LIMITED
Governance Structure
City Developments Limited (CDL)
Audit & Risk Committee
Responsible for assessing and monitoring the principal risks and reviewing
the effectiveness of the internal control, financial reporting and risk
management systems within the CDL group of companies
Millennium & Copthorne Hotels Limited
Board of Directors
Overall accountability for strategic risk management and setting risk appetite
Millennium & Copthorne Hotels Limited
Management Risk Committee
Operational accountability for the management and control of risks and the
implementation of mitigation measures in line with the Group’s risk appetite
Millennium & Copthorne Hotels Limited
Global Director Risk and Compliance
Principal Risks
Supports the Group to strengthen and embed the Group’s regulatory compliance
and enterprise risk management framework
CDL - Group Internal
Audit
Reviews the effectiveness of the
Group’s internal controls
In the following table we have identified the key risks that are regarded as the most relevant for the Group. The
principal risks should be viewed as the risks that we see as being material to our business at this time.
The following table includes a description of each risk and how it could impact the business, a summary of controls
and mitigating activities being undertaken and the ‘trend’ for the risk. This trend represents the forward-looking view
of the net risk exposure for each risk, taking into account changes in the external risk environment and the Group’s
internal mitigation activities. The risks have been loosely categorised as being strategic, tactical or operational in
nature.
The order in which risks are presented below is not indicative of the relative potential impact to the Group. The
risks may, to varying degrees, impact the Group’s revenues, profits, net assets, operations, guests, employees,
partners and/or reputation.
Not all potential risks are listed below; some risks have been excluded because the Board does not consider them
to be material to the Group’s long-term strategy, performance or viability. In general, the diversity and geographical
spread of the Group’s assets provide natural hedges against many of the principal risks identified below and our
processes aim to provide reasonable, not absolute, assurance that the principal risks that are significant to our
business have been identified and addressed. Additionally, there may be risks that are not reasonably foreseeable
as at the date of this report.
The outbreak of the novel coronavirus, COVID-19, in late 2019 and early 2020 has given rise to a serious global
health crisis and this has impacted the travel and hospitality sectors and the Group in particular. We have taken
steps to help mitigate the risks associated with the outbreak, including updating the Group’s regionalised crisis
response plans in line with guidance issued by health authorities, such as the World Health Organization and local
governmental authorities, and developing new business continuity plans tailored to COVID-19.
The well-being of our guests, colleagues and other stakeholders is our top priority and we have implemented robust
precautionary measures, including an enhanced cleaning and sanitization programme, to help ensure that our
hotels and corporate offices remain safe places to visit. The management team will continue to be vigilant and
closely monitor the latest developments and guidance about the outbreak, and implement further mitigating
measures as necessary.
12
MILLENNIUM & COPTHORNE HOTELS LIMITED
Risk
Potential Impact
Mitigation Activities
Trend
Strategic Risks
Revenue
channel
optimisation
and cost of
sale
Brand equity
and
customer
loyalty
Keeping abreast of digital
transformation and online competition
is critical given the growing proportion
of the Group’s hotel rooms being
booked online. Online travel
agencies (“OTA”) tend to have higher
commission rates compared to
traditional travel agents and are taking
an increasing share of bookings
across the sector. Over time,
consumers may develop loyalties to
the OTAs rather than to the Group’s
brands. These trends may impact the
rising cost of sale ultimately affecting
profitability. Other costs related to
metasearch engines and tools that
help direct online traffic towards our
own websites are increasing. On the
supply side, sharing economy
platforms, such as Airbnb, may
expand their market share and
compete with more traditional
business and leisure
accommodations.
Brand equity and customer loyalty
influence consumer choice.
Understanding customer needs, clear
and consistent communication and the
delivery of quality products and
services that meet those customer
needs are all critical elements of
fostering brand equity and loyalty.
Further, the Group’s ability to protect its
intellectual property rights in its brands
is fundamental to delivering on these
endeavors. Competition is fierce, and
the Group’s scale and marketing
expenditure cannot match those of
larger competitors. Generally, the
Group operates properties which it
owns and therefore is able to exercise
control over the service and product
quality of those hotels. Failure to create
brand equity and customer loyalty could
affect the pace of future revenue
growth as well as the pricing power,
image and reputation of the Group.
• The Group continues to refresh its
➔
digital marketing strategy and invest in
its e-commerce, customer relationship
management, revenue management
and reservations systems in order to
help increase rates, retain existing
customers and generate new
business.
• Fundamental to the Group’s
distribution strategy is growing brand
recognition and loyalty along with
increasing direct channel bookings. In
2019, the Group continued to enhance
its brand website and launched a
revamped loyalty programme.
• The Group is aggressively managing
its portfolio of distribution channel
partners, including established OTAs
and new, niche or local players, to
optimise revenue, gain access to new
customers and minimize commission
costs.
• The Group selectively affiliates with
international hotel chains with respect
to certain properties where it has been
determined that doing so would help to
optimize management and/or
distribution capabilities.
• The Group has in place brand standards
that are designed to maintain a level of
product consistency based on the brand
collection to which a particular hotel
belongs whilst allowing flexibility in order
to maintain the personality of the
property. The brand standards capture
the key messaging behind each of the
Group’s brands.
•
• To raise the profile of our brands and to
help build brand equity, marketing
campaigns are highly targeted and often
leverage strategic partnerships such as
our partnership with Chelsea Football
Club. A newly redesigned loyalty
programme was launched in 2019.
Investment continues to be made in
protecting the Group’s brands from
misuse and infringement, by way of
trademark registrations, enforcement of
intellectual property rights and domain
name protection. The Group utilises third
party online brand monitoring and
protection agencies to assist with the
Group’s enforcement activities.
➔
Tactical Risks
Investment
and asset
management
The Group’s hotels require
investment, typically in cycles of minor
and major refurbishments, to maintain
their competitiveness. Refurbishment
projects invariably impact on
revenues, particularly when major
renovations require the hotel to be
• The Group continues to develop
➔
property specific refurbishment plans,
which focus on the capital expenditure
requirements of each property in terms
of regular maintenance and product
enhancement to help ensure the
products remain competitive. These
13
MILLENNIUM & COPTHORNE HOTELS LIMITED
Risk
Potential Impact
closed for extended periods. Also,
refurbishment projects or other capital
projects may overrun on time and
costs or may not deliver the expected
returns on investment. The size of
investment and appropriate allocation
of limited resources across a diverse
portfolio are also key considerations.
The ability of the Group to make the
right investment decisions at the right
time, and devote appropriate
resources to its investment
programme, is crucial to enabling
long-term, profitable growth.
Competition,
trading and
market
factors
The hotel industry operates within an
inherently cyclical sector, where
competition, both online and offline,
is increasing. The growth of room
supply, without corresponding
increases in demand, may lead to
downward pressure on rates, which
in turn could negatively impact the
Group’s performance. The
hospitality industry also is seeing a
degree of consolidation in pursuit of
scale and the benefits associated
with it.
In addition, trading can be directly
affected by localised events—such
as natural catastrophes, country or
regional geo-political matters—as
well as global, macro-economic
trends impacting travel and hotel
stays.
Finally, the Group operates in
numerous jurisdictions and trades in
various international currencies but
reports its financial results in pounds
sterling. Fluctuations in currency
exchange rates and interest rates may
be either accretive or dilutive to the
Group’s reported trading results and
net asset value. Unhedged interest
rate exposures pose a risk, too. Rising
interest rates may result in increased
borrowing costs and impact the
Group’s profits.
Trend
Mitigation Activities
plans generally are developed by the
hotel management teams and reviewed
and approved at the Group level.
• Refurbishment projects typically are
phased in order to minimise their impact
on revenues. Where it is justified, a
decision to fully close and reopen a hotel
after renovation can be taken, in order to
help reposition the hotel, for instance.
• With regard to large-scale capital
projects, such as the Sunnyvale,
California mixed-use development, the
Yangdong development in Seoul,
dedicated project managers and cost
consultants are engaged to help oversee
the projects and track spending against
approved budgets.
• A global head of capital projects and
technical services is supported by
regional asset management resources
and helps to oversee the Group’s capital
investment and other asset
management initiatives.
• The diverse nature of the Group’s
portfolio, both geographically and in
respect of its breadth of brands, provides
a natural hedge against various external
risks. Since the Group has a
concentration of hotels in key gateway
cities such as London, Singapore and
New York, to benefit from corporate and
leisure travel, the management team
keeps a close watch on local events in
those locations. Also, the Group
maintains a flexible operating structure
that allows it to align its sales and
marketing activities and spend to target
relevant customer segments and adapt
to changing hospitality trends.
• Colleagues in the Group’s Treasury
team monitor and address treasury
matters, including investment and
counterparty risks, in accordance with
the Group’s treasury policy.
• Foreign exchange exposure is primarily
managed through the funding of
purchases and repayment of borrowings
from income generated in the same
currency.
Interest rate hedges and fixed-rate
lending facilities are used from time to
time to manage interest rate risks.
•
Operational Risks
Talent
management
and
succession
Hospitality is a people business. The
Group’s brands and ability to deliver
consistent service quality are
dependent on its ability to attract,
develop and retain employees with
• The Group has strong regional and local
management structures underpinned by
a common commitment to ensuring a
rewarding and empowering work
environment. This is further supported by
14
MILLENNIUM & COPTHORNE HOTELS LIMITED
Risk
Potential Impact
Mitigation Activities
Trend
the appropriate skills, experience
and aptitude. Generally in the
industry, frontline employees are
prone to higher levels of turnover.
Also, with the growth in room supply,
demand and consumer choice
globally, it becomes increasingly
important for operators to be able to
find and retain senior leaders who
inspire and motivate staff. Failure of
the Group to properly plan for the
recruitment and succession of key
management roles may impact
service quality, consistency and/or
delay the execution of the Group’s
strategies.
Not unique to the Group, a
considerable proportion of hotel staff
in the UK, and particularly in London,
originate from European Union
countries. The ability of the Group to
retain appropriate staff, as well as
the cost of doing so, may be
impacted by the UK’s exit from the
European Union.
The health, safety and security of
guests, visitors and employees is a
fundamental expectation and there is
a breadth of regulatory requirements
across different jurisdictions relating to
health and safety matters. Failure to
implement and maintain sufficient
controls regarding health and safety
issues could result in serious injury or
loss of life, lead to regulatory
investigations and expose the Group
to significant claims, sanctions or
fines, both civil and criminal, as well
as reputational damage.
Whilst health and safety matters often
are local to a particular venue or
location, security concerns can be
affected by global geopolitical events.
Increasing reliance on online distribution
channels and transactions over the
internet and mobile applications, and
the aggregation and storage of guest
and other information electronically,
both on company-controlled servers
and networks and in cloud-based
environments, present heightened risks
of attacks affecting the operation of
those systems and networks and/or a
potential loss or misuse of confidential
or proprietary information. The
occurrence of a cyber security event or
loss of data could disrupt business, the
ability of the Group to take or fulfil
bookings or lead to reputational and
performance management and
recognition systems, compensation and
benefits programmes, e.g., bonus plans,
service reward programmes, share
plans, and internal and external training
and development programmes.
• The Group strives to provide internal
talent with opportunities for development
and advancement as a matter of priority.
• The Company’s Board of Directors and
its executive management committee,
supported by the Group’s Human
Resources function, are tasked with
ensuring that proper succession plans
are in place for key members of the
senior management team.
• The Group is keeping on top of
developments relating to the UK’s exit
from the European Union as they unfold,
and management are continuing to
review the potential impact of these
developments. A ‘Brexit Steering Group’
has been established to ensure the
Group considers all potential material
risks associated with an exit and that
appropriate mitigation strategies have
been developed. This allows the Group
to remain nimble and ready to respond
to different issues and scenarios.
• The Group has health, safety and
➔
environmental management systems in
place, which include policies,
procedures, testing, self and third-party
audits, training and reporting. Where
possible, these seek to align with the
requirements of best practice accredited
systems (e.g., OHSAS 18001). By
following these standards, the Group
strives to work to the highest standards
of health and safety.
• Management proactively monitors
geopolitical developments and seeks to
identify emerging risks at the earliest
opportunity to ensure clear roles and
responsibilities, internal controls and
other steps to minimize these exposures
to the greatest extent possible.
•
The Group’s regional Information
Technology (“IT”) teams conduct
periodic security and penetration testing,
often using external consultants, and
any recommendations or
enhancements are implemented where
necessary.
• Software systems are regularly updated
to allow for the latest security updates
and patches to be installed.
• Where the Group outsources critical
information technology systems,
including its point of sale and property
management systems, the Group
utilises reputable suppliers that have
15
Health,
safety and
security
Information
security,
vulnerability
to cyber-
attacks and
PCI-DSS
compliance
MILLENNIUM & COPTHORNE HOTELS LIMITED
GOVERNANCE
18
Statement of Governance Arrangements for Directors’ report
22
Directors’ report
26
Statement of Directors’ responsibilities in respect of the annual report and accounts
27
Independent auditor’s report to the Members of Millennium & Copthorne Hotels Limited
17
MILLENNIUM & COPTHORNE HOTELS LIMITED
STATEMENT OF GOVERNANCE ARRANGEMENTS FOR DIRECTORS’ REPORT
From the period between 1 January 2019 and 11 October 2019, when the Delisting occurred, the Company
operated as a public company with a premium listing on the London Stock Exchange.
Prior to the Final Offer, the Company applied the principles of the UK Corporate Governance Code (July 2018
edition) (the “2018 Code”). However, once the Final Offer was made in June 2019, many of the initiatives
commenced to enhance the Company’s corporate governance regime in order to comply with the 2018 Code were
put on hold by the Directors as the Company’s ownership and governance structures would undergo significant
changes in the event the Final Offer were to complete. Following completion of the Final Offer, as a result of the
Delisting, resignation of the Independent Non-Executive Directors and disbanding of the Board’s committees, the
Company ceased to apply the principles of the 2018 Code and instead implemented a more-streamlined
governance structure as the Board worked on integrating the Company within the wider CDL group. The Board
will continue to review and refine its governance arrangements, to better align them with CDL’s structure, whilst
being mindful that a successful governance regime must provide for an agile and empowered organization and
foster accountability to stakeholders and transparency.
Hong Leong Investment Holdings Pte. Ltd (“HLIH”) is considered to be the immediate and ultimate holding company
of CDL. CDL, in turn, owns and controls 100% of the share capital of the Company through several of its subsidiary
companies.
Although the Group is not reporting against the 2018 Code for its 2019 financial year, the Board has decided to
report on its governance arrangements following the Wates Corporate Governance Principles for Large Private
Companies (December 2018 edition).
Purpose and Leadership
The strategy and business model for the Company are outlined in the Strategic Report on page 10. Our vision is
to be the leading global hospitality real estate ownership group for gateway cities, with effective, in-built and unique
asset management skills. Our commitment is to hospitality and creating memorable experiences in distinctive
environments. We strive to recognise not only the faces of our guests, but also their individual needs and desires.
To do this, we will need to deliver outstanding service, quality, originality and value to our customers by employing
and developing the best people and by having a challenging and forward thinking business culture. Fundamentally,
we treat our guests, employees and other stakeholders with respect and integrity.
As part of the Group’s integration within CDL following the Delisting, the Board has decided to adopt CDL’s values,
set out below, as they are consistent with the ethos of the organization and the adoption of them within the Company
will help to ensure alignment of values across the wider CDL group.
Innovation
– Because this is crucial to our success
Collaboration – Because this is the best way to achieve exponential results
Integrity
– Because this is at the core of everything that we do
In 2020, the Board intends to review the ways in which the purpose and values are embedded throughout the
organisation. As part of this review, the Board will examine the culture of the Company and will seek to reinforce
a culture of accountability where employees take into account the views of, and are responsible to, the Company’s
stakeholders, including our guests and customer, other employees, suppliers, the communities in which we
operate.
Whilst the Company engages with its employees and other stakeholders, as outlined further in this Directors’ Report
and elsewhere, the Board also will look for ways to improve its stakeholder engagement going forward. This may
involve the implementation of a global intranet, for instance, and more frequent communications from the
management team.
The Group has elected to participate in CDL’s group-wide whistleblowing programme. This allows employees to
raise serious matters of concern—via email or a dedicated whistleblowing hotline—through an independent
channel, being CDL’s Internal Audit function. This programme is, in turn, overseen by the Audit & Risk Committee
of CDL. In addition, the Group’s Slavery and Human Trafficking statement, which is updated annually, includes a
method
to
supplychain@millenniumhotels.co.uk).
to raise matters of concern
the company (via email
investigation by
for suppliers
for
18
MILLENNIUM & COPTHORNE HOTELS LIMITED
Board Composition
The current governance structure of the Company, as at the date of this Directors’ Report, includes a Board of
Directors comprised of six Directors. Four of these, Kwek Leng Beng, Kwek Eik Sheng, Jonathan Grech and
Angela Ong, hold executive positions with the Company or a direct or indirect subsidiary of the Company and are
thus considered to be Executive Directors. Two Directors, Kwek Leng Peck and Tanya Chiaranussati, do not hold
executive positions within the Group, although Mr Kwek does hold executive positions with HLIH and certain of its
subsidiary companies.
The remit of the Board is to oversee the running of the Group as stewards for the Company’s stakeholders. The
Board must ensure that there are adequate resources in place to ensure effective and efficient operations,
underpinned by good governance, strong values and an ethical, safety-driven culture.
It is anticipated that the Board will meet approximately three or four times per year, including, at a minimum, one
meeting to approve the annual financial statements of the Group, one to approve the half-year results and one to
approve the annual budget and strategy or plan for the ensuing financial year, with the fourth meeting to be called
on an ad-hoc basis as required.
The Board is chaired by Kwek Leng Beng, who served as the Non-Executive Chairman of the Company since its
listing in 1996 through to its Delisting in October 2019. Given his experience and the fact that he also serves as
the Executive Chairman of CDL, his leadership helps to provide continuity to the Board as well as alignment of
decision making with CDL’s strategic objectives. Whilst there are no independent directors on the Board, the
current mix of executive and non-executive roles, coupled with the diversity of the backgrounds and skillsets of the
Directors, is felt to promote constructive dialogue, and challenge when necessary, as well as effective decision
making.
As noted in the Section 172(1) Statement, despite the Delisting of the Company, the Board continues to support
the aspirations set out in the Hampton-Alexander Review, conducted by Sir Philip Hampton and the late Dame
Helen Alexander, which challenges FTSE 350 companies to achieve a target of one-third of Board positions to be
held by women by 2020. Currently, this standard is met as two out of the six Directors of the Company are female.
However, the Board not only believes that gender diversity is important, but the Directors recognise the benefits
and different perspectives that diversity in all of its forms–including diversity of age, ethnic origin, and cultural and
educational backgrounds–can bring to Board deliberations. As such, these factors will be taken into account when
making future appointments or changes to the composition of the Board.
The day-to-day operation of the Group has been delegated to an Executive Committee, which includes Kwek Leng
Beng, Kwek Eik Sheng and Kieran Twomey, the Group Chief Operating Officer. The regional and functional heads
report into the Executive Committee members. The Executive Committee provides regular reports to the Board,
including quarterly financial updates and updates on other significant matters, including material transactions,
significant litigation, proposals to enter into new business lines or markets, strategic alliances and so forth.
A set of reserved matters, approved by the Board, governs what matters require approval by the Board versus
those that are delegated to the Executive Committee. The Executive Committee operates pursuant to formal terms
of reference.
The Board will continue to keep the composition and structure of the Board and its committees under review as we
progress with the CDL integration process.
Director Responsibilities
All Directors have access to the advice of the Company Secretary, who is responsible for ensuring that proper
Board procedures and applicable corporate governance rules and regulations are observed. In addition, the
Directors are able, if necessary, to take independent professional advice at the Company’s expense.
The Chairman, in conjunction with the Company Secretary, is responsible for ensuring that Directors receive
appropriate training at the Company’s expense where specific expertise is required in the course of the exercise of
their duties. All Directors receive a Board compendium detailing matters relating to Board procedures and their
duties as directors. A bespoke induction programme is established for any new Directors who are appointed, based
on their needs and experience.
The Board has established agreed procedures for managing conflicts of interest or potential conflicts of interest.
These procedures and any potential conflicts authorised in accordance with section 175 of the Companies Act
2006, as permitted by the Company’s Articles of Association, are reviewed by the Board at least annually and other
potential conflicts are reviewed as they may arise from time to time. The Board is satisfied that the procedures for
managing potential conflicts remain effective.
19
MILLENNIUM & COPTHORNE HOTELS LIMITED
As the Company integrates into the wider CDL group, the ways in which the Board and Executive Committee will
liaise with and report into CDL’s decision-making bodies will be reviewed and refined, and the Directors intend to
develop and agree with CDL a protocol governing these matters.
Opportunity and Risk
When assessing a potential business opportunity, in addition to assessing whether it is aligned with the strategic
priorities of the Group and its impact on the Group’s stakeholders, the Board also considers the risks associated
with the opportunity and whether it is likely to create and preserve value over the long term. The Directors
understand that whilst the Group must remain nimble and entrepreneurial to tackle the challenges facing the
company and industry more generally, the Directors also are keenly aware that the Group must operate in a
sustainable manner in order to be successful.
The areas over which the members of the Executive Committee have responsibility have been clearly defined.
Kwek Eik Sheng, who also sits on the Board and serves as Group Chief Strategy Officer for CDL, is tasked with
overseeing investments, special projects and development projects for the Group. Mr Twomey, on the other hand,
focuses on the Group’s operations, with the goals of driving organic top-line growth and implementing effective
cost control.
In terms of oversight, each year management prepares an annual strategic plan and budget for the Group for the
ensuing year. These are submitted first the Executive Committee, for its review and approval, and then to the
Board for its consideration. Subsequently, the Executive Committee and Board review management’s progress in
executing against the strategic plan and budget. This process includes a quarterly assessment of the Group’s
performance and how it tracks against the plan and budget.
Additionally, a delegation of authority policy applies to the regional and functional heads and their reporting lines.
This policy includes different layers of approval for transactions and capital investments, such as the purchase or
sale of a hotel or a major refurbishment project, for instance, and other matters. In the case of capital investments,
the most material ones, involving an expenditure of S$10m or more, must be escalated to the Executive Committee
of the Company. Above this level, approval is required to be obtained at the CDL level.
As noted above, decisions are not made in a vacuum. The Board is working on developing “risk appetite”
parameters to help guide its decision making and the decision making of the Executive Committee. A Management
Risk Committee, chaired by the Group Chief Operating Officer, sits below the Executive Committee and helps to
ensure that the Group has appropriate internal control and risk management systems in place to allow the
management team, and ultimately the Board, to monitor and assess the Group’s principal risks and uncertainties
on a continual basis, to be informed about emerging risks, as and when appropriate, and to develop and institute
proportionate measures and controls to mitigate these risks to acceptable levels. A Global Director of Risk
Management & Compliance supports the enterprise risk management and global compliance programme of the
Group and the Group’s Internal Audit function, which has been merged into CDL’s Internal Audit function and
reports to CDL’s Audit & Risk Committee, regularly reviews the effectiveness of the Group’s internal control
environment, particularly in respect of the Group’s financial controls.
The operation of the Management Risk Committee is described further on page 11 of the Strategic Report.
Remuneration
The Group utilizes clear remuneration structures for its employees and Directors. Positions are banded to provide
for consistency across similar-level positions whilst giving the management team sufficient flexibility to vary
remuneration arrangements in certain contexts in order attract or retain talent for key positions. To the extent
possible, the Company’s incentive structures are aligned among the regions to provide for uniformity in the Group’s
performance management processes.
Remuneration is based on personal performance and the performance of the Company, region, hotel and/or
business unit, depending on the role. Generally, personal objectives and key financial performance targets are
agreed with an employee at the beginning of each year and are assessed by the employee’s supervisor at the end
of each year. Objectives relating to achievement of satisfactory Internal Audit assessment scores have been added
to General Manager and Financial Controller bonus plans to incentivize the maintenance of adequate controls and
the management team is reviewing the addition of risk management and sustainability metrics to further strengthen
accountability to the Group’s stakeholders. All historical share scheme awards include an element of vesting over
a period of at least three years and the Company’s bonus plans and share scheme rules include malus and
clawback provisions that can be utilized as necessary, all in an effort to align employee interests with the long-term
interests of the Company.
In line with the Group’s commitment to diversity, the management team is in the process of reviewing gender pay
gaps across the group and developing programmes, both in terms of recruiting and professional development, to
help close the gaps.
20
MILLENNIUM & COPTHORNE HOTELS LIMITED
Prior to the Delisting of the Company, the Company had in place a shareholder approved remuneration policy in
accordance with the requirements of the Companies Act 2006. Pursuant to the 2018 Code, and the new
requirement under the 2018 Code that remuneration committees should have responsibility for setting
remuneration for senior management, the Company’s Remuneration Committee approved a separate
remuneration policy for the direct reports to the Group Chief Executive Officer. This policy was reviewed at the
time by the Company’s independent Remuneration Committee advisor, PricewaterhouseCoopers. Following the
Delisting of the Company, future awards will no longer be made under the Company’s share schemes and the
schemes will be wound down. However, CDL management are working with Company management to review the
Group’s remuneration arrangements and replace the share scheme benefits with alternative remuneration
arrangements.
Stakeholder Relationships and Engagement
The following sections of this Annual Report and Accounts and the Group’s 2019 Corporate Responsibility Reports,
published on its website (at https://investors.millenniumhotels.com/corporate-responsibility) describe how the
Company has engaged with its stakeholders over the course of the year and how it plans to continue to engage
with them in the future.
Section
Section 172(1) Statement
Employee Involvement and Engagement with Employees
Engagement with Suppliers, Customers and Others in a
Business Relationship with the Company
Our Employees
Location
Pages 3 to 6 in the Strategic Report
Page 23 of this Directors’ Report
Page 24 of this Directors’ Report
Corporate Responsibility Report
21
MILLENNIUM & COPTHORNE HOTELS LIMITED
DIRECTORS’ REPORT
The Directors present their annual report and the audited financial statements for the Company, as well as the
independent auditor’s report, for the year ended 31 December 2019.
Registered name and corporate status
The Company is registered in England and Wales as a private limited company, under Company Number
03004377.
During the course of the year, the Company was subject to a successful takeover offer by its controlling
shareholder, City Developments Limited (“CDL”), and as a result, ceased operating as a public company. In June
2019, the Company, then operating as Millennium & Copthorne Hotels plc, and Agapier Investments Limited
("Offeror"), a company indirectly and wholly-owned by CDL, announced a recommended pre-conditional final cash
offer by the Offeror (“Final Offer”) to acquire for 685 pence per share the entire issued and to be issued share
capital of the Company not already held by CDL, its subsidiaries and persons acting in concert with them.
Following the successful completion of the Final Offer in September 2019, the listing of the Company's ordinary
shares on the premium segment of the Official List and the admission to trading of the Company’s shares on the
London Stock Exchange's main market for listed securities were cancelled on 11 October 2019 (the “Delisting”).
As part of the Delisting, the Independent Non-Executive Directors resigned and the Board’s committees, including
its Audit & Risk Committee, Remuneration Committee and Nominations Committee, were disbanded. Subsequent
to the Delisting, the Company was then re-registered as a private limited company, under the name Millennium &
Copthorne Hotels Limited, on 4 November 2019 and by the end of November 2019, the Offeror completed the
procedure under the Companies Act 2006 to acquire compulsorily all remaining shares in the Company such that
the Company became a wholly-owned indirect subsidiary of CDL.
Strategic report
The Strategic Report is found on pages 3 to 16. Pursuant to the Companies Act 2006, that report must provide a
fair review of the Company’s business, together with a description of the principal risks and uncertainties facing the
Company. It includes an analysis of the development and performance of the Company’s business during the year
and the position of its business at the end of the year, as well as a description of the Company’s strategy and
business model.
Board of Directors
The names of those who served as a Director of the Company during the course of the 2019 financial year include:
Name
Kwek Leng Beng
Kwek Leng Peck
Kwek Eik Sheng
His Excellency Shaukat Aziz
Martin Leitch
Paola Bergamaschi Broyd
Victoria WIlliams
Daniel Desbaillets
Christian de Charnacé
Tanya Chiaranussati
Jonathon Grech
David Hassan
Angela Ong
Role
Non-Executive Chairman
Executive Chairman
Non-Executive Director
Non-Executive Director
Alternate Non-Executive
Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Executive Director
Executive Director
Service Dates
1 January 2019 through 4 November 2019
4 November 2019 through 31 December 2019
1 January 2019 through 31 December 2019
1 January 2019 through 11 October 2019
11 October 2019 through 4 November 2019
4 November 2019 through 31 December 2019
1 January 2019 through 11 October 2019
1 January 2019 through 11 October 2019
21 March 2019 through 11 October 2019
10 May 2019 through 11 October 2019
1 January 2019 through 11 October 2019
1 January 2019 through 11 October 2019
4 November 2019 through 31 December 2019
11 October 2019 through 31 December 2019
11 October 2019 through 4 November 2019
11 October 2019 through 31 December 2019
Dividends
The Directors do not recommend the payment of a dividend in respect of the year ended 31 December 2019.
Political donations and expenditure
No donations were made by the Group for political purposes and the Group did not incur any political expenditure
during the year (2018: £nil). The Company operates a politically neutral policy with regard to any political donations
and expenditure it may elect to make. See the Group’s Corporate Responsibility Report, located at
the Company’s non-political
https://investors.millenniumhotels.com/corporate-responsibility,
charitable activities.
for details of
22
MILLENNIUM & COPTHORNE HOTELS LIMITED
Financial instruments
An indication of the Group’s financial risk management objectives and policies in respect of the use of financial
instruments and exposure of the Company to price risk, credit risk, liquidity risk and cash flow risk are set out in
Note 22 to the Company’s consolidated financial statements.
Employment of disabled persons
We value highly the rich diversity of our colleagues around the world. As of the end of 2019, the Group operated
in over 25 countries and employed over 11,600 employees worldwide. The Company is an equal opportunities
employer and has an objective to ensure that no employee or other worker or job applicant receives less favourable
treatment, directly or indirectly, on the grounds of age, disability, gender reassignment, marital or civil partner
status, pregnancy or maternity, race, colour, nationality, ethnic or national origin, religion or belief, sex or sexual
orientation.
In 2018, a new diversity and inclusion policy was launched globally following endorsement by the Group’s Directors.
This policy acknowledges the importance of fostering an environment where colleagues are free to share different
perspectives and the view that greater diversity allows the Group to better understand and serve the communities
in which we operate. Regional policies that address local requirements also are in place in various jurisdictions.
Together these policies encourage the employment, training and advancement of disabled persons, having regard
to their particular aptitudes and abilities, provided that they can be employed in a safe working environment.
Suitable employment would, if possible, be found for any employee who becomes disabled during the course of
employment. In 2019, training sessions on diversity and accommodating disabled persons—including new mental
health awareness training in the UK—were conducted regionally. This training will continue in 2020.
Employee involvement and engagement with employees
The Board considers employee engagement to be critical to the Company’s success. Indeed, the ability of the
Group to successfully find, retain and develop talent was deemed by the Board to be a principal risk in 2019, and
as such, was monitored not only by the management team, but also at the Audit & Risk Committee level.
through management presentations, global and regional
The Group endeavours to keep employees informed about matters of concern to them and the performance of the
intranet sites and other
Company, whether
communications. Likewise, the Group seeks to consult with employees through various means and on a regular
basis so that their views can be taken into account. Over the course of the year, these efforts included regular
meetings at the regional, functional and hotel levels, as well as exit interviews with departing colleagues. These
meetings allowed the management team to communicate important updates throughout the workforce, provide
training on existing and new policies and procedures and hear from colleagues around the world.
Communications with employees was particularly important in 2019 in light of the completion of the Final Offer and
subsequent Delisting of the Company. Regular employee communications were issued during this process,
together with “frequently asked question” documents. Chairman Kwek and Kwek Eik Sheng held several meetings
with members of the senior management team during this time, to hear their feedback and help to foster continuity
and stability during this period of change, and Chairman Kwek provided various Group-wide updates on the impact
of the integration of the Company within the wider CDL Group.
Prior to the Delisting, the Company operated four different share schemes for the benefit of the Group’s eligible
employees. These included the following plans:
•
Long Term Incentive Plan – Under this plan, annual conditional share awards were made to all Executive
Directors of the Company. Vesting was subject to future performance conditions over a three-year
performance period followed by a two-year post-vesting holding period.
• Executive Share Plan – Under this plan, conditional share awards were granted each year to members
of the Group’s executive management team based on the historical performance of the Group. These
awards vested in tranches over a period of three years, subject to the participant’s continued employment
within the Group.
• Annual Bonus Plan – Under this plan, which applied to eligible senior managers globally (except for
certain jurisdictions), including hotel General Managers as well as Director-level and Vice President-level
employees, a portion of each participant’s annual cash bonus was converted into a deferred conditional
share award that would vest in tranches over a period of three years, subject to the participant’s continued
employment within the Group.
• Sharesave scheme – Each year all eligible employees in the UK were invited to participate in the
Company’s tax advantages Sharesave, or “Save As You Earn”, plan pursuant to which they were offered
the right to save a portion of their salary for a set period of time—usually three or five years—and use
those saving to purchase options to acquire shares of the Company at a pre-determined discounted price.
23
MILLENNIUM & COPTHORNE HOTELS LIMITED
The objectives of these plans differed, but in general they served to award strong performance—both at an
employee and Group level—over a reasonable period of time, retain talent and better align the interests of
employees with the interests of shareholders.
As a result of the Delisting, no further grants have been or will be made under these share-based incentive schemes
and the schemes will be wound down once all existing awards have vested.
Engagement with suppliers, customers and others in a business relationship with the Company
As a company operating in the hospitality industry, the Directors are aware of the need for the Group to remain
competitive and for our hotels to address the wants and needs of our customers. To this end, the Company is
continually looking for ways to engage with and better understand our guests. These aims were considered by the
Board to be so important that several of the Group’s principal risks in 2019—including the ability of the Group to
build brand equity and customer loyalty, optimise its revenue channels and invest in its assets—centred around
them.
In 2019, the Group utilised a third-party agency to send post-stay service quality emails to over 15% of the guests
who stayed at Millennium Hotels & Resorts branded hotels globally. In addition, this agency regularly reviewed
popular online hotel review sites to collect guest feedback submitted through those forums. The regional
management and hotel teams used the feedback received to improve the Group’s service, brand and product
offerings.
In addition, the Directors continued to support the strategy of investing in and repositioning the Group’s hotels
throughout the year. This resulted in, among other things, the September 2019 relaunch of the group’s flagship
property in Mayfair, London, as the Biltmore, Mayfair, a five star deluxe hotel operating under Hilton’s LXR Hotels
& Resorts brand. The Board also considered the potential rebranding of another flagship property owned by the
Group, the Millennium Times Square New York, and in April 2019 the Board approved the execution by a subsidiary
of the company of an affiliation arrangement with Hilton in respect of that hotel. Various other capital expenditure
projects, including refurbishment works at the Orchard Hotel in Singapore and the Millennium Gloucester Hotel in
London and the Millennium Hotel Paris Opera in Paris, commenced and/or were completed during the year.
Turning to its suppliers, the Group continued to focus on enhancing its procurement practices over the course of
the year. These efforts included greater engagement with our supply chain regarding ethical and sustainable
sourcing. We worked with our suppliers to start sourcing cage-free eggs within the Company’s UK supply chain,
for instance, and to lessen the environmental impact of our sourcing activities, including initiatives to use of local
food suppliers, where possible, and reduce the amount of packaging and single-use plastics used by the Group.
To help us with these objectives, a strategic decision was made in 2019 to outsource elements of the Group’s
procurement activities within certain regions to a large international hotel operator. This has allowed the Group to
leverage the operator’s deep procurement experience and relationships with key suppliers, as well as their robust
processes and systems, to improve our procurement practices.
For details on how the Group engaged with its communities, please refer to the Corporate Responsibility Report,
which can be found at https://investors.millenniumhotels.com/corporate-responsibility.
Share capital
As at the date of this Directors’ Report the Company’s share capital consists of 324,950,812 ordinary shares of 30
pence each. As noted above, all of these shares are owned by direct or indirect subsidiaries of CDL. The Company
did not purchase or acquire any of its own shares during the year and no other disclosures are required pursuant
to Schedule 7, Part II of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008.
Greenhouse gas emissions
All disclosures concerning the Group’s greenhouse gas emissions can be found in the Corporate Responsibility
Report, located https://investors.millenniumhotels.com/corporate-responsibility.
Qualifying indemnities
The Articles of Association of the Company permit it to indemnify the Directors of the Company against any liability
incurred by or attaching to a Director in connection with any negligence, default, breach of duty or breach of trust
in relation to the Company or an associated company; any liability incurred by or attaching to the Director in
connection with the activities of the Company or an associated company in its capacity as a trustee of an
occupational pension scheme; and/or any other liability incurred by or attaching to the Director as an officer of the
Company or an associated company.
The Company has provided each of its Directors and certain Directors of its affiliated companies, including the
trustee of the Group’s UK pension plan, with qualifying indemnities as permitted under Sections 234 and 235 of
the Companies Act 2006. The indemnities do not apply in circumstances where indemnification is prohibited by
24
MILLENNIUM & COPTHORNE HOTELS LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MILLENNIUM & COPTHORNE HOTELS LIMITED
Opinion
We have audited the financial statements of Millennium & Copthorne Hotels Limited (“the
company”) for the year ended 31 December 2019 which comprise the Consolidated Statement of
Profit or Loss, the Consolidated Statement of Other Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated
Statement of Cash Flows, the Company Statement of Financial Position, the Company Statement of
Changes in Equity, and related notes, including the accounting policies in note 2.2 of the Group
financial statements and note B of the Company financial statements.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2019 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with International Financial
Reporting Standards as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with UK
accounting standards, including FRS 101 Reduced Disclosure Framework; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the group in accordance with, UK ethical requirements
including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a
sufficient and appropriate basis for our opinion.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend
to liquidate the group or the company or to cease their operations, and as they have concluded that
the group and the company’s financial position means that this is realistic. They have also concluded
that there are no material uncertainties that could have cast significant doubt over their ability to
continue as a going concern for at least a year from the date of approval of the financial statements
(“the going concern period”).
We are required to report to you if we have concluded that the use of the going concern basis of
accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant
doubt over the use of that basis for a period of at least a year from the date of approval of the financial
statements. In our evaluation of the directors’ conclusions, we considered the inherent risks to the
group’s business model and analysed how those risks might affect the group and company’s financial
resources or ability to continue operations over the going concern period. We have nothing to report
in these respects.
However, as we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the
absence of reference to a material uncertainty in this auditor's report is not a guarantee that the group
or the company will continue in operation.
27
MILLENNIUM & COPTHORNE HOTELS LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MILLENNIUM &
COPTHORNE HOTELS LIMITED (continued)
28
MILLENNIUM & COPTHORNE HOTELS LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MILLENNIUM &
COPTHORNE HOTELS LIMITED (continued)
29
MILLENNIUM & COPTHORNE HOTELS LIMITED
FINANCIAL STATEMENTS
31
32
33
35
36
38
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
109 Company statement of financial position
110 Company statement of changes in equity
111 Notes to the Company financial statements
30
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Other operating expense
Operating profit
Share of profit of joint ventures and associates
Finance income
Finance expense
Net finance expense
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Basic earnings per share (pence)
Diluted earnings per share (pence)
NOTES
5
6
7
7
15
9
5
10
11
11
2019
£M
1,025
(457)
568
(439)
10
(41)
98
36
7
(39)
(32)
102
(8)
94
62
32
94
–
–
2018
£M
997
(436)
561
(423)
30
(63)
105
29
9
(37)
(28)
106
(13)
93
43
50
93
13.1p
13.1p
The financial results above derive from continuing activities.
The notes on pages 38 to 108 are an integral part of these consolidated financial statements.
31
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Profit for the year
Other comprehensive (expense)/income:
Items that are not reclassified subsequently to income statement:
Remeasurement of defined benefit plan actuarial net gains, net of tax
23
Net change in fair value of equity investment
NOTE
Items that may be reclassified subsequently to income statement:
Foreign currency translation differences – foreign operations
Foreign currency translation differences – equity accounted investees
Net gain/(loss) on hedge of net investments in foreign operations
Other comprehensive (expense)/income for the year, net of tax
Total comprehensive income for the year, net of tax
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income for the year, net of tax
The notes on pages 38 to 108 are an integral part of these consolidated financial statements.
2019
£M
94
(1)
1
–
(61)
(2)
4
(59)
(59)
35
13
22
35
2018
£M
93
4
5
9
72
9
(3)
78
87
180
112
68
180
32
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Non-current assets
Property, plant and equipment
Lease premium prepayment
Investment properties
Investment in joint ventures and associates
Other financial assets
Current assets
Inventories
Development properties
Lease premium prepayment
Trade and other receivables
Cash and cash equivalents
Assets held for sale
Total assets
Non-current liabilities
Interest-bearing loans, bonds and borrowings
Employee benefits
Provisions
Other non-current liabilities
Lease liabilities
Deferred tax liabilities
Current liabilities
Interest-bearing loans, bonds and borrowings
Trade and other payables
Provisions
Lease liabilities
Income taxes payable
Total liabilities
Net assets
NOTES
2019
£M
2018
£M
12, 37
3,194
3,153
13
14
15
16
17
18
13
19
20
36
21
23
24
25
37
26
21
27
24
37
–
680
414
40
103
668
358
43
4,328
4,325
7
115
–
91
409
622
103
725
5
115
2
102
375
599
–
599
5,053
4,924
(853)
(789)
(15)
(9)
(17)
(108)
(147)
(14)
(9)
(15)
–
(172)
(1,149)
(999)
(315)
(220)
(3)
(5)
(13)
(313)
(220)
(2)
–
(27)
(556)
(562)
(1,705)
(1,561)
3,348
3,363
The notes on pages 38 to 108 are an integral part of these consolidated financial statements
33
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
SHARE
CAPITAL
£M
SHARE
PREMIUM
£M
TRANSLATION
RESERVE
£M
TREASURY
SHARE
RESERVE
£M
FAIR
VALUE
RESERVE
£M
RETAINED
EARNINGS
£M
TOTAL
EXCLUDING
NON-
CONTROLLING
INTERESTS
£M
NON-
CONTROLLING
INTERESTS
£M
TOTAL
EQUITY
£M
Balance at 1 January 2019
IFRIC 23 adjustment
Restated balance at 1 January
2019
Profit
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Contributions by and
distributions to owners
Dividends – equity holders
Dividends – non-controlling
interests
Changes in ownership interests
Change in interests in subsidiaries
without loss of control
Return of capital to non-controlling
interests
Total transactions with owners
97
-
97
–
–
–
–
–
–
–
–
843
-
843
–
–
–
–
–
–
–
–
491
-
491
–
(48)
(48)
–
–
–
–
–
(4)
-
(4)
–
–
–
–
–
–
–
–
Balance at 31 December 2019
97
843
443
(4)
5
-
5
–
(4)
(4)
–
–
–
–
–
1
1,338
4
2,770
4
1,342
2,774
62
3
65
62
(49)
13
(7)
(7)
–
2
–
–
2
–
(5)
(5)
1,402
2,782
593
-
593
32
(10)
22
–
(41)
(2)
(6)
(49)
566
3,363
4
3,367
94
(59)
35
(7)
(41)
–
(6)
(54)
3,348
SHARE
CAPITAL
£M
SHARE
PREMIUM
£M
TRANSLATION
RESERVE
£M
TREASURY
SHARE
RESERVE
£M
FAIR
VALUE
RESERVE
£M
RETAINED
EARNINGS
£M
TOTAL
EXCLUDING
NON-
CONTROLLING
INTERESTS
£M
NON-
CONTROLLING
INTERESTS
£M
TOTAL
EQUITY
£M
1,309
2,676
573
3,249
Balance at 1 January 2018
97
843
431
(4)
Profit
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Contributions by and
distributions to owners
Dividends – equity holders
Dividends – non-controlling interests
Changes in ownership interests
Change in interests in subsidiaries
without loss of control
Return of capital to non-controlling
interests
Total transactions with owners
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60
60
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 December 2018
97
843
491
(4)
–
–
5
5
–
–
–
–
–
5
43
4
47
43
69
112
(21)
(21)
–
3
–
–
3
–
(18)
(18)
1,338
2,770
50
18
68
–
(43)
(3)
(2)
(48)
593
The notes on pages 38 to 108 are an integral part of these consolidated financial statements.
93
87
180
(21)
(43)
–
(2)
(66)
3,363
35
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Share of profit of joint ventures and associates
Other operating income
Other operating expense
Finance income
Finance expense
Income tax expense
Operating profit before changes in working capital and provisions
Movement in inventories, trade and other receivables
Movement in development properties
Movement in trade and other payables
Cash generated from operations
Interest paid
Interest received
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Dividends received from joint ventures and associates
Proceeds from sale of investment properties
Acquisition of property, plant and equipment, lease premium prepayment and
investment properties
Subscription of Perpetual Convertible Capital Securities of associate
Net cash used in investing activities
Balance carried forward
NOTES
2019
£M
2018
£M
94
93
12, 13
15
7
7
9
9
10
80
(36)
(10)
41
(7)
39
8
209
9
(5)
9
222
(27)
6
(38)
163
5
–
69
(29)
(30)
63
(9)
37
13
207
(15)
(22)
7
177
(24)
5
(31)
127
4
45
(120)
(30)
(145)
(109)
(32)
(92)
18
35
The notes on pages 38 to 108 are an integral part of these consolidated financial statements.
36
MILLENNIUM & COPTHORNE HOTELS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
NOTES
28
Balance brought forward
Cash flows from financing activities
Repayment of borrowings
Drawdown of borrowings
Payment of lease liabilities
Dividends paid to non-controlling interests
Return of capital to non-controlling interests
Dividends paid to equity holders of the parent
Net cash generated from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Reconciliation of cash and cash equivalents
Cash and cash equivalents shown in the consolidated statement of financial
position
Bank overdrafts included in borrowings
Cash and cash equivalents for consolidated statement of cash flows
20
The notes on pages 38 to 108 are an integral part of these consolidated financial statements.
2019
£M
18
(304)
391
(9)
(41)
(6)
(7)
24
42
375
(8)
409
409
–
409
2018
£M
35
(145)
189
–
(43)
(2)
(21)
(22)
13
354
8
375
375
–
375
37
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 REPORTING ENTITY
Millennium & Copthorne Hotels Limited (the “Company”) is a private company incorporated in England and
Wales. The registered office is located at Corporate Headquarters, Scarsdale Place, Kensington, London W8
5SY. These consolidated financial statements comprise the Company and its subsidiaries (collectively the
“Group”). The consolidated financial statements of the Group for the year ended 31 December 2019 were
authorised for issue in accordance with a resolution of the Directors on 22 June 2020.
2.1 BASIS OF PREPARATION
The consolidated financial statements are prepared on the historical cost basis except for investment properties,
derivative financial instruments, equity investments at fair value through other comprehensive income (“FVOCI”)
and equity investments at fair value through profit and loss (“FVTPL”) which are stated at their fair values. Hotel
properties are stated at cost or deemed cost. Deemed cost is calculated based on the hotel’s frozen valuation
as at 1 January 2004. Non-current assets held for sale are stated at the lower of carrying amount and fair value
less costs to sell. The Group’s income statement and segmental analysis separately identifies operating profit
and other operating income and expense. This is in accordance with IAS 1 ‘Presentation of Financial
Statements’ and is consistent with the way that financial performance is measured by management and assists
in providing a meaningful analysis of the trading results of the Group. The financial statements are presented in
the Company’s functional currency of sterling, rounded to the nearest million.
The Company has elected to prepare its parent company financial statements in accordance with Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’.
BASIS OF ACCOUNTING
These consolidated financial statements have been prepared in accordance with IFRS as required by EU law
(IAS Regulation EC 1606/2002). Details of the Group’s accounting policies, including changes during the year,
are included below.
ADOPTION OF NEW AND REVISED STANDARDS
The Group has adopted and applied the following standard issued by the International Accounting Standards
Board (IASB) that is relevant to its operations for the first time in the year commencing 1 January 2019:
– IFRS 16 ‘Leases’
IFRS 16 replaces IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether an Arrangement contains a Lease’ and is
mandatorily effective for accounting periods beginning on or after 1 January 2019. The Group has applied IFRS
16 using the modified retrospective approach, under which the cumulative effect of the initial application is
recognised in retained earnings at 1 January 2019. Comparative information has therefore not been restated
and is reported under the previous accounting policies. The details of the changes in accounting policies are
described in Note 2.2F.
– IFRIC 23 ‘Uncertainty over Income Tax Treatments’
The International Accounting Standards Board’s Interpretations Committee issued IFRIC 23 effective for
accounting periods beginning on or after 1 January 2019. The interpretation provides guidance on how to
account for uncertainty over income tax treatments under IAS 12 ‘Income Taxes’. The new Interpretation has had
an impact on the Group’s existing positions with respect to uncertain tax treatments and financial statement
disclosures, the quantum of which can be found on page 35.
SUBSIDIARIES
BASIS OF CONSOLIDATION
(I)
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
(II)
The Group’s interests in equity-accounted investees comprise interests in joint ventures and associates.
INTERESTS IN EQUITY-ACCOUNTED INVESTEES
An associate is an entity in which the Group has significant influence but not control or joint control, over the
financial and operating policies. A joint venture is an arrangement in which the Group has joint control, and
where the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations
for its liabilities.
38
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Interests in joint ventures and associates are accounted for using the equity method. They are initially
recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial
statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted
investees, until the date on which significant influence or joint control ceases.
TRANSACTIONS ELIMINATED ON CONSOLIDATION
(III)
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
GOING CONCERN
The Group’s business activities, together with the factors likely to affect its future development, performance and
position are set out in the Strategic Report on page 7 to 8. Note 22 of the financial statements includes the
Group’s objectives, policies and processes for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
Uncertainty due to the recent COVID-19 outbreak has been considered as part of the Group’s adoption of the
going concern basis. Trading over recent months has been impacted by COVID-19 with the Group temporarily
shutting or reducing operations at a number of hotels, primarily in Europe and New Zealand. In response, the
Directors have taken immediate and significant actions, all within management’s control, to reduce costs and
optimise the Group’s cash flow and liquidity. Amongst these are the following mitigating actions: reducing capital
expenditure through postponing or pausing refurbishment and property development activities, tight monitoring of
manpower planning, monitoring of controllable variable expenses and negotiation of discounts with suppliers, and
maximising of government assistance and relief programs. It is noted the Group has a limited fixed cost base due
to owning the majority of its hotel properties.
Cash flow forecasts have been prepared for a period of twelve months from the date of approval of these
consolidated financial statements. The directors have reviewed these cash flow forecasts in light of the COVID-
19 pandemic, including a severe but plausible downside scenario consisting of significant revenue reductions
through to Q3 2020 with a cautious pick up in trading from this date through 2021, and the non-renewal of
maturing debt instruments throughout the review period. This severe but plausible downside scenario, whilst
considered by the Directors to be extremely prudent, has a significant impact on sales, margin, and cash flow;
however it shows that the Group will be able to operate within the current committed debt facilities with continued
financial covenant compliance.
Having reviewed the forecasts and the available committed debt facilities, the Directors have a reasonable
expectation that the Group and Company have adequate resources including external credit facilities to continue
in operational existence for at least 12 months from the signing of this annual report. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements of the Group and the Company.
In assessing whether the Group is a going concern, the Directors follow a review process which is consistent
with the principles set out in the “Guidance on Risk Management, Internal Control and Related Financial and
Business Reporting 2014” published by the Financial Reporting Council.
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
BUSINESS COMBINATIONS AND GOODWILL
A
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-
controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed and identifiable net assets acquired are measured at the
acquisition date fair value.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
39
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value as at that date through the income statement.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay
contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not
remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is
remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
Goodwill is initially measured at cost, being the excess of the consideration transferred over the fair value of the
Group’s net identifiable assets acquired and liabilities assumed, and is allocated to each of the Group’s cash-
generating units that are expected to benefit from the combination. If the consideration is lower than the fair
value of the net assets of the subsidiary acquired, the difference is recognised in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the
operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured
based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
FOREIGN CURRENCY
B
The financial statements of each of the Group’s businesses are prepared in the functional currency applicable to
that business.
FOREIGN CURRENCY TRANSLATION
(I)
Transactions in foreign currencies other than the functional currency are translated at the foreign exchange rate
ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into
sterling at the foreign exchange rate at that date. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated at the date of the transaction. Non‑monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated into sterling at foreign exchange
rates ruling at the date the fair value was determined.
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS
(II)
On consolidation, the assets and liabilities of foreign operations, including fair value adjustments arising on
consolidation, are translated to sterling at foreign exchange rates ruling at the balance sheet date. The revenues
and expenses of foreign operations are translated to sterling at rates approximating to the foreign exchange
rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are
recognised directly in equity in the foreign currency translation reserve. When a foreign operation is disposed of,
in part or in full, the relevant amount in the translation reserve is transferred to the income statement.
NET INVESTMENT IN FOREIGN OPERATIONS
(III)
Exchange differences arising from the translation of the net investment in foreign operations, and of related
hedges are taken to translation reserve. They are released into the income statement upon disposal or partial
disposal of the foreign operation.
C
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit
or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are generally recognised in profit or loss.
HEDGES
CASH FLOW HEDGES
D
(I)
When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised
asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial
40
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
instrument is recognised directly in equity. When the forecast transaction subsequently results in the recognition
of a non-financial asset or non-financial liability, the associated cumulative gain or loss is removed from equity
and included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a
forecast transaction subsequently results in the recognition of a financial asset or a financial liability, then the
associated gains and losses that were recognised directly in equity are reclassified to the income statement in
the same period or periods during which the asset acquired or liability assumed affects the income statement
(i.e. when interest income or expense is recognised).
For cash flow hedges, other than those covered by the above policy, the associated cumulative gain or loss is
removed from equity and recognised in profit or loss in the same period or periods during which the hedged
forecast transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the
income statement.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the
hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at
that point remains in equity and is recognised in accordance with the above policy when the transaction occurs.
If the hedged transaction is no longer expected to take place, then the cumulative unrealised gain or loss
recognised in equity is recognised immediately in the income statement.
HEDGE OF MONETARY ASSETS AND LIABILITIES
(II)
When a derivative financial instrument is used as an economic hedge of the foreign exchange exposure of a
recognised monetary asset or liability, hedge accounting is not applied and any gain or loss on the hedging
instrument is recognised in the income statement.
HEDGE OF NET INVESTMENT IN FOREIGN OPERATIONS
(III)
The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is
determined to be an effective hedge is recognised directly in equity within the translation reserve. The ineffective
portion is recognised immediately in the income statement.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
RECOGNITION AND MEASUREMENT
E
(I)
Land and buildings (other than investment properties) are stated at cost, except as allowed under IFRS 1
transition rules, less depreciation and any provision for impairment. All other property, plant and equipment is
stated at cost less depreciation and any provision for impairment. Any impairment of such properties below
depreciated historical cost is charged to the income statement.
Under the transition provisions of IFRS 1, land and buildings which were previously revalued under UK GAAP
were measured on the basis of their deemed cost, being their UK GAAP carrying value, including revaluations,
as at 1 January 2004 being the effective date of the Group’s conversion to IFRS.
DEPRECIATION
(II)
Freehold land is not depreciated. All other assets are depreciated to their residual values on a straight-line basis
over their estimated useful lives as follows:
Building core
50 years or lease term if shorter
Building surface, finishes and services
30 years or lease term if shorter
Plant and machinery
Furniture and equipment
Soft furnishings
Computer equipment
Software
Motor vehicles
15 – 20 years
10 years
5 – 7 years
5 years
up to 8 years
4 years
No residual values are ascribed to building surface finishes and services. Residual values ascribed to building
core depend on the nature, location and tenure of each property.
SUBSEQUENT COSTS
(III)
Capital expenditure on major projects is recorded separately within property, plant and equipment as capital
work in progress. Once the project is complete the balance is transferred to the appropriate fixed asset
categories. Capital work in progress is not depreciated.
41
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Interest attributable to funds used to finance the construction or acquisition of new hotels or major extensions to
existing hotels is capitalised net of tax relief and added to the cost of the hotel core.
Operating supplies, which include china, linen, glass and silverware, were stated at their deemed costs as at 1
January 2008 and subsumed into the costs of the hotel buildings. Subsequent renewals and replacements of
such stocks and new supplies upon initial hotel opening are written off as incurred to the income statement.
LEASES
F
Effective 1 January 2019, the Group adopted IFRS 16 ‘Leases’ using the modified retrospective approach
allowed under which the cumulative effect of initial application is recognised in accumulated profits as at 1
January 2019. Comparative information presented for 2018 is not restated and continues to be reported under
IAS 17 ‘Leases’ and IFRIC 4 ‘Determining Whether an Arrangement Contains a Lease’. The details of the
current and prior years accounting policies are disclosed separately below. Further information on the adoption
and initial application of IFRS 16 can be found in Note 37.
Policy applicable prior to 1 January 2019
Rentals payable under operating leases were charged to the income statement on a straight-line basis over the
term of the relevant lease. Benefits received and receivable (and costs paid and payable) as an incentive to
enter into an operating lease were also spread on a straight-line basis over the lease term.
Policy applicable from 1 January 2019
For contracts entered into on or after 1 January 2019, the Group assesses at inception whether the contract is,
or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. The Group assessment includes whether:
– the contract involves the use of an identified asset;
– the Group has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the contract period; and
– the Group has the right to direct the use of the asset.
THE GROUP AS A LESSEE
(I)
At the commencement of a lease, the Group recognises a right-of-use asset along with a corresponding lease
liability.
The lease liability is initially measured at the present value of the remaining lease payments, discounted using
the applicable incremental borrowing rate (single discount rate applied to a portfolio of leases with similar
characteristics). The lease term comprises the non-cancellable period of the contract, together with periods
covered by an option to extend the lease where the Group is reasonably certain to exercise that option based on
operational needs and contractual terms. Subsequently, the lease liability is measured at amortised cost by
increasing the carrying amount to reflect interest on the lease liability, and reducing it by the lease payments
made. The lease liability is remeasured either when the Group changes its assessment of whether it will
exercise an extension or termination option (if expected to be terminated early then any applicable penalties due
will also be factored in the remeasurement) or if there is a change in the Group’s estimate of the amount
expected to be payable under the residual value guarantee.
Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability
adjusted for any lease payments made at or before the commencement date, estimated asset retirement
obligations, lease incentives received and initial direct costs. Subsequently, right-of-use assets are measured at
cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain
remeasurements of the lease liability. Depreciation is calculated on a straight-line basis over the length of the
lease.
The Group has elected to apply exemptions for short-term leases (less than 12 months) and leases for which
the underlying asset is of low value (£5,000 or less). For these leases, payments are charged to the income
statement on a straight-line basis over the term of the relevant lease.
Right-of-use assets are presented within non-current assets on the face of the balance sheet, and lease
liabilities are shown separately on the balance sheet in current liabilities and non-current liabilities depending on
the length of the lease term.
Leases where the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. The leased asset is initially recorded at the lower of fair value and the present value of minimum lease
42
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
payments. The equivalent liability, categorised as appropriate, is included within current or non-current liabilities.
Assets are depreciated over the shorter of the lease term and their useful economic lives. Finance charges are
allocated to accounting periods over the period of the lease to produce constant rates of return on the
outstanding balance.
THE GROUP AS A LESSOR
(II)
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or
operating lease. Rents receivable by the Group as lessor under operating leases, including the sub-letting of
retail outlets within hotel properties, are credited to the income statement on a straight-line basis over the lease
term even if the receipts are not made on such basis. Costs, including depreciation incurred in earning the lease
income, are recognised as an expense. Rents receivable under a finance lease are recognised on the statement
of financial position as a finance lease receivable and the corresponding asset is subsequently disposed of with
a profit or loss if applicable recognised in the income statement.
LEASE PREMIUM
III)
The Group makes and receives initial payments on entering into both long and short leases of land and
buildings. Prior to the adoption of IFRS 16 ‘Leases’, where payment for leased land was equivalent to the
purchase of the freehold interest, the lease was classified as a finance lease. All other payments for leases of
land were classified as operating leases.
Subsequent to the adoption of IFRS 16 on 1 January 2019, on the statement of financial position, finance lease
payments attributable to land are still recorded as property, plant and equipment and for operating leases, the
finance lease payments attributable to land have been reclassified as a right-of-use asset where it had
previously been recognised as a lease premium prepayment before the adoption of IFRS 16. Both lease types
are charged to the income statement on a straight-line basis over the term of the lease. Interest attributable to
funds to finance the purchase or lease of land is capitalised gross of tax relief and added to the cost of lease.
In the case of lease premiums received, these are reflected on the statement of financial position as deferred
income, appropriately classified between current and non-current liabilities and are credited to the income
statement on a straight-line basis over the term of the lease.
IMPAIRMENT
G
The carrying amounts of the Group’s assets, other than investment properties, inventories, employee benefit
assets and deferred tax assets are reviewed at each reporting date to determine whether there is any indication
of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment is recognised in the income statement whenever the carrying amount of an asset or its cash-
generating unit exceeds its recoverable amount. Impairment losses are reversed if there has been a change in
the estimates used to determine the recoverable amount. Where permissible under IFRS, an impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment had been recognised.
In the case of equity investments, a significant or prolonged decline in fair value of the asset below its cost is
considered in determining whether the asset is impaired. If any such evidence exists for these assets, the
cumulative loss – measured as the difference between acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in the income statement – is removed from equity
and recognised in the income statement.
The Group recognises loss allowances for expected credit losses (ECL) on:
•
•
•
financial assets measured at amortised cost;
debt investments measured at FVOCI or FVTPL; and
contract assets.
43
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Loss allowances of the Group are measured on either of the following bases:
•
•
12-month ECL: these are ECL that result from default events that are possible within the 12 months
after the reporting date (or for a shorter period if the expected life of the instrument is less than 12
months); or
Lifetime ECL: these are ECL that result from all possible default events over the expected life of a
financial instrument or contract asset.
Simplified approach
The Group applies the simplified approach to provide for ECL for all trade receivables and contract assets. The
simplified approach requires the loss allowance to be measured at an amount equal to lifetime ECL.
General approach
The Group applies the general approach to provide for ECL on all other financial instruments. Under the general
approach, the loss allowance is measured at an amount equal to 12-month ECL at initial recognition. At each
reporting date, the Group assesses whether the credit risk of a financial instrument has increased significantly
since initial recognition. When credit risk has increased significantly since initial recognition, loss allowance is
measured at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECL, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessment and includes forward-looking
information.
If credit risk has not increased significantly since initial recognition or if the credit quality of the financial
instruments improves such that there is no longer a significant increase in credit risk since initial recognition,
loss allowance is measured at an amount equal to 12-month ECL.
The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations
to the Group in full, without recourse by the Group to actions such as realising security (if any is held). The
Group considers a contract asset to be in default when the customer is unlikely to pay its contractual obligations
to the Group in full, without recourse by the Group to actions such as realising security (if any is held).
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
Measurement of ECLs
ECLs are probability-weighted estimates of credit losses. Credit losses are measured at the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and
the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the
financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt
investments at FVOCI or FVTPL are credit-impaired. A financial asset is ‘credit-impaired’ when one or more
events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
•
•
•
significant financial difficulty of the borrower or issuer;
a breach of contract such as a default;
the restructuring of a loan or advance by the Group on terms that the Group would not consider
otherwise;
44
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
•
•
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
Presentation of ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost and contract assets are deducted from the
gross carrying amount of these assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is
no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not
have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the
write-off. However, financial assets that are written off could still be subject to enforcement activities in order to
comply with the Group’s procedures for recovery of amounts due.
INVESTMENT PROPERTIES
H
Investment properties held by the Group are properties which are held either to earn rental income or for capital
appreciation or both. Investment properties are stated at fair value. Any increase or decrease in the fair value on
annual revaluation is recognised in the income statement in accordance with IAS 40 Investment Property. In
limited circumstances, the determination of fair value is uncertain, and these properties are carried at cost.
Impairment analysis over these properties is carried out annually.
An external independent valuer, having an appropriate recognised professional qualification and recent
experience in the location and category of the property being valued, values the portfolio annually. The fair
values are based on market values, being the estimated amount for which a property could be exchanged on
the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
INVENTORIES
I
Inventories are recorded at the lower of cost and net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
DEVELOPMENT PROPERTIES
J
Development properties are stated at the lower of cost and net realisable value. They are held for sale in the
short term and are therefore classified as current assets. The cost of development properties includes interest
and other related expenditure incurred in order to get the asset ready for its intended use. Borrowing costs
payable on loans funding a development property are also capitalised, on a specific identification basis, as part
of the cost of the development property until the completion of development. Payments received from
purchasers arising from pre-sales of the property units prior to the completion are included as deferred income
under other financial liabilities in the statement of financial position.
CASH AND CASH EQUIVALENTS
K
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months
or less.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents.
BORROWINGS
L
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost: any difference between proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the period of the borrowings using the effective interest method.
TAXATION
M
Income tax on profit or loss comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.
45
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.
Deferred tax is provided for using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: (i) the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit; and (ii) differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred
tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the benefit will be realised.
Deferred tax assets and liabilities are offset only to the extent that: (i) the Group has a legally enforceable right
to offset current tax assets against current tax liabilities; (ii) the Group intends to settle net; and (iii) the deferred
tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
EMPLOYEE BENEFITS
DEFINED CONTRIBUTION PLANS
N
(I)
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income
statement.
DEFINED BENEFIT PLANS
(II)
The Group operates a number of defined benefit pension plans. As set out in Note 23, the calculation of the
present value of the Group’s defined benefit obligations at each period end is subject to significant estimation.
An appropriately qualified, independent actuary is used to undertake this calculation. The assumptions made by
the actuary are the best estimates chosen from a range of possible actuarial assumptions, which due to the
timescale covered may not necessarily be borne out in practice. The valuation of scheme assets is based on
their fair value at the balance sheet date. As these assets are not intended to be sold in the short term, their
values may be subject to significant change before they are realised. In reviewing the work of the independent
actuary, management is required to exercise judgement to satisfy themselves that appropriate weight has been
afforded to macro-economic factors. Details of the assumptions used are set out in Note 23.
The Group’s net obligation in respect of defined benefit post-employment plans, including pension plans, is
calculated separately for each plan by estimating the amount of future benefit that employees have earned in
return for their service in the current and prior periods. That benefit is discounted to determine its present value,
and the fair value of any plan assets is deducted. The calculation is performed by a qualified actuary using the
projected unit credit method.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by
employees is recognised immediately as an expense in the income statement.
The Group recognises remeasurement gains and losses within the consolidated statement of comprehensive
income in the period in which they occur.
The Group determines the net interest expense (income) on the net defined benefit liabilities (asset) for the
period by applying the discount rate used to measure the defined benefit obligation at the beginning of the
annual period to the net defined benefit liability (asset), taking into account any changes in the net defined
benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense
and other expenses related to defined benefit plans are recognised in the income statement.
LONG-TERM SERVICE BENEFITS
(III)
The Group’s net obligation in respect of long-term service benefits, other than post-employment plans, is the
amount of future benefit that employees have earned in return for their service in the current and prior periods.
The obligation is calculated using the projected unit credit method and is discounted to its present value and the
fair value of any plan assets is deducted.
SHARE-BASED PAYMENT TRANSACTIONS
(IV)
The share-based incentive schemes allow the Group’s employees to acquire shares of Millennium & Copthorne
Hotels Limited.
46
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The cost of equity-settled transactions with employees for awards granted after 7 November 2002 is measured
by reference to the fair value at the date on which they are granted. The fair value is determined by using an
appropriate pricing model, further details of which are given in Note 23.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for
equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The income statement expense or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where
vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of
whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or
service conditions are satisfied.
Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the
expense as if the terms had not been modified, if the original terms of the award are met. An additional expense
is recognised for any modification that increases the total fair value of the share-based payment transaction, or
is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. This includes any award where non-
vesting conditions within the control of either the entity or the employee are not met. However, if a new award is
substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the
previous paragraph. All cancellations of equity-settled transaction awards are treated equally.
PROVISIONS
O
A provision is recognised on the balance sheet when the Group has a present legal or constructive obligation as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the
risks specific to the liability. Further details on provisions are given in Note 24.
P
Revenue comprises:
REVENUE AND ITS RECOGNITION
• Income from the ownership and operation of hotels – recognised at the point at which the accommodation and
related services are provided;
• Management fees – earned from hotels managed by the Group, usually under long-term contracts with the
hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and/or an
incentive fee, which is generally based on the hotel’s profitability; recognised when earned on an accrual basis
under the terms of the contract;
• Franchise fees – received in connection with licensing of the Group’s brand names, usually under long-term
contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue;
recognised when earned on an accrual basis under the terms of the agreement;
• Income from property rental – recognised on a straight-line basis over the lease term, lease incentives granted
are recognised as an integral part of the total rental income; and
• Development property sales – recognised when the transfer of control of the property has passed to the buyer,
which is usually when legal title transfers depending on jurisdictions. The trigger for revenue recognition
depends on the laws within each jurisdiction.
DIVIDEND DISTRIBUTION
Q
Dividend distribution to the shareholders is recognised as a liability in the Group’s financial statements in the
period in which the dividends are appropriately authorised and approved for payment and are no longer at the
discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
47
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
OPERATING SEGMENT INFORMATION
R
Disclosure of segmental information is principally presented in respect of the Group’s geographical segments.
The segments reported reflect the operating information included in internal reports that the Chief Operating
Decision Maker (“CODM”), which is the Board, regularly reviews. Further details are given in Note 5.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components. 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 maintain regular contact with the Group 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. No operating segments have
been aggregated to form the reportable operating segments.
Segment results that are reported to the CODM 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.
NON-CURRENT ASSETS HELD-FOR-SALE
S
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered
primarily through sale rather than through continuing use are classified as held-for-sale. Generally the assets (or
disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any
impairment loss on a disposal group is first allocated to property, plant and equipment and lease premium
prepayment, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to
inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which
continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial
classification as held-for-sale and subsequent gains or losses on remeasurement are recognised in the income
statement. Gains are not recognised in excess of any cumulative impairment loss.
OTHER FINANCIAL ASSETS AND LIABILITIES
T
Trade investments are classified as either equity instruments at FVOCI or fair value through profit and loss
(“FVTPL”) and are included under non-current assets within ‘other financial assets’. They are recorded at market
value with movements in value taken to equity. Any impairment to value is recorded in the income statement.
Trade and other receivables are stated at their nominal amount (discounted if material) less any impairment.
Trade and other payables are stated at their nominal amount (discounted if material).
RELATED PARTIES
U
For the purpose of these financial statements, parties are considered to be related to the Group if the Group has
the ability, directly or indirectly, to control the party or exercise significant influence over the party making
financial and operating decisions, or vice versa, or where the Group and the party are subject to common
control or common significant influence. Related parties may be individuals or other entities.
3 ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements under IFRS requires the Group to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingencies and the reported amount
of revenue and expenses during the year. The Group evaluates its estimates and assumptions on an ongoing
basis. Such estimates and judgements are based upon historical experience and other factors it believes to be
reasonable under the circumstances, which form the basis for making judgements about the carrying value of
assets and liabilities that are not readily apparent from other sources.
Certain critical accounting policies, among others, affect the Group’s more significant estimates and
assumptions used in preparing the consolidated financial statements. Actual results could differ from the
Group’s estimates and assumptions.
48
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
3.1 JUDGEMENTS
The key judgements are:
CLASSIFICATION OF INVESTMENT PROPERTIES
The Group holds a number of investment properties and accounts for such properties in accordance with the
accounting policy set out in Note 2.2H. The Group owns assets which are leased to external third parties with
lease rentals and related charges varying according to the agreement involved. The Group accounts for such
assets in its financial statements in accordance with the accounting policy set out in Note 2.2H.
Where the indicators are such that on balance the Group is shown to be a passive investor, the relevant
property is accounted for in accordance with IAS 40 and the Group accounts for the fair value change through
the income statement as other operating income or expense. Indicators considered include (1) party that has the
power to make the significant operating and financing decisions regarding the operations of the property in a
management contract, (2) calculation of the lessor’s return, (3) lessor’s power of intervention under the
management contract, and (4) duration of the contract.
CONSOLIDATION OF ENTITIES IN WHICH THE GROUP HOLDS LESS THAN A MAJORITY OF VOTING
RIGHTS (DE FACTO CONTROL)
In 2014, the new consolidation accounting standard, IFRS 10 introduced a new control model that focuses on
whether the Group has power over an investee, exposure or rights to variable returns from its involvement with
the investee and ability to use its power to affect those returns.
This required the Group to consider whether it has de facto control over its investees, particularly when it owned
less than 50% of the voting rights. In 2014, in accordance with the transitional provisions of IFRS 10, the Group
reassessed the control conclusion for its investees and changed its control conclusion in respect of its
investment in CDLHT, which was previously accounted for as an associate using the equity method. Although
the Group owns less than half of the voting power of the investee, management determined that, under IFRS
10, the Group has had control over the investee since its inception. This is because a 100% owned subsidiary of
the Group, M&C REIT Management Limited acts as REIT Manager with its fees having a performance-based
element and therefore the Group has exposure to variable returns from its involvement with the investee.
Accordingly, in 2014, the Group applied acquisition accounting to the investment from the year it was first
established in 2006, and restated the relevant amounts as if the investee had been consolidated from that year.
This judgement was reconsidered this year and continues to be appropriate.
BUSINESS COMBINATION
For each acquisition, the Group has to make a judgement whether to account the transaction as an asset
purchase or a business combination, which results in a different accounting treatment. In particular, under
business combination accounting, goodwill and additional intangible assets may arise and the valuation of
acquired assets is complex. In addition, transaction costs can be capitalised in an asset acquisition, but have to
be charged through the income statement for a business combination. The classification of each acquisition and
related accounting is highly judgemental. Details of acquisitions undertaken by the Group during 2018, including
the specific judgements, are set out in Notes 12 and 14. There were no acquisitions undertaken by the Group
during 2019.
LAND LEASES CLASSIFICATION
The Group holds a number of hotels with leases of land that are determined to have an indefinite economic life.
The judgement prior to 1 January 2019 was that these were classified as a finance lease even if at the end of
the lease term title does not pass to the lessee. Subsequent to 1 January 2019 and the adoption of IFRS 16
‘Leases’, these assets have been reclassified as right-of-use assets.
3.2 ESTIMATES
The key estimates are:
IMPAIRMENT OF TANGIBLE ASSETS
The Group determines whether tangible fixed assets are impaired when indicators of impairments exist or based
on the annual impairment assessment. The annual assessment requires an estimate of the recoverable value of
the cash generating units to which the tangible fixed assets are allocated, which is predominantly at the
individual hotel site level. Where appropriate, external valuations are also undertaken. Estimation of the
recoverable value of the hotel assets is done with the reference to fair value less cost to sell, using income
approach, which requires estimation of future cash flows of a third-party efficient operator, the time period over
which they will occur, an appropriate discount rates, terminal capitalization rates and growth rates. The Directors
consider that the assumptions made represent their best estimate, and that the discount rate and terminal
capitalisation rate used are appropriate given the risks associated with the specific cash flows. A sensitivity
analysis has been performed over the estimates (see Note 12).
49
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
4 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The following standards and interpretations, which have been issued by the IASB, become effective after the
current year end and have not been early adopted by the Group:
• Amendments to References to the Conceptual Framework in IFRS Standards (effective date 1 January 2020);
• Amendments to IFRS 3: Definition of a Business (effective date 1 January 2020);
• Amendments to IAS 1 and IAS 8: Definition of Material (effective date 1 January 2020);
• Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (effective date 1 January
2020); and
• IFRS 17 Insurance Contracts (effective date 1 January 2021).
The Group is in the process of assessing the impact of these new standards, amendments and interpretations
on the financial statements.
5 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 financial 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
• 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 Group 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.
50
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
SEGMENT RESULTS
2019
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
Property operations
REIT4
166
146
109
–
–
5
–
–
–
Total revenue
166
151
109
42
(23)
19
–
–
–
–
–
–
19
–
7
–
26
Hotel gross operating
profit
Hotel fixed charges1
Hotel operating
profit/(loss)
Property operating profit
REIT operating
profit/(loss)
Central costs
Other operating income2
Other operating
expense2
18
(32)
(14)
–
–
–
–
27
(20)
7
1
–
–
–
(17)
(3)
–
5
–
13
3
21
Other operating expense
– REIT2
–
Operating profit/(loss)
(31)
–
11
17
(3)
Share of joint ventures
and associates profit
Add: Depreciation and
amortisation
Add: Net revaluation
gain/deficit & impairment
EBITDA3
Less: Depreciation,
amortisation, net
revaluation gain/deficit &
impairment
Net finance expense
Profit before tax
66
–
33
99
11
(11)
–
–
11
–
–
(1)
(2)
8
19
6
3
36
134
3
17
154
53
(6)
47
3
(4)
–
3
–
(1)
48
–
15
1
64
182
10
11
203
61
(29)
32
9
(3)
–
7
(5)
(11)
29
17
21
9
76
85
53
5
143
41
(6)
35
26
4
–
–
–
(1)
64
–
4
1
–
–
–
–
–
–
–
–
–
(44)
–
–
–
(44)
–
3
–
888
71
66
1,025
253
(127)
126
39
8
(44)
10
(26)
(15)
98
36
80
34
69
(41)
248
1 Hotel fixed charges include depreciation, property rent, taxes and insurance, and management fees.
2 See Note 7 for details of other operating income and expense.
3 EBITDA is earnings before interest, tax, depreciation and amortisation.
4 CDLHT operates the REIT business.
(114)
(32)
102
51
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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
2018
159
139
106
Revenue
Hotel
Property operations
REIT4
Total revenue
Hotel gross operating profit
Hotel fixed charges1
Hotel operating profit/(loss)
Property operating profit
REIT operating profit/(loss)
Central costs
Other operating income2
–
–
159
25
(33)
(8)
–
–
–
–
5
–
144
27
(25)
2
2
–
–
–
Other operating expense2
(31)
(19)
Other operating income –
REIT2
Other operating expense –
REIT2
–
–
–
–
–
–
106
43
(23)
20
–
–
–
–
–
–
–
Operating profit/(loss)
(39)
(15)
20
–
9
31
1
–
12
19
16
–
6
–
26
Share of joint ventures and
associates profit
Add: Depreciation and
amortisation
Add: Net revaluation
gain/deficit & impairment
EBITDA3
Less: Depreciation,
amortisation, net revaluation
gain/deficit & impairment
Net finance expense
Profit before tax
71
–
31
102
16
(11)
5
–
11
–
–
(3)
10
–
23
13
4
(7)
33
130
177
3
16
149
51
(4)
47
2
(2)
–
3
–
9
–
59
–
13
(12)
60
9
13
199
60
(33)
27
8
1
–
5
(6)
–
(4)
31
16
20
5
72
85
48
5
138
42
(6)
36
25
5
–
–
–
3
–
–
–
–
–
–
–
–
–
–
867
65
65
997
264
(135)
129
37
15
(43)
(43)
–
–
–
–
8
(59)
22
(4)
69
(43)
105
–
3
–
–
2
–
29
69
36
72
(41)
239
(105)
(28)
106
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 7 for details of other operating income and expense.
3 EBITDA is earnings before interest, tax, depreciation and amortisation.
4 CDLHT operates the REIT business.
52
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
SEGMENTAL ASSETS AND LIABILITIES
2019
NEW
YORK
£M
REGIONAL
US
£M
LONDON
£M
REST OF
EUROPE
£M
SINGAPORE
£M
REST
OF ASIA
£M
AUSTRALASIA
£M
TOTAL
GROUP
£M
Hotel operating assets
REIT operating assets
Hotel operating liabilities
REIT operating liabilities
Investment in joint ventures and
associates
601
–
(58)
–
–
310
–
(58)
–
–
559
–
(37)
–
–
227
258
(41)
(14)
9
Total hotel operating net assets
543
252
522
439
Property operating assets
Property operating liabilities
Investment in joint ventures and
associates
Total property operating net assets
–
–
–
–
61
(2)
–
59
–
–
–
–
–
–
95
95
62
625
(30)
(12)
–
645
89
(1)
–
88
653
136
(80)
(18)
141
832
200
(3)
169
366
Deferred tax liabilities
Income taxes payable
Net debt
Net assets
189
144
(19)
(3)
2,601
1,163
(323)
(47)
–
150
311
3,544
116
(1)
–
115
466
(7)
264
723
(147)
(13)
(759)
3,348
2018
NEW
YORK
£M
REGIONAL
US
£M
LONDON
£M
REST OF
EUROPE
£M
SINGAPORE
£M
REST
OF ASIA
£M
AUSTRALASIA
£M
TOTAL
GROUP
£M
Hotel operating assets
REIT operating assets
Hotel operating liabilities
REIT operating liabilities
Investment in joint ventures and
associates
614
–
(31)
–
–
309
–
(48)
–
–
514
–
(13)
–
–
228
258
(34)
(7)
1
Total hotel operating net assets
583
261
501
446
Property operating assets
Property operating liabilities
Investment in joint ventures and
associates
Total property operating net assets
–
–
–
–
48
(1)
–
47
–
–
–
–
39
–
36
75
24
626
(25)
(7)
–
618
89
(2)
–
87
659
130
(66)
(7)
161
877
195
(3)
160
352
Deferred tax liabilities
Income taxes payable
Net debt
Net assets
188
155
(11)
(3)
2,536
1,169
(228)
(24)
–
162
329
3,615
115
(2)
–
113
486
(8)
196
674
(172)
(27)
(727)
3,363
53
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Geographic information
Revenue from external customers
2019
£M
2018
£M
United States
United Kingdom
Singapore
New Zealand
Taiwan
South Korea
China
Malaysia
France
Australia
Philippines
Italy
Maldives
Indonesia
Other
317
183
154
133
77
49
25
14
11
11
7
7
6
5
26
Total revenue per consolidated income statement
1,025
303
183
149
129
73
48
26
14
13
9
6
6
7
5
26
997
The revenue information above is based on the location of the business. The £1,025m (2018: £997m) revenue is constituted
of £888m (2018: £867m) of hotel revenue, £71m (2018: £65m) of property operations revenue and £66m (2018: £65m) of
REIT revenue. The property operations revenue comprises £53m (2018: £48m) from Australasia, £3m (2018: £3m) from
Singapore and £15m (2018: £14m) from other countries.
54
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Non-current assets
United States
United Kingdom
Singapore
China
Taiwan
New Zealand
Japan
South Korea
Hong Kong
Germany
Australia
Maldives
Italy
Netherlands
Malaysia
France
Indonesia
Philippines
2019
£M
2018
£M
930
808
673
274
291
239
239
176
124
100
81
91
78
103
65
36
13
7
938
756
728
290
276
238
235
191
121
106
85
84
83
73
66
36
12
7
Total non-current assets per consolidated statement of financial position
4,328
4,325
Non-current assets for this purpose consist of property, plant and equipment, investment properties, investment in joint
ventures and associates and other non-current financial assets.
6 ADMINISTRATIVE EXPENSES
The following items are included within administrative expenses:
Included in administrative expenses is the auditor’s remuneration, for audit and non-audit
services as follows:
Auditor’s remuneration
Statutory audit services:
– Annual audit of the Company and consolidated financial statements
– Audit of subsidiary companies
Non-audit related services:
– Tax advisory
Total
2019
£M
2018
£M
1
2
3
1
4
1
2
3
1
4
55
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Repairs and maintenance
Depreciation
– property, plant and equipment
–
right-of-use assets
Lease premium amortisation
Rental paid/payable under operating leases*
–
land and buildings
– plant and machinery
2019
£M
60
2018
£M
54
72
66
8
–
1
1
–
3
4
3
* Under IFRS 16 ‘Leases’, which the Group adopted in the current year, payments under operating leases are not charged to the income statement except
for those where a recognition exemption has been applied.
7 OTHER OPERATING INCOME AND EXPENSE
Revaluation gain/(deficit) of investment properties
– REIT properties
– Millennium Mitsui Garden Hotel Tokyo
– Biltmore Court & Tower
– Tanglin Shopping Centre
Impairment of property, plant & equipment
Gain on disposal of investment properties
Fair value gain from FSGL’s warrant
2019
£M
2018
£M
NOTES
(A)
(4)
6
(3)
1
(34)
(34)
–
3
16
5
(1)
3
(59)
(36)
3
–
(31)
(33)
(B)
(C)
(D)
REVALUATION GAIN/(DEFICIT) OF INVESTMENT PROPERTIES
(A)
At the end of the financial year, in accordance with the Group’s policy its investment properties were subject to
external professional valuation on an open-market existing use basis. Based on these valuations, the
revaluation gain or deficit was recorded as considered appropriate by the Directors. Further details on these
valuations are provided in Note 14.
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT
(B)
The Directors undertook their annual review of the carrying value of hotels and property assets for indication of
impairment and where appropriate, external valuations were also obtained. As a result of this review, the total
impairment charge for the year ended 31 December 2019 was £34m consisting of £17m in New York, £3m in
Rest of Europe and £14m in Rest of Asia. For 2018, a total impairment charge of £59m was recognised in
relation to £31m in New York, £3m in Rest of Europe, £6m in Rest of Asia and £19m for Regional US. Further
information is given in Note 12.
GAIN ON DISPOSAL OF INVESTMENT PROPERTIES
(C)
On 11 January 2018, CDLHT completed the divestment of two hotels in Australia, the Mercure Brisbane and Ibis
Brisbane for A$77m (£45m) and a gain of £3m was recognised by the Group.
56
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FAIR VALUE GAIN FROM FSGL’S WARRANT
(D)
On 3 June 2019, the Group took up its full entitlement of First Sponsor Group Limited’s (“FSGL”) rights issue of
new Perpetual Convertible Capital Securities (“PCCS”) for a total cost of S$53m (£30m). As part of the capital
funding exercise, 1 new free warrant was issued for every 1 new PCCS subscribed for; in addition, 1 new bonus
warrant was issued for every 10 existing ordinary shares held in FSGL. For the year ended 31 December 2019,
a fair value gain of £3m was recorded by the Group from the holding of new warrants.
8
PERSONNEL EXPENSES
Wages and salaries
Compulsory social security contributions
Contributions to defined contribution schemes
Defined benefit pension (gain)/cost – recorded in the statement of comprehensive income
Defined benefit pension cost – recorded in the income statement
2019
£M
322
50
22
1
2
2018
£M
309
49
19
(5)
2
397
374
The number of employees employed by the Group as at year end analysed by category was as follows:
Hotel operating staff
Management/administration
Sales and marketing
Repairs and maintenance
DIRECTORS’ REMUNERATION
Remuneration
Received by the Directors under:
– Long-term incentive schemes
– Pensions
2019
NUMBER
2018
NUMBER
9,023
1,497
519
648
8,853
1,478
492
681
11,687
11,504
2019
£M
2018
£M
1
–
–
1
1
–
–
1
57
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
9 NET FINANCE EXPENSE
Interest income
Foreign exchange gain
Finance income
Interest expense
– Overdrafts, bank and other loans
– Recognised under IFRS 16 ‘Leases’
Foreign exchange loss
Finance expense
Net finance expense
10
INCOME TAX EXPENSE
Current tax
Corporation tax charge for the year
Adjustment in respect of prior years
Total current tax expense
Deferred tax (Note 26)
Origination and reversal of timing differences
Benefits of tax losses recognised
(Over)/under provision in respect of prior years
Total deferred tax credit
Total income tax charge in the consolidated income statement
UK
Overseas
Total income tax charge in the consolidated income statement
2019
£M
2018
£M
5
2
7
(25)
(5)
(9)
(39)
(32)
5
4
9
(28)
–
(9)
(37)
(28)
2019
£M
2018
£M
30
(2)
28
(10)
(11)
1
(20)
8
1
7
8
34
1
35
(14)
(9)
1
(22)
13
2
11
13
For the year ended 31 December 2019, the Group has a tax charge of £8m (2018: £13m) excluding the tax relating
to joint ventures and associates.
The effective tax rate relating to the tax charge of £8m is 12.4% (2018: 16.9%). The Group’s underlying effective
tax rate is 17.5% (2018: 20.4%). The effective tax rate has been affected primarily by the mix of Group regional
profits and tax adjustments in respect of previous years (finalisation of exposures in Philippines).
For the year ended 31 December 2019, a charge of £7m (2018: £7m) relating to joint ventures and associates is
included in the profit before tax.
58
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
ADJUSTMENTS IN RESPECT OF SETTLEMENT OF PRIOR YEARS’ TAX LIABILITIES
The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The
calculation of the Group’s total tax charge necessarily involves a degree of estimation and judgement in respect
of certain items whose tax treatment cannot be finally determined until resolution has been reached with the
relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these
items may give rise to material profit and loss and/or cash flow variances. The geographical complexity of the
Group’s structure makes the degree of estimation and judgement more challenging. The resolution of issues is
not always within the control of the Group and it is often dependent on the efficacy of the legal processes in the
relevant tax jurisdictions in which the Group operates.
INCOME TAX RECONCILIATION
Profit before income tax in consolidated income statement
Less share of profits of joint ventures and associates
Profit on ordinary activities excluding share of joint ventures and associates
Income tax on ordinary activities at the standard rate of UK tax of 19.00% (2018: 19.00%)
Tax exempt income
Non-deductible expenses
Unrecognised tax losses arising during the year
Other effect of tax rates in foreign jurisdictions
Other adjustments to tax charge in respect of prior years
Income tax expense per consolidated income statement
11 EARNINGS PER SHARE
2019
£M
102
(36)
66
13
(29)
17
3
4
–
8
2018
£M
106
(29)
77
15
(22)
10
3
5
2
13
Subsequent to the Final Offer and Delisting of the Group, earnings per share is no longer applicable. Refer to
the Directors Report on page 22 for further detail regarding the Final Offer and Delisting.
(a) Basic
Profit for the year attributable to holders of the parent (£m)
Weighted average number of shares in issue (m)
Basic earnings per share (pence)
(b) Diluted
Profit for the year attributable to holders of the parent (£m)
Weighted average number of shares in issue (m)
Potentially dilutive share options under the Group’s share option schemes (m)
Weighted average number of shares in issue (diluted) (m)
Diluted earnings per share (pence)
2019
2018
62
325
43
325
–
13.1p
62
325
–
325
43
325
–
325
–
13.1p
59
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
12 PROPERTY, PLANT AND EQUIPMENT
LAND AND
BUILDINGS
£M
CAPITAL
WORK IN
PROGRESS
£M
PLANT AND
MACHINERY
£M
FIXTURES,
FITTINGS AND
EQUIPMENT
AND VEHICLES
£M
RIGHT-
OF-USE
ASSETS
£M
Cost
Balance at 1 January 2018
3,297
Additions – Acquisitions
Additions – Others
Reclassification between asset categories
Transfer to investment properties
Disposals
Written off
Foreign exchange adjustments
Balance at 31 December 2018
Balance at 1 January 2019
Adoption of IFRS 16 on 1 January 2019
Additions – Others
Reclassification between asset categories
Transfer to assets held for sale
Disposals
Written off
Foreign exchange adjustments
Balance at 31 December 2019
Accumulated depreciation and impairment losses
Balance at 1 January 2018
Charge for the year
Impairment
Disposals
Written off
Foreign exchange adjustments
Balance at 31 December 2018
Balance at 1 January 2019
Charge for the year
Impairment
Disposals
Reclassification between asset categories
Transfer to assets held for sale
Written off
Foreign exchange adjustments
Balance at 31 December 2019
Carrying amounts
At 31 December 2019
At 31 December 2018
5
2
3
–
–
(1)
82
3,388
3,388
–
11
35
(97)
–
–
(55)
3,282
520
19
58
–
–
16
613
613
21
29
–
–
(13)
–
(10)
640
2,642
2,775
36
–
43
(6)
(3)
–
–
2
72
72
–
45
(61)
(7)
–
(1)
(1)
47
1
–
–
–
–
–
1
1
–
–
–
–
–
(1)
–
–
47
71
349
–
10
–
–
–
(3)
12
368
368
–
14
12
(38)
–
(8)
(5)
343
135
14
1
–
(2)
5
153
153
15
5
–
(1)
(27)
(7)
(2)
136
207
215
381
1
15
3
–
(2)
(4)
12
406
406
–
29
14
(6)
(1)
(10)
(8)
424
278
33
–
(2)
(4)
9
314
314
36
–
(1)
1
(6)
(9)
(7)
328
96
92
–
–
–
–
–
–
–
–
–
–
207
8
–
(2)
–
–
(4)
209
–
–
–
–
–
–
–
–
8
–
–
–
–
–
(1)
7
202
–
TOTAL
£M
4,063
6
70
–
(3)
(2)
(8)
108
4,234
4,234
207
107
–
(150)
(1)
(19)
(73)
4,305
934
66
59
(2)
(6)
30
1,081
1,081
80
34
(1)
–
(46)
(17)
(20)
1,111
3,194
3,153
The carrying value of property, plant and equipment held under finance leases at 31 December 2019 was £nil (2018: £nil).
60
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
IMPAIRMENT
A
Property, plant and equipment are reviewed for impairment based on each cash generating unit (“CGU”). The
CGUs are individual hotels. The carrying value of individual hotels was compared to the recoverable amount of
the hotels, which was derived with the reference to fair value through creation of discount cash flow models.
Under this methodology, the fair value measurement reflects current market expectations about the third-party
efficient operator’s is future cash flows, discounted to their present value. The underlying basis for the
impairment model involves each hotel’s projected cash flow for the financial year ending 31 December 2020,
extrapolated to incorporate individual assumptions in respect of revenue growth (principally factoring in room
rate and occupancy growth) and major expense lines. The future cash flows are based on assumptions about
competitive growth rates for hotels in that area, as well as internal business plans. These plans and forecasts
include management’s most recent view of trading prospects for the hotel in the relevant market. Where
appropriate, the Directors sought guidance on value from a registered independent appraiser with an
appropriately recognised professional qualification and recent experience in the location and category of the
hotel being valued.
On the basis of external valuations in 2019, the Group recorded an impairment charge of £34m consisting of
£17m in New York, £14m in Rest of Asia and £3m in Rest of Europe. For 2018, a total impairment charge of
£59m was recognised in relation to £31m in New York, £3m in Rest of Europe, £6m in Rest of Asia and £19m
for Regional US. Further information is given in Note 12.
Circumstances and events that led to impairment are largely due to the performance of the hotels. The fair
values assumed through the impairment assessment are considered to fall within level 3 of the fair value
hierarchy. Refer to Note 22d for more detail.
B
The key assumptions used were as follows:
KEY ASSUMPTIONS USED BY THE EXTERNAL APPRAISERS
Pre-tax discount rate – The discount rate is based on the country in which the hotel is located and is adjusted for
risks associated with the hotel. Discount rates ranged from 7.75% in the US, 5.90% to 11.50% in Europe, 7.25%
to 12.00% in Asia and 7.25% to 10.25% in New Zealand.
Occupancy rate – The occupancy growth rates ranged up to 1.00% in the US, up to 1.00% in Europe, an
increase of 10% to a decrease of 2.00% in Asia and up to 3.00% in New Zealand.
Average room rate – The average room rate growth ranged from 4.60% in the US, 1.70% to 2.60% in Europe,
2.40% to 6.80% in Asia and 2.50% to 5.80% in New Zealand.
Terminal rate – These rates ranged from 5.50% in the US, 4.00% to 9.50% in Europe, 5.50% to 9.00% in Asia
and 6.50% to 9.25% in New Zealand.
The forecasts cover a five to ten year period, and cash flows beyond this period are extrapolated using a growth
rate ranging between 1.50% and 3.00%, which is based upon the expected trading growth for each hotel and
inflation in the country.
SENSITIVITIES
C
The Group’s impairment review is sensitive to changes in key assumptions used, most notably the discount and
terminal rates. Based on the Group’s sensitivity analysis performed on the property in New York (which
represents 50% of the total impairment recognised), assuming that all other variables were to remain constant,
the increase/(decrease) in the Group’s total impairment recognised would be as follows:
Terminal rate decreased by 0.25%
Terminal rate increased by 0.25%
Discount rate decreased by 0.25%
Discount rate increased by 0.25%
£M
(5)
4
(3)
3
61
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
LAND AND BUILDINGS
D
Interest of £2m (2018: £nil) was capitalised within land and buildings during the year. The cumulative capitalised
interest within land and buildings is £7m (2018: £5m).
PLEDGED ASSETS
E
At year-end, the net book value of assets pledged as collateral for secured loans was £529m (2018: £477m).
The security for the loans is by way of charges on the properties of the Group companies concerned.
13 LEASE PREMIUM PREPAYMENT
Cost
Balance at 1 January 2019
Adoption of IFRS 16 on 1 January 2019
Balance at 31 December 2019
Amortisation
Balance at 1 January 2019
Adoption of IFRS 16 on 1 January 2019
Balance at 31 December 2019
Carrying amount at 31 December 2019
2019
£M
129
(129)
–
24
(24)
–
–
62
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
INVESTMENT PROPERTIES
14
Completed investment properties comprise Tanglin Shopping Centre, Biltmore Court & Tower, CDLHT
properties and Millennium Mitsui Garden Hotel Tokyo. Investment properties under construction represents the
site at Sunnyvale.
Movements in the year analysed as:
Balance at 1 January 2018
Transfer from property, plant and equipment
Additions
Acquisition of property
Adjustment to fair value
Foreign exchange adjustment
Balance at 31 December 2018
Balance at 1 January 2019
Adoption of IFRS 16 on 1 January 2019
Additions
Foreign exchange adjustment
Balance at 31 December 2019
COMPLETED
INVESTMENT
PROPERTIES
£M
INVESTMENT
PROPERTIES
UNDER
CONSTRUCTION
£M
RIGHT-
OF-USE
ASSETS
£M
568
–
–
38
22
22
650
650
–
5
(15)
640
9
3
6
–
–
–
18
18
–
16
(1)
33
–
–
–
–
–
–
–
–
7
–
–
7
TOTAL
£M
577
3
6
38
22
22
668
668
7
21
(16)
680
In general, the carrying amount of investment property other than those under construction is the fair value of
the property as determined by a registered independent appraiser having an appropriate recognised
professional qualification and recent experience in the location and category of the property being valued. Fair
values were determined having regard to recent market transactions for similar properties in the same location
as the Group’s investment property.
Consistent with the prior year, only the land site at Sunnyvale, California, is classified as investment properties
under construction as the project of building a hotel and an apartment complex is still in progress. This asset is
carried at cost on the balance sheet.
63
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Group’s investment properties were subject to external professional valuation on an open market existing
use basis by the following accredited independent valuers:
PROPERTIES
Tanglin Shopping Centre, Singapore
Biltmore Court & Tower, Los Angeles
Land site at Sunnyvale, California
Millennium Mitsui Garden Hotel Tokyo
CDLHT – Singapore
CDLHT – Australia
CDLHT – Maldives
CDLHT – Germany
CDLHT – Italy
Edmund Tie & Company (SEA) Pte Ltd
VALUERS
Sequoia Hotel Advisors, LLC
Sequoia Hotel Advisors, LLC
Jones Lang LaSalle KK
Knight Frank Pte Ltd
CBRE Pte Ltd and Jones Lang LaSalle Advisory Services Pty Limited
Jones Lang LaSalle Property Consultants Pte Ltd
Cushman & Wakefield
Cushman & Wakefield
Based on these valuations together with such considerations as the Directors consider appropriate, Millennium
Mitsui Garden Hotel Tokyo, Biltmore Court & Tower and Tanglin Shopping Centre recorded a revaluation gain of
£6m (2018: revaluation gain £5m), a revaluation deficit of £3m (2018: revaluation deficit £1m) and a revaluation
gain of £1m (2018: revaluation gain £3m) respectively. In addition, the REIT properties recorded a net
revaluation deficit of £4m (2018: net revaluation gain of £16m). All the other investment properties recorded no
change and no impairment was identified.
FAIR VALUE HIERARCHY
The fair value measurement for investment properties not under construction of £640m (2018: £650m) has been
categorised as a Level 3 fair value based on inputs to the valuation technique used.
64
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
VALUATION TECHNIQUE AND SIGNIFICANT UNOBSERVABLE INPUTS
The following table shows the valuation technique used in measuring the fair value of investment property, as
well as significant unobservable inputs used.
VALUATION TECHNIQUE
SIGNIFICANT UNOBSERVABLE INPUTS
INTER-RELATIONSHIP BETWEEN KEY
UNOBSERVABLE INPUTS AND FAIR VALUE
MEASUREMENT
The technique applied in the valuation of the
Tanglin Shopping Centre is based on market
comparison of sales of similar properties in
the vicinity. Further adjustments are made to
this value to account for differences in
location, size, tenure, view, accessibility,
condition and other factors.
Biltmore Court & Tower and Millennium Mitsui
Garden Hotel Tokyo were valued using a
discounted cash flow technique based on
expected rental income and discount rate
appropriate for the property.
Investment properties held by the REIT were
valued using the discounted cash flow,
capitalisation or comparison techniques.
Tanglin Shopping Centre
Open market values for other properties.
The estimated fair value would increase/
(decrease) if:
Biltmore Court & Tower
Discount rate of between 8.25% to 10.50%
and capitalisation rate of 7.75% to 9.00%.
Expected market rental growth were
higher/(lower); and
Risk adjusted discount rate was lower/ (higher),
capitalisation rate was higher/ (lower) and
terminal yield was lower/ (higher).
Millennium Mitsui Garden Hotel Tokyo
Discount rate of 3.7% and capitalisation rate of
4.1%.
CDLHT investment properties Discount rate
of between 4.75% and 12.00%, capitalisation
rate of 4.25% to 6.00% and terminal yield of
4.25% to 9.00%.
Further details in respect of investment property rentals are given in Note 37.
ACQUISITION OF PROPERTY
On 27 November 2018, the H-REIT Group acquired 95.0% of the shares and voting interest in Event Hospitality
Group III B.V., which wholly-owns Event Hospitality Group III Italy SRL, sole shareholder of NKS Hospitality III
(collectively, the “Italy Acquisition”) for a total consideration of €33m (£29m). NKS Hospitality III SRL is the legal
owner of Hotel Cerretani Florence, MGallery by Sofitel and the fixtures, furniture and equipment therein
(collectively, the “Italy Property”). The acquisition was accounted for as an acquisition of assets.
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date
of acquisition.
Investment property
Trade and other receivables
Cash at bank
Current liabilities
Borrowings
Total identifiable net assets
Less: Non-controlling interest, based on their proportionate interest in the recognised
amounts of the assets and liabilities of the acquiree
Identifiable net assets acquired
€M
43
1
3
(1)
(11)
35
(2)
33
£M
38
1
3
(1)
(10)
31
(2)
29
65
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSIDERATION TRANSFERRED
Total consideration for 95.0% equity interest acquired
Add: Acquisition related costs
Less: Cash at bank of subsidiaries acquired
Less: Acquisition related costs not yet paid
Net cash outflow on acquisition1
1 Included in cash flows from investing activities.
€M
33
2
(3)
(2)
30
£M
29
2
(3)
(2)
26
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
15
The Group has the following investments in joint ventures and associates:
FAIR VALUE
OF
OWNERSHIP
INTEREST
£M
EFFECTIVE GROUP
INTEREST
2019
2018
PRINCIPAL PLACE
OF BUSINESS
Joint ventures
New Unity Holdings Limited (“New Unity”)
Fergurson Hotel Management Limited
New York Sign LLC
Hong Kong
Hong Kong
New York
Associate
First Sponsor Group Limited (“First Sponsor”)
People’s Republic of
China
Prestons Road Limited
CDL Hotels Japan Pte. Ltd.
New Zealand
Singapore
–
–
–
226
–
–
50%
50%
50%
36%
17%
40%
50%
50%
50%
36%
17%
40%
The Group has 50% in New Unity which operates the Group’s hotel business in Hong Kong. First Sponsor is a
property company which is listed on the Singapore Exchange and has interests in China, the Netherlands and
Germany. It is also involved in the Chinese property financing business which carries additional risk of
recoverability of certain assets.
Share of net assets/cost
Balance at 1 January 2018
Share of profit for the year
Dividends received
Foreign exchange adjustments
Balance at 31 December 2018
Balance at 1 January 2019
Share of profit for the year
Additions
Dividends received
Foreign exchange adjustments
Balance at 31 December 2019
JOINT
VENTURES
£M
ASSOCIATES
£M
TOTAL
£M
108
7
–
6
121
121
3
–
–
(3)
121
216
22
(4)
3
237
237
33
37
(5)
(9)
293
324
29
(4)
9
358
358
36
37
(5)
(12)
414
66
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is summarised financial information for First Sponsor and New Unity based on their respective
financial statements prepared in accordance with IFRS. These are considered to be the most significant
investments in joint ventures and associates.
FIRST SPONSOR
NEW UNITY
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Total assets less total liabilities
Less: Non-controlling interest
Net assets (100%)
Group’s share
Revenue
Operating profit
Interest income/(expense)
Income tax expense
Profit for the year
Non-controlling interests
Profit for the year after non-controlling interests
2019
£M
951
618
(367)
(377)
825
(17)
808
291
183
108
–
(16)
92
1
93
2018
£M
749
621
(476)
(224)
670
(7)
663
237
154
76
4
(15)
65
(3)
62
Other comprehensive income
(19)
(13)
Profit and total comprehensive income (100%)
Group’s share of profit and total comprehensive income
Dividends received by the Group
74
27
4
49
18
4
2019
£M
349
91
(84)
(34)
322
(82)
240
120
2018
£M
361
101
(104)
(38)
320
(79)
241
121
118
134
13
(1)
(2)
10
(5)
5
–
5
2
–
28
(2)
(4)
22
(9)
13
–
13
7
–
At 31 December 2019, the Group’s share of the total capital commitments of joint ventures and associates
amounted to £58m (2018: £15m). At 31 December 2019, the Group’s joint ventures and associates had no
contingent liabilities (2018: £nil).
67
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
16 OTHER FINANCIAL ASSETS
Equity investments
Derivative financial assets
Deposits receivable
17
INVENTORIES
Consumables
18 DEVELOPMENT PROPERTIES
Development properties comprise:
Development land for resale
– New Zealand residential sections
Development properties
– Zenith Residences
19 TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments and accrued income
Trade receivables due from holding and associate companies
2019
£M
2018
£M
34
4
2
40
2019
£M
7
39
2
2
43
2018
£M
5
2019
£M
2018
£M
93
90
22
115
25
115
2019
£M
2018
£M
40
24
26
1
91
45
27
29
1
102
Trade receivables are shown net of an impairment allowance of £7m (2018: £4m) relating to the likely
insolvencies of certain customers and non-recoverability of debts.
The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables
are disclosed in Note 22.
68
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
20 CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash pool overdrafts
Cash and cash equivalents on the statement of financial position
Overdrafts included in borrowings
Cash and cash equivalents shown in the cash flow statement
2019
£M
254
240
(85)
409
–
409
2018
£M
228
225
(78)
375
–
375
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets are disclosed in Note 22.
As at 31 December 2019, £3m (2018: £1m) of the cash balance was restricted.
21
INTEREST-BEARING LOANS, BONDS AND BORROWINGS
Included within non-current liabilities:
Bank loans
Bonds payable
Included within current liabilities:
Bank loans and overdrafts
Bonds payable
2019
£M
2018
£M
776
77
853
219
96
315
614
175
789
234
79
313
Net debt of £759m (2018: £727m) is the total of the interest-bearing loans, bonds and borrowings of £1,168m
(2018: £1,102m) less cash and cash equivalents of £409m (2018: £375m). Further details in respect of financial
liabilities are given in Note 22.
22 FINANCIAL INSTRUMENTS
OVERVIEW
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the Group’s exposure to each of the above risks, and the Group’s policies
and processes for measuring and managing risk.
CREDIT RISK
(A)
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and
investment securities.
Exposure to credit risk is monitored on an ongoing basis, with credit checks performed on all clients requiring
credit over certain amounts. Credit is not extended beyond authorised limits, established where appropriate
through consultation with a professional credit vetting organisation. Credit granted is subject to regular review, to
69
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
ensure it remains consistent with the client’s current creditworthiness and appropriate to the anticipated volume
of business.
Investments are allowed only in liquid short-term instruments within approved limits, with investment
counterparties approved by the Board, such that the exposure to a single counterparty is minimised.
The maximum exposure to credit risk is represented by the carrying value of each financial asset on the balance
sheet, these being spread across the various currencies and jurisdictions in which the Group operates.
The maximum exposure to credit risk at the reporting date was:
Cash at bank and in hand (see Note 20)
Short-term deposits (see Note 20)
Cash pool overdrafts (see Note 20)
Trade receivables (see Note 19)
Other receivables (see Note 19)
Equity investments (see Note 16)
Deposits receivable (see Note 16)
Trade receivables due from holding and associate companies (see Note 19)
CARRYING VALUE
2019
£M
254
240
(85)
40
24
34
2
1
2018
£M
228
225
(78)
45
27
39
2
1
510
489
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
New York
Regional US
Rest of Europe
Singapore
Rest of Asia
Australasia
CARRYING VALUE
2019
£M
2018
£M
7
5
5
8
9
6
40
7
4
10
7
10
7
45
70
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The ageing of trade receivables at the reporting date was:
Not past due
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
More than 90 days
GROSS RECEIVABLE
IMPAIRMENT
ALLOWANCE
CARRYING VALUE
2019
£M
24
9
3
2
9
47
2018
£M
2019
£M
2018
£M
28
11
3
1
6
49
–
–
–
–
(7)
(7)
–
–
–
–
(4)
(4)
2019
£M
24
9
3
2
2
40
2018
£M
28
11
3
1
2
45
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 January
Impairment losses recognised
Bad debts written off
Balance at 31 December
2019
£M
2018
£M
4
4
(1)
7
3
2
(1)
4
71
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONTRACTUAL MATURITIES OF FINANCIAL ASSETS
2019
TOTAL
£M
6 MONTHS
OR LESS
£M
6 MONTHS
- 1 YEAR
£M
1 - 5
YEARS
£M
MORE
THAN
5 YEARS
£M
Financial Assets
Fixed Rate
US dollar
Korean Won
Singapore dollar
New Taiwan dollar
Australian dollar
New Zealand dollar
Malaysian Ringgit
Euro
Chinese Renminbi
Others
Non-Interest Bearing
Sterling
US dollar
Singapore dollar
Australian dollar
New Zealand dollar
Malaysian Ringgit
Euro
Japanese Yen
Others
Interest Bearing Cash Pool deposits
Singapore dollar
Non-Interest Bearing Cash Pool deposits
Sterling
Total cash and other financial assets
Interest Bearing Cash Pool Overdrafts
Sterling
Hong Kong dollar
Non-Interest Bearing Cash Pool Overdrafts
Sterling
Euro
Total overdrafts (Note 20)
Represented by:
Cash and cash equivalents (Note 20)
Financial assets (Note 16)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34
–
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
–
–
36
–
–
–
–
–
36
5
8
26
31
41
77
22
–
7
1
50
48
75
6
4
1
17
18
7
49
1
494
(24)
(17)
(38)
(6)
(85)
409
5
8
60
35
41
77
22
2
7
1
50
48
75
6
4
1
17
18
7
49
1
534
(24)
(17)
(38)
(6)
(85)
449
409
40
449
–
–
–
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
–
–
–
–
–
4
72
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONTRACTUAL MATURITIES OF FINANCIAL ASSETS
2018
TOTAL
£M
6 MONTHS
OR LESS
£M
6 MONTHS
- 1 YEAR
£M
1 - 5
YEARS
£M
MORE
THAN
5 YEARS
£M
Financial Assets
Fixed Rate
US dollar
Korean Won
Singapore dollar
New Taiwan dollar
Australian dollar
New Zealand dollar
Malaysian Ringgit
Euro
Chinese Renminbi
Non-Interest Bearing
Sterling
US dollar
Singapore dollar
Australian dollar
New Zealand dollar
Malaysian Ringgit
Euro
Japanese Yen
Others
Interest Bearing Cash Pool deposits
Singapore dollar
Non-Interest Bearing Cash Pool deposits
Sterling
Total cash and other financial assets
Interest Bearing Cash Pool Overdrafts
Sterling
Hong Kong dollar
Non-Interest Bearing Cash Pool Overdrafts
Sterling
Euro
Total overdrafts (Note 20)
Represented by:
Cash and cash equivalents (Note 20)
Financial assets (Note 16)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39
–
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
–
41
–
–
–
–
–
41
4
8
69
22
38
62
21
–
20
9
34
29
5
5
1
22
17
4
53
30
453
(24)
(19)
(28)
(7)
(78)
375
4
8
108
24
38
62
21
2
20
9
34
29
5
5
1
22
17
4
53
30
496
(24)
(19)
(28)
(7)
(78)
418
375
43
418
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
–
–
–
–
–
2
73
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
LIQUIDITY RISK
(B)
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
The following are the contractual maturities of financial liabilities, including estimated interest payments using
the interest rates prevailing as at the reporting date.
31 DECEMBER 2019
Floating rate financial
liabilities
Secured loans
Unsecured loans
Secured bonds
Fixed rate financial
liabilities
Unsecured loans
Secured loans
Secured bonds
Unsecured bonds
Trade and other payables
Trade payables
Other creditors
Non-current liabilities
Other non-current liabilities
CONTRACTUAL MATURITIES OF FINANCIAL LIABILITIES
CARRYING
AMOUNT
£M
CONTRACTUAL
CASH FLOWS
£M
6 MONTHS
OR LESS
£M
6-12
MONTHS
£M
1-2
YEARS
£M
2-5
YEARS
£M
MORE
THAN
5 YEARS
£M
44
602
20
47
636
20
311
340
38
76
77
32
55
17
41
76
81
32
55
17
1
58
20
4
–
54
1
32
55
–
5
109
–
1
259
–
66
–
22
1
–
–
–
7
1
–
79
–
–
2
40
210
–
263
2
–
–
–
–
3
1,272
1,345
225
203
349
518
–
–
–
–
38
–
–
–
–
12
50
74
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
31 DECEMBER 2018
Floating rate financial
liabilities
Secured loans
Unsecured loans
Secured bonds
Unsecured bonds
Fixed rate financial
liabilities
Unsecured loans
Secured loans
Secured bonds
Trade and other payables
Trade payables
Other creditors
Non-current liabilities
Other non-current liabilities
CONTRACTUAL MATURITIES OF FINANCIAL LIABILITIES
CARRYING
AMOUNT
£M
CONTRACTUAL
CASH FLOWS
£M
6 MONTHS
OR LESS
£M
6-12
MONTHS
£M
1-2
YEARS
£M
2-5
YEARS
£M
MORE
THAN
5 YEARS
£M
61
451
20
157
296
40
77
32
53
15
64
475
20
167
321
44
78
32
53
15
28
52
–
3
4
–
–
32
53
–
–
75
–
80
95
–
–
–
–
–
1
157
20
3
29
1
78
–
–
2
35
191
–
81
193
2
–
–
–
3
1,202
1,269
172
250
291
505
–
–
–
–
–
41
–
–
–
10
51
Undrawn committed borrowing facilities
At 31 December 2019, the Group had £595m (2018: £539m) of undrawn and committed facilities available,
comprising committed revolving credit facilities which provide the Group with financial flexibility. Maturities of
these facilities are set out in the following table.
The conditions precedent to the availability of these facilities are all satisfied at the balance sheet date.
Expiring in one year or less
Expiring after more than one year but not more than two years
Expiring after more than two years but not more than five years
Expiring after more than five years
Total undrawn committed borrowing facilities
Total undrawn uncommitted borrowing facilities
Total undrawn borrowing facilities
2019
£M
423
95
77
–
595
112
707
2018
£M
223
165
151
–
539
173
712
SECURITY
Included within the Group’s total bank loans and overdrafts of £996m (2018: £849m) are £82m (2018: £100m) of
secured loans and overdrafts. Total bonds and notes payable of £173m (2018: £254m) consist of £77m
unsecured.
Loans, bonds and notes are secured on land and buildings with a carrying value of £529m (2018: £477m) and
an assignment of insurance proceeds in respect of insurances over the mortgaged properties.
75
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Of the Group’s total facilities of £1,879m, £846m matures within 12 months comprising £96m secured bonds
and notes, £277m committed revolving credit facilities, £150m uncommitted facilities and overdrafts subject to
annual renewal, £323m unsecured term loans and no secured term loans. Plans for refinancing the facilities are
underway.
MARKET RISK
(C)
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments.
The primary objectives of the treasury function are to provide secure and competitively priced funding for the
activities of the Group and to identify and manage financial risks, including exposure to movements in interest
and foreign exchange rates arising from those activities. If appropriate, the Group uses financial instruments and
derivatives to manage these risks, as set out below.
FOREIGN CURRENCY RISK
(I)
The Group is exposed to foreign currency risk on revenue, purchases, borrowings and cash deposits
denominated in currencies other than the functional currencies of the respective Group entities. The currencies
giving rise to this risk are primarily US dollars, Singapore dollars, New Zealand dollars, New Taiwan dollars,
Korean won, Chinese renminbi, Japanese yen and Euro.
The Group’s principal policy, wherever possible, is to maintain a natural hedge whereby liabilities are matched
with assets denominated in the same currency. Foreign currency investment exposure is also minimised by
borrowing in the currency of the investment.
To mitigate foreign currency translation exposure, an appropriate proportion of net assets are designated as
hedged against corresponding financial liabilities in the same currency.
NET INVESTMENT HEDGING
The Group has US$302m (2018: US$161m) US dollar loans and €7m (2018: €7m) Euro loans designated as
hedges of corresponding respective proportions of its net investment in foreign operations whose functional
currencies are US dollars and Euros. The risk being hedged is the foreign currency exposure on the carrying
amount of the net assets of the foreign operation upon consolidation. The fair value of the hedging instruments
as at 31 December 2019 was £292m (2018: £133m).
An analysis of borrowings by currency and their fair values as at 31 December is given below:
Sterling
Singapore dollar
US dollar
New Zealand dollar
Chinese renminbi
Japanese yen
Korean Won
Euro
31 DECEMBER 2019
31 DECEMBER 2018
BOOK
VALUE
£M
FAIR
VALUE
£M
BOOK
VALUE
£M
FAIR VALUE
£M
166
237
549
34
10
119
13
40
166
237
549
34
10
119
13
40
146
223
468
34
27
120
14
70
146
223
468
34
27
120
14
70
1,168
1,168
1,102
1,102
Exchange differences arising on foreign currency loans during each accounting period are recognised as a
component of equity, to the extent that the hedge is effective. The foreign exchange exposure arising on the
Group’s net investment in its subsidiaries is expected to be highly effective in offsetting the exposure arising on
the Group’s foreign currency borrowings. However during the year an immaterial amount (2018: £2m credit) was
76
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
recognised in the consolidated income statement that arose from hedges of net investments in foreign
operations that were considered to be ineffective.
Foreign currency transaction exposure is primarily managed through funding of purchases from operating
income streams arising in the same currency.
Hedging of transaction exposure is undertaken with approved counterparties and within designated limits, using
spot or short-term forward contracts to buy or sell the currency concerned, once the timing and the underlying
amount of exposure have been determined. Foreign exchange derivatives may also be used to hedge specific
transaction exposure where appropriate.
The following significant exchange rates applied during the year:
US dollar
Singapore dollar
New Taiwan dollar
New Zealand dollar
Malaysian ringgit
Korean won
Chinese renminbi
Euro
Japanese yen
AVERAGE RATE
CLOSING RATE
2019
2018
2019
2018
1.276
1.743
1.334
1.799
1.299
1.759
1.270
1.741
39.432
40.237
39.070
39.152
1.932
5.296
1.927
5.390
1.953
5.367
1.885
5.306
1,482.06
1,465.85
1,507.54
1,428.30
8.820
1.141
8.825
1.129
9.092
1.171
8.736
1.115
139.432
147.426
142.223
140.298
77
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
SENSITIVITY ANALYSIS
With respect to the Group’s foreign currency exposure, and assuming that all other variables, in particular
interest rates, remain constant, it is estimated that a 10% strengthening of sterling against the following
currencies at 31 December 2019 (31 December 2018: 10%) would have increased/(decreased) equity and profit
before tax by the amounts shown below:
US dollar
Australian dollar
Singapore dollar
New Taiwan dollar
New Zealand dollar
Euro
Chinese renminbi
Japanese Yen
31 DECEMBER 2019
31 DECEMBER 2018
PROFIT
BEFORE
TAX
£M
EQUITY
£M
PROFIT
BEFORE
TAX
£M
EQUITY
£M
31
(8)
7
–
–
4
(3)
2
33
6
(1)
(4)
(1)
(5)
(2)
(2)
(1)
(10)
28
(8)
6
–
–
4
(4)
2
28
7
(1)
(4)
(1)
(5)
(2)
(1)
(2)
(9)
A 10% weakening of sterling against the above currencies at 31 December 2019 (31 December 2018: 10%)
would have had the equal but opposite effect on the above currencies to the amounts shown above, on the
basis that all other variables remain constant.
INTEREST RATE RISK AND INTEREST RATE SWAPS
(II)
The Group adopts a policy of ongoing review of its exposure to changes in interest rates on its borrowings,
taking into account market expectations with regard to the perceived level of risk associated with each currency,
the maturity profile and cash flows of the underlying debt, and the extent to which debt may potentially be either
prepaid prior to its maturity or refinanced at reduced cost.
The Group’s policy is to maintain a mixture of its financial liabilities on a fixed and floating-rate basis with a
greater emphasis on floating rates presently as this flexibility is considered to be appropriate in the context of
the Group’s overall geographical diversity, investment and business cycle and the stability of the income
streams, cash balances and loan covenants.
Interest rate derivatives are used to manage interest rate risk, to the extent that the perceived cost is considered
to outweigh the benefit from the flexibility of variable rate borrowings, and the Group actively monitors the need
and timing for such derivatives. Where used, interest rate derivatives are classified as cash flow hedges and
stated at fair value within the Group’s consolidated statement of financial position. Further details of interest rate
derivatives in place at 31 December 2019 are provided hereafter.
78
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
CASH FLOW SENSITIVITY ANALYSIS FOR VARIABLE RATE INSTRUMENTS
Assuming that all other variables, in particular foreign currency rates, remain constant, a change of one
percentage point in the average interest rates applicable to variable rate instruments for the year would have
increased/(decreased) the Group’s profit before tax for the year as shown below:
Variable rate financial assets
Variable rate financial liabilities
Cash flow sensitivity (net)
31 DECEMBER 2019
31 DECEMBER 2018
1%
INCREASE
£M
1%
DECREASE
£M
1%
INCREASE
£M
1%
DECREASE
£M
2
(13)
(11)
(2)
13
11
2
(11)
(9)
(2)
11
9
FAIR VALUE
(D)
Set out below is a comparison of the fair and book values of all the Group’s financial instruments by category.
Fair values are determined by reference to market values, where available, or calculated by discounting cash
flows at prevailing interest rates.
Financial assets
Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Cash pool overdrafts
Loans and receivables
Trade receivables
Trade receivables due from holding and associate companies
Other receivables
Other financial assets
Equity investments
Deposits receivable
Financial liabilities
Overdrafts and borrowings
Trade payables
Other creditors
Other non-current liabilities
2019
BOOK
VALUE
£M
2019
FAIR
VALUE
£M
2018
BOOK
VALUE
£M
2018
FAIR VALUE
£M
254
240
(85)
40
1
24
34
2
254
240
(85)
40
1
24
34
2
228
225
(78)
45
1
27
39
2
228
225
(78)
45
1
27
39
2
510
510
489
489
(1,168)
(1,168)
(1,102)
(1,102)
(32)
(55)
(17)
(32)
(55)
(17)
(32)
(53)
(15)
(32)
(53)
(15)
(1,272)
(1,272)
(1,202)
(1,202)
79
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
ESTIMATION OF FAIR VALUES
The following summarises the major methods and assumptions used in estimating the fair values of financial
instruments reflected in the table.
DERIVATIVES
Forward exchange contracts are either marked to market using listed market prices or by discounting the
contractual forward price and deducting the current spot rate. For interest rate swaps, bank valuations are used.
INTEREST-BEARING LOANS AND BORROWINGS
Fair value is calculated based on discounted expected future principal and interest cash flows.
FINANCE LEASE LIABILITIES
The fair value is estimated as the present value of future cash flows, discounted at market interest rates for
similar lease agreements. The estimated fair values reflect changes in interest rates.
TRADE AND OTHER RECEIVABLES/PAYABLES
For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect
the fair value. All other receivables/payables are discounted to determine the fair value.
INTEREST RATES USED FOR DETERMINING FAIR VALUE
Prevailing market interest rates are used to discount cash flows to determine the fair value of financial assets
and liabilities.
FAIR VALUE HIERARCHY
As at 31 December 2019, the Group held certain financial instruments measured at fair value.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are
observable, either directly or indirectly
Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based
on observable market data
The table below provides a hierarchy analysis of financial instruments carried at fair value:
2019
2018
LEVEL 1
£M
LEVEL 2
£M
LEVEL 3
£M
TOTAL
£M
LEVEL 1
£M
LEVEL 2
£M
LEVEL 3
£M
TOTAL
£M
Equity investment at FVOCI
Equity investment at FVTPL
Currency derivative assets
Assets
Interest rate derivative
liabilities
Liabilities
–
–
–
–
–
–
30
4
4
38
–
–
–
–
–
–
–
–
30
4
4
38
–
–
–
–
–
–
–
–
39
–
2
41
1
1
–
–
–
–
–
–
39
–
2
41
1
1
During the year ended 31 December 2019 there were no transfers between Level 1 and Level 2 fair value
measurements, and no transfers into and out of Level 3 fair value measures.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Company’s objective for managing its capital
80
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
is to ensure that Group entities will be able to continue as a going concern while maximising the return to
shareholders, as well as sustaining the future development of its business. In order to maintain or adjust the
capital structure, the Group may alter the total amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, draw down additional debt or reduce debt.
The Group’s capital structure consists of debt, which includes the loans and borrowings disclosed in Note 21,
cash and cash equivalents disclosed in Note 20 and the equity attributable to the parent, comprising share
capital, reserves and retained earnings, as disclosed in the consolidated statement of changes in equity. The
Group seeks to maintain a balance between the higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position.
One of the Group’s subsidiaries, CDLHT which is a stapled group comprising CDL Hospitality Real Estate
Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”), a business trust, is required to
maintain certain minimum base capital and financial resources.
H-REIT is subject to the aggregate leverage limit as defined in the Property Fund Appendix of the Code on
Collective Investment Schemes (“CIS Code”) issued by Monetary Authority of Singapore. The CIS Code
stipulates that the total borrowings and deferred payments (together the “Aggregate Leverage”) of a property
fund should not exceed 45.0% of its Deposited Property except that the Aggregate Leverage of a property fund
may exceed 45.0% of its Deposited Property (up to a maximum of 60.0%) if a credit rating of the property fund
from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. The property fund
should continue to maintain and disclose a credit rating so long as its Aggregate Leverage exceeds 45.0% of its
Deposited Property.
For this financial year, H-REIT has a credit rating of BBB- from Fitch Inc. The Aggregate Leverage of H-REIT as
at 31 December 2019 was 35.4% (2018: 34.2%) of H-REIT’s Deposited Property. This complied with the
aggregate leverage limit as described above.
HBT, H-REIT and CDLHT have complied with the borrowing limit requirements imposed by the relevant Trust
Deeds and all externally imposed capital requirements for the financial years ended 31 December 2019 and
2018.
Except for the above, neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements.
23 EMPLOYEE BENEFITS
PENSION ARRANGEMENTS
The Group operates various funded pension schemes which are established in accordance with local conditions
and practices within the countries concerned. The most significant funds are described below.
UNITED KINGDOM
The pension arrangements in the United Kingdom operate under the ’Millennium & Copthorne Pension Plan’,
which was set up in 1993. The plan operates a funded defined benefit arrangement together with a defined
contribution plan, both with different categories of membership. The defined benefit section of the plan was
closed to new entrants in 2001 and at the same time rights to a Guaranteed Minimum Pension (”GMPs“) under
the defined contribution scheme also ceased. The plan entitles a retired employee to receive an annual pension
payment.
The contributions required are determined by a qualified actuary on the basis of triennial valuations using the
projected unit credit method. The last full actuarial valuation of this scheme was carried out by a qualified
independent actuary as at 5 April 2017 and this has been updated on an approximate basis to 31 December
2019. The contributions of the Group during the year were about 11% (2018: 11%) of pensionable salary.
As the defined benefit section is closed to new entrants, the current service cost, as a percentage of
pensionable payroll is likely to increase as the membership ages, although it will be applied to a decreasing
pensionable payroll. The assumptions which have the most significant effect on the results of the valuation are
those relating to the discount rate and the rates of increase in salaries and pensions.
SOUTH KOREA
The Group operates a defined benefit pension plan for its employees in South Korea. The contributions required
are determined by an external qualified actuary using the projected unit credit method. The most recent
81
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
valuation was carried out on 31 December 2019. The assumptions which have the most significant effect on the
results of the valuations are those relating to the discount rate and rate of increase in salaries.
TAIWAN
The Group operates a defined benefit pension plan for its employees in Taiwan. The contributions required are
determined by an external qualified actuary using the projected unit credit method. The most recent valuation
was carried out on 31 December 2019. The contributions of the Group were no less than 6% (2018: 6%) of the
employees’ earnings. The assumptions which have the most significant effect on the results of the valuations
are those relating to the discount rate and rate of increase in salaries.
The defined benefit plans are administered by pension funds that are legally separated from the Group. The
boards of the pension funds are required by law to act in the best interests of the plan participants.
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest
rate risk and market investment risk.
The above plans are substantially funded by the Group’s subsidiaries. The funding requirements are based on
the pension funds’ actuarial measurement framework set out in the funding policies of the plans.
The assets of each scheme have been taken at market value and the liabilities have been calculated using the
following principal assumptions:
Inflation rate
Discount rate
Rate of salary increase
Rate of pension increases
Rate of revaluation
2019
UK
3.0%
1.9%
3.5%
2.9%
2.2%
2019
SOUTH
KOREA
2.0%
2.0%
3.0%
–
–
2019
TAIWAN
2018
UK
2018
SOUTH
KOREA
2018
TAIWAN
–
3.5%
2.0%
0.75%
3.0%
–
–
2.9%
4.0%
3.3%
2.5%
2.5%
3.0%
–
–
–
1.0%
3.0%
–
–
The methodology for computing the discount rate is the yield range method.
The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial
assumptions, which due to the timescale covered, may not necessarily be borne out in practice. The present
values of the schemes’ liabilities are derived from cash flow projections over long periods and are inherently
uncertain.
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other
assumptions consistent, would have altered the defined benefit obligation by the amounts shown below:
Discount rate (1% movement)
Rate of salary increase (1% movement)
DEFINED BENEFIT OBLIGATION
2019
INCREASE
£M
2019
DECREASE
£M
2018
INCREASE
£M
2018
DECREASE
£M
(13)
1
13
(1)
(12)
1
14
(1)
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it
does provide an approximation of the sensitivity of the assumptions shown.
82
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts recognised on the balance sheet are as follows:
2019
UK
£M
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
OTHER
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
OTHER
£M
2018
TOTAL
£M
Present value of funded
obligations
74
Fair value of plan assets
(64)
Plan deficit
10
4
(4)
–
9
(6)
3
2
–
2
89
66
(74)
(58)
15
8
4
(4)
–
10
(6)
4
2
–
2
82
(68)
14
Changes in the present value of defined benefit obligations are as follows:
2019
UK
£M
66
–
–
2
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
OTHER
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
OTHER
£M
2018
TOTAL
£M
4
1
–
–
10
–
–
–
2
–
–
–
82
74
1
–
2
–
1
2
5
–
–
–
11
–
–
–
2
–
–
–
92
–
1
2
(2)
(1)
(1)
–
(4)
(2)
(1)
(1)
–
(4)
Balance at 1 January
Current service cost
Past service cost
Interest cost
Benefits paid, death in
service insurance
premiums and expenses
Remeasurement losses/
(gains) arising from:
– Financial assumptions
10
– Demographic
assumptions
Balance at 31 December
(2)
74
–
–
4
–
–
9
–
–
2
10
(9)
(2)
89
–
66
–
–
4
–
–
10
–
–
2
(9)
–
82
Changes in the fair value of plan assets are as follows:
2019
UK
£M
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
TOTAL
£M
Balance at 1 January
Interest income
Group contributions
Benefits paid
Remeasurement gains arising from:
– Return/(loss) on plan assets excluding
interest income
Balance at 31 December
Actual return/(loss) on plan assets
58
2
–
(2)
6
64
8
4
–
–
6
–
1
68
2
1
63
2
–
5
–
–
5
–
2
(1)
(1)
(4)
(2)
(1)
(1)
1
4
–
–
6
–
7
74
8
(5)
58
(3)
–
4
–
–
6
–
73
2
2
(4)
(5)
68
(3)
83
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The fair values of plan assets in each category are as follows:
Quoted equities
Bonds
Property
Cash and cash equivalents
2019
UK
£M
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
TOTAL
£M
24
5
1
34
64
–
4
–
–
4
–
–
–
6
6
24
9
1
40
74
19
4
1
34
58
–
4
–
–
4
–
–
–
6
6
19
8
1
40
68
The Group values plan assets in accordance with IAS 19 as follows:
• Quoted equities listed on recognised stock exchanges are valued at closing bid prices;
• Bonds are measured using pricing models making assumptions for credit risk, market risk and market yield
curves; and
• Properties are valued on the basis of the open market value.
The expense recognised in the income statement is as follows:
Current service cost
Past service cost *
Interest cost
Interest income
2019
UK
£M
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
OTHER
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
OTHER
£M
2018
TOTAL
£M
–
–
2
(2)
–
1
–
–
–
1
–
–
–
–
–
–
–
–
–
–
1
–
2
–
1
2
(2)
(2)
1
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
2
(2)
1
* The English High Court ruling in Lloyds Banking Group Pension Trustees Limited v Lloyds Bank plc and others was published on 26 October 2018, and
held that UK pension schemes with GMPs accrued from 17 May 1990 must equalise for the different effects of these GMPs between men and women. The
estimated GMP equalisation impact for the UK scheme is an increase of 1.83% of the total value of scheme liabilities on the IAS19 basis as at 31 December
2018, or £1m.
Total cost is recognised within the following items in the income statement:
Administrative expenses
2019
£M
1
2018
£M
1
84
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The gains or losses recognised in the consolidated statement of comprehensive income are as follows:
2019
UK
£M
2019
SOUTH
KOREA
£M
2019
TAIWAN
£M
2019
OTHER
£M
2019
TOTAL
£M
2018
UK
£M
2018
SOUTH
KOREA
£M
2018
TAIWAN
£M
2018
OTHER
£M
2018
TOTAL
£M
Actual return less
expected return on plan
assets
Remeasurement (losses)/
gains arising from
6
– Financial assumptions
(10)
– Demographic
assumptions
Defined benefit plan
remeasurement
gains/(losses)
2
(2)
1
–
–
1
–
–
–
–
7
(5)
–
–
–
(10)
2
–
(1)
9
–
4
Actuarial losses recognised directly in equity are as follows:
Cumulative as at 1 January
Remeasurement gains recognised during the year
Cumulative as at 31 December
–
–
–
–
–
–
–
–
–
(5)
–
–
–
2019
£M
19
1
20
9
–
4
2018
£M
23
(4)
19
The life expectancies underlying the value of the accrued liabilities for the UK Plan, based on retirement age of
65, are as follows:
Males
Females
2019
YEARS
2018
YEARS
22
24
22
24
The weighted-average duration of the defined benefit obligations as at 31 December 2019 was 18 years (2018:
18). The Group expects about £2m in contributions to be paid to the defined benefit plans in 2020.
The Group monitors the deficit of the fund and believes any risk associated with the deficit is mitigated by the
Group’s strong balance sheet position.
SHARE-BASED PAYMENTS
The Group operates a number of share option schemes, a majority being designed to link remuneration to the
future performance of the Group. In accordance with the Group’s accounting policy 2.2N(iv) on share-based
payment transactions, the fair value of share options and long-term incentive awards is recognised as an
employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread
over the period during which the employees become unconditionally entitled to the share options and long-term
incentive awards. The charge to the income statement for the year was £nil (2018: £nil).
The Group has applied IFRS 2 to its active employee share-based payment arrangements from 1 January 2005
except for arrangements granted before 7 November 2002.
All grants made during 2019 were before the Delisting took place, refer to page 23 for more detail and the
impact this had on the share option schemes.
85
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
MILLENNIUM & COPTHORNE HOTELS LIMITED 2006 LONG-TERM INCENTIVE PLAN (“LTIP”)
(I)
Performance Share Awards under this scheme are awarded to Executive Directors and senior management of
the Group.
DATE OF
AWARDS
03.08.2015
29.03.2016
AWARDS
OUTSTANDING
AS AT
1 JAN 2019
AWARDS
AWARDED
DURING
THE
YEAR
AWARDS
VESTED
DURING
THE
YEAR
AWARDS
FORFEITED
DURING
THE
YEAR
AWARDS
EXPIRED
DURING
THE
YEAR
AWARDS
OUTSTANDING
AS AT
31 DEC 2019
CREDITED
TO SHARE
CAPITAL
£M
CREDITED
TO SHARE
PREMIUM
£M
36,761
37,128
73,889
–
–
–
–
(36,761)
(4,401)
(32,727)
(4,401)
(69,488)
–
–
–
–
–
–
–
–
–
–
–
–
VESTING
DATE
03.08.2018
29.03.2019
(II)
Share options under this scheme are granted to UK based employees.
MILLENNIUM & COPTHORNE HOTELS LIMITED 2006 AND 2016 SHARESAVE SCHEMES
EXERCISE
PRICE
PER
SHARE
£
DATE OF
AWARDS
AWARDS
OUTSTANDING
AS AT
1 JAN 2019
AWARDS
AWARDED
DURING
THE YEAR
AWARDS
VESTED
DURING
THE YEAR
AWARDS
FORFEITED
DURING
THE YEAR
AWARDS
OUTSTANDING
AS AT
31 DEC 2019
CREDITED
TO SHARE
CAPITAL
£M
CREDITED
TO SHARE
PREMIUM
£M
19.04.2013
4.480
2,008
06.05.2014
4.460
941
14.04.2015
4.690
1,456
14.04.2015
4.690
4,732
12.04.2016
3.300
101,374
12.04.2016
3.300
909
11.04.2017
3.660
37,704
11.04.2017
3.660
2,458
05.06.2018
4.360
56,180
05.06.2018
4.360
1,582
–
–
–
–
–
–
–
–
–
–
–
(2,008)
(672)
(269)
(383)
(1,073)
(3,547)
(1,185)
(99,794)
(1,580)
(606)
(303)
(24,218)
(13,486)
(382)
(2,076)
(21,654)
(34,526)
(238)
(1,344)
09.04.2019
3.750
09.04.2019
3.750
–
–
93,436
(9,886)
(83,550)
1,040
(53)
(987)
209,344
94,476
(161,433)
(142,387)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
There are no options outstanding at the end of the year therefore there is no current exercise price (2018:
exercise price ranged from £3.30 to £4.69) with no weighted average contractual life remaining (2018: 1.88
years).
EXERCISE
PERIOD
01.08.2018–
31.01.2019
01.08.2019–
31.01.2020
01.08.2018–
31.01.2019
01.08.2020–
31.01.2021
01.08.2019–
31.01.2020
01.08.2021–
31.01.2022
01.08.2020–
31.01.2021
01.08.2022–
31.01.2023
01.08.2021–
31.01.2022
01.08.2023–
31.01.2024
01.08.2022–
31.01.2023
01.08.2024–
31.01.2025
86
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
ANNUAL BONUS PLAN (“ABP”)
(III)
Under the ABP, deferred share awards are granted annually to selected employees of the Group. Shares in
Millennium & Copthorne Hotels Limited are transferred to participants as follows if they continue to be employed
by the Group:
• 2015 awards, at the end of three years; and
• 2016, 2017, 2018 and 2019 awards, 25% after years one and two and 50% after three years.
DATE OF
AWARDS
08.09.2015
13.05.2016
12.08.2016
09.11.2016
14.06.2017
14.12.2018
13.08.2019
AWARDS
OUTSTANDING
AS AT
1 JAN 2019
AWARDS
AWARDED
DURING THE
YEAR
AWARDS
VESTED
DURING THE
YEAR
AWARDS
FORFEITED
DURING THE
YEAR
AWARDS
EXPIRED
DURING
THE
YEAR
AWARDS
OUTSTANDING
AS AT 31 DEC
2019
CREDITED
TO
SHARE
CAPITAL
£M
CREDITED
TO
SHARE
PREMIUM
£M
1,530
17,009
1,188
488
27,122
57,358
–
–
–
–
–
–
–
35,724
(1,530)
(15,346)
(1,188)
(488)
(20,030)
(25,409)
(2,800)
–
(1,467)
–
–
(3,755)
(8,048)
(1,110)
104,695
35,724
(66,791)
(14,380)
–
–
–
–
–
–
–
–
196
–
–
3,337
23,901
31,814
59,248
–
–
–
–
–
–
–
–
VESTING DATES
08.09.2018
13.05.2017/8/9
12.08.2017/8/9
09.11.2017/8/9
14.06.2018/9/20
–
–
–
–
–
– 14.12.2019/20/21
13.08.2020/1/2
–
–
EXECUTIVE SHARE PLAN (“ESP”)
(IV)
The ESP was approved by the Company on 18 February 2016 to replace participation in the LTIP by senior
executive management. These awards will vest over a three-year period (25% after years one and two, 50%
after three years), subject to the rules of the ESP.
DATE OF
AWARDS
29.03.2016
15.08.2017
04.12.2018
09.08.2019
AWARDS
OUTSTANDING
AS AT
1 JAN 2019
AWARDS
AWARDED
DURING
THE YEAR
AWARDS
VESTED
DURING
THE
YEAR
AWARDS
FORFEITED
DURING
THE YEAR
AWARDS
EXPIRED
DURING
THE
YEAR
AWARDS
OUTSTANDING
AS AT
31 DEC 2019
CREDITED
TO SHARE
CAPITAL
£M
CREDITED
TO SHARE
PREMIUM
£M
16,310
42,627
65,649
–
–
–
(16,310)
–
(25,694)
(13,570)
(20,103)
(33,874)
–
30,151
(1,577)
(12,790)
124,586
30,151
(63,684)
(60,234)
–
–
–
–
–
–
3,363
11,672
15,784
30,819
–
–
–
–
–
–
–
–
–
–
VESTING DATES
29.03.2017/8/9
15.08.2018/9/20
04.12.2019/20/21
09.08.2020/1/2
87
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
AWARDS/OPTIONS GRANTED
The following awards/options were granted in the current and comparative years:
AWARDS/OPTIONS
GRANTED
DATE OF
GRANT
DIRECTOR
NON-
DIRECTOR
SHARE
PRICE
PREVAILING
ON DATE OF
GRANT
£
EXERCISE
PRICE
£
FAIR
VALUE
£
EXPECTED
TERM
(YEARS)
EXPECTED
VOLATILITY
EXPECTED
DIVIDEND
YIELD
RISK-
FREE
INTEREST
RATES
–
–
–
–
–
–
–
–
7,538
7,538
15,075
6.80
6.80
6.80
–
–
–
6.85
1.00
6.85
2.00
6.85
3.00
–
–
–
–
–
–
–
–
–
93,436
4.44
3.75
1.11
3.31
26.0%
0.95%
0.72%
1,040
4.44
3.75
1.28
5.31
26.0%
0.95%
0.82%
8,931
8,931
17,862
6.80
6.80
6.80
–
–
–
6.85
1.00
6.85
2.00
6.85
3.00
–
–
–
–
–
–
–
–
–
AWARDS/OPTIONS
GRANTED
DATE OF
GRANT
DIRECTOR
NON-
DIRECTOR
SHARE
PRICE
PREVAILING
ON DATE OF
GRANT
£
EXERCISE
PRICE
£
FAIR
VALUE
£
EXPECTED
TERM
(YEARS)
EXPECTED
VOLATILITY
EXPECTED
DIVIDEND
YIELD
RISK-
FREE
INTEREST
RATES
2019 AWARDS
Executive Share
Plan
Executive Share
Plan
Executive Share
Plan
09.08.2019
09.08.2019
09.08.2019
Sharesave
Scheme (3 year) 09.04.2019
Sharesave
Scheme (5 year) 09.04.2019
Deferred Share
Awards
Deferred Share
Awards
Deferred Share
Awards
13.08.2019
13.08.2019
13.08.2019
2018 AWARDS
Executive Share
Plan
Executive Share
Plan
Executive Share
Plan
04.12.2018
04.12.2018
04.12.2018
Sharesave
Scheme (3 year) 05.06.2018
Sharesave
Scheme (5 year) 05.06.2018
Deferred Share
Awards
Deferred Share
Awards
Deferred Share
Awards
14.12.2018
14.12.2018
14.12.2018
–
–
–
–
–
–
–
–
16,412
16,412
32,825
4.66
4.66
4.66
–
–
–
4.60
1.00
4.53
2.00
4.47
3.00
–
–
–
1.39%
1.39%
1.39%
–
–
–
57,582
5.32
4.36
1.35
3.16
26.0%
1.22%
0.75%
1,582
5.32
4.36
1.54
5.16
26.0%
1.22%
0.97%
14,340
14,340
28,678
4.68
4.68
4.68
–
–
–
4.61
1.00
4,55
2.00
4.48
3.00
–
–
–
1.39%
1.39%
1.39%
–
–
–
88
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
MEASUREMENT OF FAIR VALUE
The Sharesave awards were valued using the Black-Scholes valuation method.
The ESP and ABP will be cash settled for a fixed price of £6.85 in line with the Final Offer executed by CDL.
The fair values of these awards are therefore equal to the offer price.
24 PROVISIONS
Balance at 1 January 2019
Recognised during the year
Released during the year
Foreign exchange adjustments
Balance at 31 December 2019
Analysed as:
Non-current provision
Current provision
Total provision
LEGAL
£M
BEIJING
INDEMNITY
£M
TOTAL
£M
2
3
(2)
–
3
–
3
3
9
–
–
–
9
9
–
9
11
3
(2)
–
12
9
3
12
Provision for legal fees as at 31 December 2019 of £3m (2018: £2m) relates to disputes in several hotels. The
Beijing indemnity of £9m (2018: £9m) relates to the tax indemnity to the former shareholders of Grand
Millennium Hotel Beijing in which the Group acquired an additional 40% interest in 2007.
25 OTHER NON-CURRENT LIABILITIES
Other liabilities
2019
£M
17
2018
£M
15
89
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
26 DEFERRED TAXATION
Movements in deferred tax liabilities and assets (prior to offsetting balances) during the year are as follows:
Charged/(credited) to income statement
AT
1 JANUARY
2019
£M
CHANGE IN
TAX RATE
£M
CURRENT YEAR
MOVEMENT
£M
EXCHANGE ON
TRANSLATION
£M
AT
31 DECEMBER
2019
£M
Deferred tax liabilities
Property assets1
Deferred tax assets
Tax losses
Others
Net deferred tax liabilities
234
234
(58)
(4)
(62)
172
–
–
–
–
–
–
1 Property assets comprise plant, property and equipment and investment properties.
(8)
(8)
(11)
(1)
(12)
(20)
(4)
(4)
(1)
–
(1)
(5)
222
222
(70)
(5)
(75)
147
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when deferred taxes relate to the same taxation authority.
Deferred tax assets have not been recognised in respect of the following items because it is not probable that
future taxable profit will be available against which the Group can utilise the benefits.
Tax losses
Adjustments due to:
– Deductible temporary differences in respect of prior year
– Tax losses in respect of prior year
2019
£M
4
(1)
21
24
2018
£M
3
–
18
21
The deductible temporary differences do not expire under current tax legislation. The tax losses are subject to
agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain
subsidiaries operate.
90
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The gross tax losses with expiry dates are as follows:
Expiry dates:
– within 1 to 5 years
– after 5 years
– no expiry date
2019
£M
2018
£M
27
14
84
25
8
81
125
114
At 31 December 2019, a deferred tax liability of £8m (2018: £8m) relating to undistributed reserves of overseas
subsidiaries and joint ventures of £1,000m (2018: £1,000m) has not been recognised because the Group
determined that the distributions will not be made and the liability will not be incurred in the foreseeable future.
27 TRADE AND OTHER PAYABLES
Trade payables
Other creditors including taxation and social security:
– Social security and other taxes
– Value added tax and similar sales taxes
– Other creditors
Accruals
Deferred income
Contract liabilities
Rental and other deposits
2019
£M
32
13
11
29
2018
£M
32
13
12
26
104
111
5
24
2
4
20
2
220
220
The Group’s exposure to currency and liquidity risks related to trade and other payables are disclosed in Note
22.
28 DIVIDENDS
Final ordinary dividend paid
Interim ordinary dividend paid
Total dividends paid
All dividends paid during 2019 and 2018 were in cash.
2019
PENCE
2018
PENCE
2019
£M
2.15
–
2.15
4.42
2.08
6.50
7
–
7
2018
£M
14
7
21
91
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Subsequent to 31 December 2019, the Directors declared the following final dividends, which have not been
provided for:
Final ordinary dividend
2019
PENCE
2018
PENCE
–*
2.15
2019
£M
–*
2018
£M
7
* The Board of Directors of the Company, after initially approving in principle the payment by the Company of a final dividend in the amount of six
pence per ordinary share in respect of the 2019 financial year, subject to the results for the year being finalised and signed, subsequently approved
the cancellation of that dividend payment in order to conserve cash following the impact on the Company’s business of the global health crisis
brought about by the novel coronavirus, COVID-19 in early 2020.
29 SHARE CAPITAL
Balance at 1 January 2019
Issue of ordinary shares on exercise of share options
Balance at 31 December 2019
NUMBER OF
30P SHARES
ALLOTTED,
CALLED UP
AND FULLY
PAID
324,791,486
159,326
324,950,812
All of the share capital is equity share capital. Holders of these shares are entitled to dividends as declared from
time to time and are entitled to one vote per share at general meetings of the Company. All rights attached to
the Company’s shares held by the Group are suspended until those shares are reissued.
At the year end, options over 59,248 and 30,819 ordinary shares remain outstanding under the ABP and ESP
respectively. Holders of these options will receive a cash payment on the date of exercise, as such no shares
will be awarded.
30 RESERVES
CASH FLOW HEDGE RESERVE
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
instruments related to the hedged transactions that have not yet occurred (net of tax).
TRANSLATION RESERVE
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net
investment in foreign operations (net of tax).
TREASURY SHARE RESERVE
No shares were held by the employee benefit trust at 31 December 2019 (2018: 2,483).
FAIR VALUE RESERVE
The fair value reserve includes the cumulative change in the fair value of equity investments at FVOCI.
31 FINANCIAL COMMITMENTS
(a) Capital commitments at the end of the financial year which are contracted but not
provided for
2019
£M
2018
£M
53
94
92
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Group’s share of the capital commitments of joint ventures and associates is shown in Note 15.
(b) Total commitments under non-cancellable operating lease rentals are payable by the Group as follows (from
1 January 2019, the Group has recognised right-of-use assets for these leases, except for short term and low-
value leases - refer to Note 37 for further detail):
– less than one year
– between one and five years
– more than five years
2019
£M
3
–
–
3
(c) The Group leases out certain of its properties under operating leases. The future minimum lease rentals
receivable by the Group under non-cancellable leases are as follows:
– less than one year
– between one and five years
– one to two years
– two to three years
– three to four years
– four to five years
– more than five years
2019
£M
34
–
15
9
10
37
77
182
2018
£M
15
45
198
258
2018
£M
38
98
–
–
–
–
122
258
Future minimum lease rentals receivable under non-cancellable leases includes all future rentals receivable up
to the period when those leases expire or become cancellable.
During the year ended 31 December 2019, £53m (2018: £51m) was recognised as rental income in the income
statement and £2m (2018: £3m) in respect of repairs and maintenance was recognised as an expense in the
income statement relating to investment properties.
32 CONTINGENCIES AND SUBSEQUENT EVENTS
In the course of its operations the Group is routinely exposed to potential liabilities for claims made by
employees and contractual or tortious claims made by third parties. No material losses are anticipated from
such exposures. There were no contingent liabilities or guarantees other than those arising in the ordinary
course of business and on these no material losses are anticipated. The Group has insurance cover up to
certain limits for major risks on property and major claims in connection with legal liabilities arising in the course
of its operations. Otherwise the Group generally carries its own risk. The Group believes that the accruals and
provisions carried on the balance sheet are sufficient to cover these risks.
Other than the above transactions, there are no events subsequent to the balance sheet date which require
adjustments to or disclosure within these consolidated financial statements except for those stated below:
• Millennium Cincinnati was disposed of effective 14 February 2020 with a gross sales price of US$36m
(£28m). The property was classified as asset held for sale in the statement of financial position as at 31
December 2019. Refer to Note 36 for further detail.
•
The COVID-19 pandemic, which started at the end of 2019 in Asia and then later spread to other
regions worldwide, has had a significant impact on the Group’s revenue and profit due to quarantines,
social distancing measures and travel restrictions implemented in various jurisdictions. More
information has been provided in the Business Review on page 8 and Strategic Report on page 12.
93
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
33 RELATED PARTIES
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 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 and with its Directors and executive
officers.
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 Limited
and holds 100.0% (2018: 65.2%) of the Company’s shares via CDL, the intermediate holding company of the
Group. During the year ended 31 December 2019, the Group had the following 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 31 December 2019, £2m (2018: £2m) of cash was deposited with Hong Leong
Finance Limited.
Fees paid/payable by the Group to CDL and its other subsidiaries were £1m (2018: £3m) which included rentals
paid for the Grand Shanghai restaurant and King’s Centre; property management fees for Tanglin Shopping
Centre; charges for car parking, leasing commission and professional services.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
In addition to their salaries, the Group also provides non-cash benefits to Directors and executive officers and
contributes to a post-employment defined contribution plan depending on the date of commencement of
employment. The defined contribution plan does not have a specified pension payable on retirement and
benefits are determined by the extent to which the individual’s fund can buy an annuity in the market at
retirement.
The key management personnel compensation is as follows:
Short-term employee benefits
Directors
Executives
2019
£M
2018
£M
5
1
4
5
7
1
6
7
94
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
34 RELATED UNDERTAKINGS
The full list of the Company’s related undertakings as at 31 December 2019 are set out below:
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
Aircoa Equity Interests Inc.
100%
Indirect subsidiary USA
Aircoa GP Corporation
100%
Indirect subsidiary USA
Aircoa, LLC
100%
Indirect subsidiary USA
All Seasons Hotels & Resorts
Limited
Anchorage-Lakefront Limited
Partnership
76%
Indirect subsidiary New Zealand
100%
Indirect subsidiary USA
Archyield Limited
100%
Indirect subsidiary United Kingdom
ATOS Holding GmbH
100%
Direct subsidiary
Austria
Aurora Inn Operating
Partnership L.P.
100%
Indirect subsidiary USA
Avon Wynfield Inn, Ltd.
100%
Indirect subsidiary USA
Avon Wynfield LLC
100%
Indirect subsidiary USA
Beijing Fortune Hotel Co. Ltd.
70%
Indirect subsidiary
People’s Republic
of China
Biltmore Place Operations
Corp.
100%
Indirect subsidiary USA
Birkenhead Holdings Pty. Ltd.
76%
Indirect subsidiary
Australia
Birkenhead Investments Pty.
Ltd.
76%
Indirect subsidiary
Australia
Bostonian Hotel Limited
Partnership
Buffalo Operating Partnership
L.P.
100%
Indirect subsidiary USA
100%
Indirect subsidiary USA
Buffalo RHM Operating LLC
100%
Indirect subsidiary USA
CDL (New York) LLC
100%
Indirect subsidiary USA
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding Company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
Holding Company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Level 13, 280 Queen Street,
Auckland 1010,
New Zealand
Dormant
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Schulhof 6/1st fl , 1010
Vienna,
Austria
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
Building No. 5, 7
DongSanHuan
Middle Road, Chaoyang
District,
Bejing, P.R.China 100020
Hotel owner and
operator
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Liquor licence
holder
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Holding company
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Property Investment
&
Management
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
95
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
CDL (NYL) Limited
100%
Indirect subsidiary USA
CDL Entertainment & Leisure
Pte Ltd
100%
Indirect subsidiary Republic of
Singapore
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Investment holding
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
See note below1
Provision of
management
services and
investment
holding
See note below1
CDL Hospitality Trusts1
37%
CDL Hotels (Chelsea) Limited
100%
CDL Hotels (Korea) Ltd.
100%
Associated
undertakings
Indirect subsidiary United Kingdom
Republic of
Singapore
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Indirect subsidiary Republic of Korea Jung-gu Sowolro 50, Seoul,
South Korea 04637
Hotel owner and
operator
Hotel owner and
operator
CDL Hotels (Labuan) Limited
100%
Indirect subsidiary Malaysia
CDL Hotels (Malaysia) Sdn.
Bhd.
100%
Indirect subsidiary Malaysia
CDL Hotels (U.K.) Limited
100%
Indirect subsidiary United Kingdom
CDL Hotels Holdings Japan
Limited
CDL Hotels Holdings New
Zealand Limited
100%
Indirect subsidiary Hong Kong
100%
Indirect subsidiary New Zealand
CDL Hotels Japan Pte. Ltd.
40%
Associated
undertakings
Republic of
Singapore
CDL Hotels USA, Inc.
100%
Indirect subsidiary USA
CDL Investments New Zealand
Limited
50%
Indirect subsidiary New Zealand
Tiara Labuan, Jalan Tanjung
Batu,
87000 F.T. Labuan,
Malaysia
Hotel owner and
operator
Level 8, Symphony House,
Pusat Dagangan Dana 1,
Jalan PJU 1A/46,
47301 Petaling Jaya,
Selangor Darul Ehsan
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Investment holding
Investment holding
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Hotel investment
holding
company
Investment and
property
management
company
CDL Land New Zealand Limited
50%
Indirect subsidiary New Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
CDL West 45th Street LLC
100%
Indirect subsidiary USA
Chicago Hotel Holdings, Inc.
100%
Indirect subsidiary USA
Cincinnati S.I. Co.
100%
Indirect subsidiary USA
City Century Pte. Ltd.
City Elite Pte Ltd
City Hotels Pte Ltd.
100%
100%
100%
Indirect subsidiary Republic of
Singapore
Indirect subsidiary Republic of
Singapore
Indirect subsidiary Republic of
Singapore
Property investment
and
development
Hotel owner
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Previously hotel
owner
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Restaurateur
Restaurateur
Hotel operator
96
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
Context Securities Limited
76%
Indirect subsidiary New Zealand
Copthorne (Nominees) Limited
100%
Indirect subsidiary United Kingdom
Copthorne Aberdeen Limited
83%
Indirect subsidiary United Kingdom
Copthorne Hotel (Birmingham)
Limited
Copthorne Hotel (Cardiff)
Limited
Copthorne Hotel (Effingham
Park) Limited
Copthorne Hotel (Gatwick)
Limited
Copthorne Hotel (Manchester)
Limited
Copthorne Hotel (Merry Hill)
Construction Limited
Copthorne Hotel (Merry Hill)
Limited
Copthorne Hotel (Newcastle)
Limited
Copthorne Hotel (Plymouth)
Limited
Copthorne Hotel (Slough)
Limited
Copthorne Hotel Holdings
Limited
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
96%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Direct subsidiary
United Kingdom
Copthorne Hotels Limited
100%
Indirect subsidiary United Kingdom
Copthorne Orchid Hotel
Singapore Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
Copthorne Orchid Penang Sdn.
Bhd.
100%
Indirect subsidiary Malaysia
Diplomat Hotel Holding Limited
100%
Indirect subsidiary United Kingdom
Durham Operating Partnership
L.P.
Elite Hotel Management
Services Pte. Ltd.
Fergurson Hotel Management
Limited
100%
Indirect subsidiary USA
100%
50%
Indirect subsidiary Republic of
Singapore
Associated
undertakings
Hong Kong
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel management
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel investment
holding
Property owner and
developer
Hotel owner
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Level 8, Symphony House,
Pusat Dagangan Dana 1,
Jalan PJU 1A/46,
47301 Petaling Jaya,
Selangor Darul Ehsan
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Unit 606, 6th Floor, Alliance
Building,
133 Connaught Road
Central, Hong Kong
Hotel management
consultancy
services
Investment holding
97
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
First 2000 Limited
100%
Indirect subsidiary Hong Kong
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
First Sponsor Group Limited
36%
Associated
undertakings
Cayman Islands
Five Star Assurance, Inc.
100%
Indirect subsidiary USA
Four Peaks Management
Company
100%
Indirect subsidiary USA
Gateway Holdings Corporation I
100%
Indirect subsidiary USA
Gateway Hotel Holdings, Inc.
100%
Indirect subsidiary USA
Gateway Regal Holdings LLC
100%
Indirect subsidiary USA
Grand Plaza Hotel Corporation
66%
Indirect subsidiary
Philippines
Harbour Land Corporation
41%
Associated
undertakings
Philippines
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
190 Elgin Avenue, George
Town,
KY1-9005 Grand Cayman,
Cayman Islands
1401 Eye St., NW, Suite
600,
Washington D.C. 20005
Investment holding
Investment Holding
Captive insurance
company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Arizona
condominium
management
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner and
operator
Hotel owner and
operator
and investment
holding
company
Land owner
10 Floor, Heritage Hotel
Manila,
EDSA corner Roxas
Boulevard,
Pasay City, Philippines 1300
10 Floor, Heritage Hotel
Manila,
EDSA corner Roxas
Boulevard,
Pasay City, Philippines 1300
Harbour View Hotel Pte. Ltd.
100%
Harrow Entertainment Pte Ltd
100%
Indirect subsidiary Republic of
Singapore
Indirect subsidiary Republic of
Singapore
Hong Leong Ginza TMK
70%
Indirect subsidiary
Japan
Hong Leong Hotel
Development Limited
84%
Indirect subsidiary
Taiwan
Hong Leong Hotels Pte Ltd.
100%
Indirect subsidiary Cayman Islands
Hong Leong International Hotel
(Singapore) Pte. Ltd.
97%
Indirect subsidiary Republic of
Singapore
Hospitality Group Limited
76%
Indirect subsidiary New Zealand
Hospitality Holdings Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
Hospitality Leases Limited
76%
Indirect subsidiary New Zealand
Hospitality Services Limited
76%
Indirect subsidiary New Zealand
Hospitality Ventures Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
4-1 Nihonbashi 1-chome,
Chuo-ku,
Tokyo, Japan
2 Song Shou Road, Xinyi
District,
Taipei 11051, Taiwan
PO Box 309 Ugland House,
Grand Cayman, KY1-1104
Cayman Islands
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Hotel operator
Investment holding
Property owner
Hotel owner and
operator
Investment holding
company
Investment holding
Holding company
and property owner
Investment holding
company
Lessee company
Hotel operation/
management
Investment holding
98
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
Hotel Liverpool Limited
100%
Indirect subsidiary
United Kingdom
Hotel Liverpool Management Limited 100%
Indirect subsidiary
United Kingdom
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8
5SY
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8
5SY
Property letting
Operating company
Hotelcorp New Zealand Pty.
Ltd.
76%
Indirect subsidiary
Australia
KIN Holdings Limited
76%
Indirect subsidiary New Zealand
King’s Tanglin Shopping Pte.
Ltd.
100%
Indirect subsidiary Republic of
Singapore
Kingsgate Holdings Pty. Ltd.
76%
Indirect subsidiary
Australia
Kingsgate Hotel Pty. Ltd.
76%
Indirect subsidiary
Australia
Kingsgate Hotels and Resorts
Limited
76%
Indirect subsidiary New Zealand
Kingsgate Hotels Limited
76%
Indirect subsidiary New Zealand
Kingsgate International
Corporation Limited
76%
Indirect subsidiary New Zealand
Kingsgate Investments Pty. Ltd.
76%
Indirect subsidiary
Australia
Lakeside Operating Partnership
L.P.
100%
Indirect subsidiary USA
London Britannia Hotel Limited
100%
Indirect subsidiary United Kingdom
London Tara Hotel Limited
100%
Indirect subsidiary United Kingdom
M&C Asia Finance (UK) Limited
100%
Direct subsidiary
United Kingdom
M&C Asia Holdings (UK)
Limited
100%
Direct subsidiary
United Kingdom
M & C (CB) Limited
100%
Indirect subsidiary United Kingdom
M & C (CD) Limited
100%
Indirect subsidiary United Kingdom
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Holding company
Holding company
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Property owner
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Holding company
Dormant
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Franchise holder
(Kingsgate)
Dormant
Investment holding
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Investment
company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel owner and
operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Finance company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment
company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
99
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
M & C Management Services
(USA) Inc.
100%
Indirect subsidiary USA
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
M & C NZ Limited
100%
Indirect subsidiary United Kingdom
M & C Reservations Services
Limited
100%
Indirect subsidiary United Kingdom
M&C Business Trust
Management Limited
100%
Indirect subsidiary Republic of
Singapore
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
M&C Colorado Hotel
Corporation
100%
Indirect subsidiary USA
M&C Crescent Corporation
100%
Indirect subsidiary USA
M&C Crescent Interests, LLC
100%
Indirect subsidiary USA
M&C Finance (1) Limited
100%
Indirect subsidiary United Kingdom
M&C Holdings (Thailand) Ltd.
100%
Indirect subsidiary
Thailand
M&C Holdings Delaware
Partnership
100%
Indirect subsidiary USA
M&C Holdings, LLC
100%
Indirect subsidiary USA
M&C Hotel Enterprises (Asia)
Limited
100%
Indirect subsidiary Hong Kong
M&C Hotel Interests, Inc.
100%
Indirect subsidiary USA
M&C Hotel Investments Pte.
Ltd.
100%
Indirect subsidiary Republic of
Singapore
M&C Hotels France
Management SARL
M&C Hotels France SAS
100%
Indirect subsidiary
France
100%
Indirect subsidiary
France
M&C Hotels Holdings Japan
Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
M&C Hotels Holdings Limited
100%
Direct subsidiary
United Kingdom
M&C Hotels Holdings USA
Limited
100%
Direct subsidiary
Cayman Islands
M&C Hotels Japan Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Management
services
company
Holding company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Provider of
reservation
services to hotel
owners
and operators
Provision of
property fund
management
services
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Property owner
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Finance company
75 White Group Tower II,
11th Floor, Soi Rubia,
Sukhumvit 42 Road, Kwaeng
Phrakanong Khet
Klongtoey, Bangkok 10110
Thailand
Investment holding
and
hotel management
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Property investment
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel management
services company
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Investment holding
12 Boulevard Haussmann,
75009 Paris, France
12 Boulevard Haussmann,
75009 Paris, France
Management
company
Hotel owner
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
PO Box 309 Ugland House,
Grand Cayman,
KY1-1104 Cayman Islands
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Investment holding
Investment holding
100
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
M&C Hotels Partnership France
SNC
M&C Hospitality Holdings (Asia)
Limited
M&C Hospitality International
Limited
M&C Management Holdings
Limited
100%
Indirect subsidiary
France
100%
Indirect subsidiary Hong Kong
100%
Indirect subsidiary Hong Kong
100%
Direct subsidiary
United Kingdom
12 Boulevard Haussmann,
75009 Paris, France
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
Investment holding
Investment holding
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
M&C REIT Management
Limited
100%
Indirect subsidiary Republic of
Singapore
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
M&C New York (Times
Square), LLC
M&C New York Finance (UK)
Limited
M&C New York (Times Square)
EAT II LLC
M&C Singapore Finance (UK)
Limited
M&C Singapore Holdings (UK)
Limited
100%
Indirect subsidiary USA
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary USA
100%
Direct subsidiary
United Kingdom
100%
Direct subsidiary
United Kingdom
M&C Sponsorship Limited
100%
Indirect subsidiary United Kingdom
McCormick Ranch Operating
Partnership L.P.
100%
Indirect subsidiary USA
MHM, Inc.
100%
Indirect subsidiary USA
Millennium Bostonian, Inc.
100%
Indirect subsidiary USA
Millennium & Copthorne
(Austrian Holdings) Limited
Millennium & Copthorne
(Jersey Holdings) Limited
Millennium & Copthorne Hotel
Holdings
(Hong Kong) Limited
Millennium & Copthorne Hotels
(Hong Kong) Limited
Millennium & Copthorne NZ
Limited
Millennium & Copthorne Hotels
Management (Shanghai)
Limited
100%
Direct subsidiary
United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary Hong Kong
100%
Indirect subsidiary Hong Kong
76%
Indirect subsidiary New Zealand
100%
Indirect subsidiary
People’s Republic
of China
REIT investment
management
services
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Finance company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Finance company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Other service
activities
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel management
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Holding company
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
2803 Great Eagle Centre,
23 Harbour Road, Wanchai,
Hong Kong
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
#1205, No. 511 Wei Hoi
Road, Shanghai 200041,
P.R. China
Investment and
development of
hotels and hotel
management
Provision of hotel
management and
consultancy
services
Name-holding
Hotel management
101
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
Millennium & Copthorne Hotels
New Zealand Limited
Millennium & Copthorne Hotels
Pty. Ltd.
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
76%
Indirect subsidiary New Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
76%
Indirect subsidiary
Australia
Hotel investment
holding
company
Name holding
Suite 7B, Zenith Residences,
82-94 Darlinghurst Road,
Potts Point,
Sydney 2011, Australia
Millennium & Copthorne
International Limited
100%
Indirect subsidiary Republic of
Singapore
Millennium & Copthorne
Pension Trustee Limited
100%
Direct subsidiary
United Kingdom
Millennium & Copthorne Share
Trustees Limited
100%
Direct subsidiary
United Kingdom
Millennium CDG Paris SAS
100%
Indirect subsidiary
France
Millennium Hotel Holdings
EMEA Limited
Millennium Hotels & Resorts
Services Limited
Millennium Hotels Europe
Holdings Limited
Millennium Hotels Italy Holdings
S.r.l.
Millennium Hotels Limited
Millennium Hotels Palace
Management S.r.l.
Millennium Hotels Property
S.r.l.
Millennium Hotels (West
London) Limited
Millennium Hotels (West
London)
Management Limited
Millennium Hotels London
Limited
100%
Direct subsidiary
United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Direct subsidiary
United Kingdom
100%
Indirect subsidiary
Italy
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary
Italy
100%
Indirect subsidiary
Italy
100%
Indirect subsidiary United Kingdom
100%
Indirect subsidiary United Kingdom
100%
Direct subsidiary
United Kingdom
Millennium Opera Paris SAS
100%
Indirect subsidiary
France
New Unity Holdings Ltd
New York Sign LLC
50%
50%
Associated
undertakings
Associated
undertakings
BVI
USA
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Hotels and resorts
management
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Pension trust acting
on behalf of
company
trustees
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Share trustee
company
2 Allée du Verger, 95700
Roissy, France
Hotel operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Management
contract
holding company
Investment holding
Via Vittorio Veneto, n. 70,
Roma 00187, Italy
Holding company
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
Via Vittorio Veneto, n. 70,
Roma 00187, Italy
Via Vittorio Veneto, n. 70,
Roma 00187, Italy
Hotel operator
Property owner
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Property letting
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Hotel operator
Corporate Headquarters,
Scarsdale Place,
Kensington, London W8 5SY
Investment holding
12 Boulevard Haussmann,
75009 Paris, France
Hotel operator
PO Box 146 Road Town,
Tortola, British Virgin Islands
Investment holding
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
To lease, manage,
and otherwise deal
with certain
advertising signage
space at the Novotel
hotel
Investment holding
Newbury Investments Pte Ltd
100%
Indirect subsidiary Republic of
Singapore
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Park Plaza Hotel Corporation
100%
Indirect subsidiary USA
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
102
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
Prestons Road Limited
17%
Indirect Associate
New Zealand
PT Millennium Hotels & Resorts
100%
Indirect subsidiary
Indonesia
PT. Millennium Sirih Jakarta
Hotel
100%
Indirect subsidiary
Indonesia
QINZ (Anzac Avenue) Limited
76%
Indirect subsidiary New Zealand
QINZ Holdings (New Zealand)
Limited
76%
Indirect subsidiary New Zealand
Quantum Limited
76%
Indirect subsidiary New Zealand
Regal Grand Holdings
Corporation I
100%
Indirect subsidiary USA
Regal Harvest House LP
100%
Indirect subsidiary USA
Regal Hotel Management Inc.
100%
Indirect subsidiary USA
Republic Hotels & Resorts
Limited
100%
Indirect subsidiary Republic of
Singapore
Republic Iconic Hotel Pte. Ltd.
100%
Indirect subsidiary Republic of
Singapore
RHH Operating LLC
100%
Indirect subsidiary USA
RHI Boston Holdings
Corporation I
RHI Boston Holdings
Corporation II
100%
Indirect subsidiary USA
100%
Indirect subsidiary USA
RHM Aurora LLC
100%
Indirect subsidiary USA
RHM Holdings Corporation I
100%
Indirect subsidiary USA
RHM Management LLC
100%
Indirect subsidiary USA
RHM Ranch LLC
100%
Indirect subsidiary USA
RHM Wynfield LLC
100%
Indirect subsidiary USA
RHM-88, LLC
100%
Indirect subsidiary USA
Richfield Holdings Corporation I
100%
Indirect subsidiary USA
167 Main North Road,
Christchurch 8140, New
Zealand
Service provider
Jalan Fachrudin 3, Jakarta
10250,
Indonesia
Management
services
Jalan Fachrudin 3, Jakarta
10250,
Indonesia
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Level 13, 280 Queen Street,
Auckland 1010, New
Zealand
Hotel owner
Hotel owner
Holding company
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
Hotel operator and
investment holding
company
Hotel operator
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel owner
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Holding company
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Hotel ownership
Hotel owner
Hotel ownership
Hotel owner and
operator
Holding company
103
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FULL NAME
SHAREHOLDING
PERCENTAGE
TYPE
COUNTRY OF
INCORPORATION
REGISTERED OFFICE
ADDRESS
PRINCIPAL
ACTIVITIES
Richfield Holdings Corporation
II
100%
Indirect subsidiary USA
Richfield Holdings, Inc
100%
Indirect subsidiary USA
Rogo Investments Pte. Ltd.
100%
Rogo Realty Corporation
24%
Indirect subsidiary Republic of
Singapore
Associated
undertakings
Philippines
S.S. Restaurant Corporation
100%
Indirect subsidiary USA
St. Louis Operating, Inc.
100%
Indirect subsidiary USA
Sunnyvale Partners, Ltd.
100%
Indirect subsidiary USA
Tara Hotels Deutschland GmbH 100%
Indirect subsidiary Germany
The Philippine Fund Limited
60%
Indirect subsidiary
Bermuda
TOSCAP Limited
100%
Indirect subsidiary Republic of
Singapore
Trimark Hotel Corporation
100%
Indirect subsidiary USA
WHB Biltmore LLC
100%
Indirect subsidiary USA
WHB Corporation
100%
Indirect subsidiary USA
Wynfield GP Corporation
100%
Indirect subsidiary USA
Wynfield One, Ltd.
100%
Indirect subsidiary USA
Zatrio Pte Ltd
100%
Indirect subsidiary Republic of
Singapore
Zillion Holdings Limited
100%
Indirect subsidiary
Barbados
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
10 Floor, Heritage Hotel
Manila,
EDSA corner Roxas
Boulevard,
Pasay City, Philippines 1300
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
Registered at the Trade
register at
the local court of Hannover
with the
legal form of Private limited
company (number HRB
209133).
C/o Coson Corporate
Services
Limited, Cumberland House
9th Floor, 1 Victoria Street
Hamilton HM 11, Bermuda
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
7900 East Union Avenue,
Suite 500, Denver, Colorado,
80237
9 Raffles Place
#12-01 Republic Plaza
Singapore 048619
The Phoenix Centre, George
Street,
Belleville, St. Michael,
Barbados
Holding company
Holding company
Investment holding
Real estate owner
Liquor license
holder
Dormant
Hotel ownership
Hotel investment
holding
company
Investment holding
Investment holding
Hotel owner and
operator
Hotel owner and
operator
Holding company
Hotel ownership
Holding company
Investment holding
Investment holding
1 CDL Hospitality Trusts is a stapled group comprising CDL Hospitality Real Estate Investment Trust (“H-REIT”), a real estate investment trust, and CDL
Hospitality Business Trust (“HBT”), a business trust. H-REIT has an investment strategy of investing, directly or indirectly, in a diversified portfolio of income-
producing real estate which is primarily used for hospitality and/or hospitality-related purposes, whether wholly or partially, and real-estate related assets in
relation to the foregoing. HBT is a business trust which was activated in December 2013. In addition to its function as a master lessee, HBT may also undertake
certain hospitality and hospitality-related development projects, acquisitions and investments which may not be suitable for H-REIT. The registered office
address of M&C REIT Management Limited, Manager of H-REIT and M&C Business Trust Management Limited, Trustee-Manager of HBT is 9 Raffles Place
#12-01 Republic Plaza Singapore 048619. As disclosed in Note 3 to the consolidated financial statements, the Group has concluded that under IFRS10, it has
de facto control over CDL Hospitality Trusts.
2 The Group has assessed the classification of its investments in First Sponsor Group Limited and New Unity Holdings Limited in accordance with IFRS10
and concluded that it does not have control.
104
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
EXEMPTION FROM STATUTORY AUDIT
Certain subsidiaries of the Group can take an exemption from having an audit completed. Strict criteria must be
met for this exemption to apply, and it must be agreed to by the Directors of each subsidiary entity.
Listed below are subsidiaries controlled and consolidated by the Group, where the Directors have elected to
take the exemption from having an audit of their financial statements for the year ended 31 December 2019.
This exemption is taken in accordance with Companies Act s479A.
Archyield Limited (1747079)
CDL Hotels (Chelsea) Limited (2845022)
CDL Hotels (U.K.) Limited (2729520)
Copthorne Hotel (Birmingham) Limited (1816493)
Copthorne Hotel (Cardiff) Limited (2411296)
Copthorne Hotel (Effingham Park) Limited
(1423861)
Copthorne Hotel (Gatwick) Limited (994968)
Copthorne Hotel (Manchester) Limited (1855800)
Copthorne Hotel (Merry Hill) Construction Limited
(2649367)
Copthorne Hotel (Merry Hill) Limited (2590620)
Copthorne Hotel (Plymouth) Limited (3253120)
Copthorne Hotel (Slough) Limited (2300992)
Copthorne (Nominees) Limited (2574042)
Diplomat Hotel Holding Limited (1927463)
Hotel Liverpool Limited (9636541)
Hotel Liverpool Management Limited (9638688)
London Tara Hotel Limited (1005559)
M&C Asia Finance (UK) Limited (8391037)
M&C Asia Holdings (UK) Limited (8382946)
M&C (CB) Limited (3846711)
M&C (CD) Limited (3846704)
M&C Finance (1) Limited (6783896)
M&C Hotels Holdings Limited (4407581)
M&C Management Holdings Limited (5832248)
M&C New York Finance (UK) Limited (9060415)
M&C NZ Limited (5159722)
M&C Singapore Finance (UK) Limited (8391052)
M&C Singapore Holdings (UK) Limited (8382985)
Millennium & Copthorne (Austrian Holdings) Limited
(3757378)
Millennium & Copthorne (Jersey Holdings) Limited
(5846574)
Millennium & Copthorne Pension Trustee Limited (6662791)
Millennium & Copthorne Share Trustees Limited (3320990)
Millennium Hotel Holdings EMEA Limited (4592877)
Millennium Hotels Limited (3141048)
Millennium Hotels Europe Holdings Limited (8844747)
Millennium Hotels London Limited (3691885)
Millennium Hotels (West London) Limited (8599282)
Millennium Hotels (West London) Management Limited
(8891908)
Millennium Hotels & Resorts Services Limited (4601112)
Each company’s registered number is shown in brackets after its name.
105
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
35. NON-CONTROLLING INTERESTS (“NCI”)
The following subsidiaries have material NCI.
NAME
PRINCIPAL PLACE OF
BUSINESS/ COUNTRY OF
INCORPORATION
Millennium & Copthorne Hotels
New Zealand Limited (“MCHNZ”) New Zealand
CDL Hospitality Trusts (“CDLHT”) Singapore
PRINCIPAL ACTIVITY
2019
2018
Hotel investment holding
company
Real estate investment
trust
24%
24%
62%
63%
OWNERSHIP INTERESTS
HELD BY NCI
The following is summarised financial information for MCHNZ and CDLHT, prepared in accordance with local
accounting standards. The information is before inter-company eliminations with other companies in the Group.
NAME
Revenue
Profit after tax
Profit attributable to NCI
Other comprehensive income
Total comprehensive income
Total comprehensive income attributable to NCI
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Net assets attributable to NCI
Cash inflow from operating activities
Cash outflow from investing activities
Cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Dividends paid to NCI during the year1
1 Included in cash flows from financing activities.
MCHNZ SUBGROUP
CDLHT SUBGROUP
2019
£M
119
32
7
19
51
6
123
393
(18)
(85)
413
136
33
(11)
(8)
14
(2)
2018
£M
114
32
6
6
38
6
107
369
(18)
(74)
384
44
15
(17)
(8)
(10)
2
2019
£M
113
65
41
2
67
42
305
1,435
(75)
(607)
2018
£M
112
61
39
–
61
39
100
1,602
(174)
(462)
1,058
1,066
658
69
(26)
(44)
(1)
40
672
68
(2)
(40)
26
41
36. ASSETS HELD FOR SALE
Effective 1 July 2019, a subsidiary of the Company entered into a purchase and sale agreement to sell Millennium
Cincinnati. Accordingly, the property with a total carrying value of US$15m (£12m) was classified as asset held
for sale in the statement of financial position as at 31 December 2019. The sale was completed on 14 February
2020 with a gross sales price of US$36m (£28m) and resulting profit on sale of US$18m (£14m) after taking
expected selling costs into account of US$3m (£2m). The asset is held under the segment “Regional US” as
disclosed in Note 5.
On 21 November 2019, the H-REIT Group announced its proposed disposal of Novotel Singapore Clarke Quay.
Accordingly, the property with a total carrying value of S$160m (£91m) was classified as asset held for sale in the
statement of financial position as at 31 December 2019. The disposal is expected to be completed in 2020. The
asset is held under the segment “Singapore” as disclosed in Note 5.
106
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
37. ADOPTION OF IFRS 16 ‘LEASES’
The Group adopted IFRS 16 with an initial application date of 1 January 2019. The Group applied the modified
retrospective approach and comparative information has not been presented.
The Group as a lessee
The Group’s leases consist primarily of land & buildings and plant & machinery. Information about leases for
which the Group is a lessee is presented below.
Amounts recognised in the income statement
Depreciation
– Land and buildings
– Plant and machinery
– Fixtures, fittings and equipment and vehicles
Interest on lease liabilities
Total
NOTES
6, 12
9
2019
£M
7
1
–
5
13
NOTES
LAND AND
BUILDINGS
£M
PLANT AND
MACHINERY
£M
FIXTURES,
FITTINGS AND
EQUIPMENTAND
VEHICLES
£M
INVESTMENT
PROPERTIES
£M
TOTAL
£M
Right-of-use assets
Initial recognition on 1 January 2019
Additions
Transfer to asset held for sale
Depreciation
Foreign exchange adjustments
203
8
(2)
(7)
(3)
Carrying amount at 31 December 2019
12, 14
199
3
–
–
(1)
–
2
1
–
–
–
–
1
7
–
–
–
–
7
Lease liabilities
Current
Non-current
Total
The total cash outflow for leases during the current year was £9m.
214
8
(2)
(8)
(3)
209
2019
£M
5
108
113
107
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The lease liabilities were determined by discounting the relevant lease payments at the Group’s incremental
borrowing rate of between 0.9% and 14.6% in Asia, 1.9% to 3.5% in Europe and 3.0% to 5.2% in the US.
The reconciliation between operating lease commitments previously reported in the financial statements for the
year ended 31 December 2019 discounted at the Group’s incremental borrowing rate and the lease liabilities
recognised in the balance sheet on initial application of IFRS 16 is shown below:
Operating lease commitment at 31 December 2018 as disclosed in the Group's financial statement
Discounted at the Group’s incremental borrowing rate at 1 January 2019
Recognition exemption for:
– short-term leases
–
leases of low-value assets
Extension and termination options reasonably certain to be exercised
Variable lease payments based on an index or a rate
Contracts reassessed as service agreements
Contracts reassessed as lease agreements
Lease liabilities recognised at 1 January 2019
£M
258
(80)
(2)
(1)
10
15
(105)
17
112
108
MILLENNIUM & COPTHORNE HOTELS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
SHARE
CAPITAL
£M
SHARE
PREMIUM
£M
TREASURY
SHARE
RESERVE
£M
RETAINED
EARNINGS
£M
TOTAL
EQUITY
£M
Balance at 1 January 2018
97
843
(4)
463
1,399
Profit
Other comprehensive income
Total comprehensive income
Dividends
–
–
–
–
–
–
–
–
–
–
–
–
17
5
22
17
5
22
(21)
(21)
Balance at 31 December 2018
97
843
(4)
464
1,400
Balance at 1 January 2019
97
843
(4)
464
1,400
Profit
Other comprehensive income
Total comprehensive income
Dividends
–
–
–
–
–
–
–
–
–
–
–
–
11
–
11
(7)
11
–
11
(7)
Balance at 31 December 2019
97
843
(4)
468
1,404
The notes on pages 111 to 113 are an integral part of these Company’s financial statements.
110
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE COMPANY FINANCIAL STATEMENTS
AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH FRS
A
101
The parent company financial statements of Millennium and Copthorne Hotels Limited (“the Company”) for the
year ended 31 December 2019 were authorised for issue by the board of Directors and signed on its behalf on
22 June 2020. The Company is incorporated and domiciled in England and Wales.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101). The financial statements are prepared under the historical cost convention.
As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not
presented as part of the financial statements.
The Company’s results are included in the consolidated financial statements of Millennium and Copthorne
Hotels Limited which are available from the Group’s website www.millenniumhotels.com.
The accounting policies which follow set out those policies which apply in preparing the financial statements for
the year ended 31 December 2019. The financial statements are prepared in Sterling and are rounded to the
nearest million except when otherwise indicated.
ACCOUNTING POLICIES
B
The parent company financial statements of Millennium and Copthorne Hotels Limited have been prepared in
accordance with the Companies Act 2006 and Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”), which was first applied in 2015 after notifying shareholders of the proposed change.
FRS 101 enables the financial statements of the parent company to be prepared in accordance with EU-
adopted IFRS but with certain disclosure exemptions. The main areas of reduced disclosure are in respect of
equity settled share-based payments, financial instruments, the cash flow statement, and related party
transactions with Group companies.
The Company early adopted FRS 101 amendments before the effective date of 1 January 2016 regarding the
presentation of financial statements in compliance with the IAS 1 format.
The accounting policies adopted for the parent company are otherwise consistent with those used for the Group
which are set out on pages 39 to 48.
DIVIDENDS
C
Details of dividends paid and proposed in the current and prior year are given in Note 28 to the consolidated
financial statements.
D
The profit dealt with in the financial statements of the Company is £11m (2018: £17m).
PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
E
PROPERTY, PLANT AND EQUIPMENT
Cost at 1 January 2019
Depreciation
Cost at 31 December 2019
CAPITAL
WORK
IN
PROGRESS
£M
SOFTWARE
£M
2
(1)
1
–
–
–
TOTAL
£M
2
(1)
1
111
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
F
INVESTMENTS AND OTHER FINANCIAL ASSETS
SHARES IN
SUBSIDIARY
UNDERTAKINGS
£M
LOANS TO
SUBSIDIARY
UNDERTAKINGS
£M
GROUP SETTLED
ARRANGEMENTS
£M
Cost and net book value at 1 January 2019
Additions
Foreign exchange adjustments
Cost and net book value at 31 December 2019
1,902
–
(8)
1,894
79
72
(3)
148
7
–
–
7
TOTAL
£M
1,988
72
(11)
2,049
There were no provisions made against investments in subsidiary undertakings. Reductions and additions relate
to internal restructuring transactions.
The Company’s subsidiary undertakings at 31 December 2019 are listed in Note 34 to the consolidated financial
statements.
G
OTHER CURRENT LIABILITIES
Bank loans and overdrafts
Bonds payable
Amounts owed to subsidiary undertakings
Other payables
Accruals and deferred income
H
OTHER NON-CURRENT LIABILITIES
Bank loans
Bonds payable
Amounts owed to subsidiary undertakings
Net employee defined benefit liabilities
Other non-current liabilities are repayable as follows:-
Between one and two years
Between two and five years
2019
£M
132
–
38
9
1
2018
£M
47
79
28
4
1
180
159
2019
£M
177
77
335
10
599
2019
£M
129
470
599
2018
£M
83
79
335
8
505
2018
£M
66
439
505
112
MILLENNIUM & COPTHORNE HOTELS LIMITED
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
I
Details of the Company’s share capital are given in Note 29 to the consolidated financial statements.
SHARE CAPITAL
RELATED PARTIES
J
For the year ended 31 December 2019, fees paid/payable by the Company to Hong Leong Management
Services, a subsidiary of Hong Leong Investment Holdings Pte. Ltd. amounted to £1m (2018: £1m). At 31
December 2019, £nil (2018: £nil) of fees payable was outstanding.
113
MILLENNIUM & COPTHORNE HOTELS LIMITED
GROUP FINANCIAL RECORD
For the year ended 31 December 2019
Income statement
Revenue
Operating profit
Net finance expense
Income tax (expense)/credit
Profit for the year
Cash flow
2019
£M
1,025
98
(32)
(8)
94
2018
£M
997
105
(28)
(13)
93
2017
£M
1,008
145
(20)
12
159
2016
£M
926
107
(25)
(10)
98
2015
£M
847
112
(20)
(12)
97
Cash generated from operations
222
177
230
220
220
Statement of financial position
Property, plant, equipment and lease premium
prepayment
Investment properties
Investment and loans in joint ventures and associates
Other financial assets
Non-current assets
Current assets excluding cash
Net debt
Deferred tax liabilities
Provisions and other liabilities
3,194
3,256
3,232
3,345
2,858
680
414
40
668
358
43
577
324
–
534
320
–
506
255
–
4,328
4,325
4,133
4,199
3,619
316
(759)
(147)
(390)
224
(727)
(172)
(287)
228
(650)
(188)
(274)
195
(707)
(220)
(297)
163
(605)
(210)
(255)
Net assets
3,348
3,363
3,249
3,170
2,712
Share capital and share premium
940
940
940
940
940
Reserves
1,842
1,830
1,736
1,728
1,336
Total equity attributable to equity holders
2,782
2,770
2,676
2,668
2,276
Non-controlling interests
566
593
573
502
436
Total equity
3,348
3,363
3,249
3,170
2,712
Key operating statistics
Gearing
Earnings per share
Dividends per share1
Hotel gross operating profit margin
Occupancy
Average room rate (£)
RevPAR (£)
1 Dividends per share includes ordinary dividends and special dividends.
27%
–
–
28.5%
73.3%
26%
13.1p
4.23p
30.5%
73.3%
24%
38.1p
6.50p
32.2%
73.5%
26%
24.0p
7.74p
31.6%
71.8%
27%
19.9p
6.42p
34.1%
71.8%
£114.52
£111.31
£112.68
£106.78
£100.19
£83.94
£81.57
£82.78
£76.71
£71.98
114
MILLENNIUM & COPTHORNE HOTELS LIMITED
KEY OPERATING STATISTICS
For the year ended 31 December 2019
OWNED OR LEASED HOTELS*
Occupancy (%)
New York
Regional US
Total US
London
Rest of Europe
Total Europe
Singapore
Rest of Asia
Total Asia
Australasia
Total Group
Average Room Rate (£)
New York
Regional US
Total US
London
Rest of Europe
Total Europe
Singapore
Rest of Asia
Total Asia
Australasia
Total Group
YEAR ENDED
2019
REPORTED
CURRENCY
YEAR ENDED
2018
CONSTANT
CURRENCY
YEAR ENDED
2018
REPORTED
CURRENCY
86.6
58.0
67.5
79.1
69.6
74.2
86.8
68.5
75.6
82.4
73.3
86.3
57.6
67.1
80.1
71.2
75.6
85.9
68.1
75.0
82.5
73.3
197.45
106.79
200.43
108.18
191.78
103.51
145.26
147.32
140.96
137.87
75.44
127.22
78.68
127.22
78.94
107.76
104.10
104.22
101.47
97.81
99.43
88.74
100.37
96.79
98.38
88.39
97.26
95.74
96.42
88.61
114.52
113.88
111.31
115
MILLENNIUM & COPTHORNE HOTELS LIMITED
KEY OPERATING STATISTICS (continued)
OWNED OR LEASED HOTELS*
RevPAR (£)
New York
Regional US
Total US
London
Rest of Europe
Total Europe
Singapore
Rest of Asia
Total Asia
Australasia
Total Group
Gross Operating Profit Margin (%)
New York
Regional US
Total US
London
Rest of Europe
Total Europe
Singapore
Rest of Asia
Total Asia
Australasia
Total Group
YEAR ENDED
2019
REPORTED
CURRENCY
YEAR ENDED
2018
CONSTANT
CURRENCY
YEAR ENDED
2018
REPORTED
CURRENCY
171.09
61.99
172.96
62.30
165.49
59.61
98.05
98.78
94.52
108.99
52.49
101.89
56.00
101.89
56.18
79.94
88.04
67.04
75.17
73.12
83.94
78.67
86.23
65.88
73.76
72.96
83.45
10.9
18.5
14.5
39.0
16.6
30.6
39.2
33.6
36.0
47.7
28.5
78.76
83.56
65.17
72.29
73.13
81.57
15.6
19.3
17.4
41.0
21.8
33.2
39.3
34.5
36.5
49.0
30.5
For comparability, the 31 December 2018 Average Room Rate and RevPAR have been translated at average
exchange rates for the period ended 31 December 2019.
*excluding managed, franchised and investment hotels.
116
EFFECTIVE
GROUP
INTEREST
(%)
70
50
26
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES
For the year ended 31 December 2019
Asia
HOTELS
TENURE
Grand Millennium Beijing
Fortune Plaza, 7 Dongsanhuan Middle Road
Chaoyang District, Beijing 100020 PRC
Leasehold to year 2046 (hotel),
leasehold to year 2056
(underground car park)
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
9,268
516
New World Millennium Hong Kong Hotel
(Owned by New Unity Holdings Limited)
72 Mody Road, Tsimshatsui East
Kowloon, Hong Kong
JW Marriott Hotel Hong Kong
(Owned by New Unity Holdings Limited)
Pacific Place, 88 Queensway,
Hong Kong
Millennium Hotel Sirih Jakarta
Jalan Fachrudin 3,
Jakarta 10250, Indonesia
75-year term from 28.11.1984 and may be
renewable for a further 75 years
2,850
464
75-year term from 18.04.1985 and may be
renewable for a further 75 years
10,690
(Part)
608
The title is held under a Hak Guna Bangunan
(i.e. Right to Build) and a 40-year lease
wef 14.04.1984 and 22.01.1986 for
approximate site area of 7,137 sq. metres and
212 sq. metres, respectively
7,349
401
100
Hotel MyStays Asakusabashi
1-5-5, Asakusabashi, Taito-ku,
Tokyo 111-0053, Japan
Hotel MyStays Kamata
5-46-5, Kamata, Ota-ku,
Tokyo 144-0052, Japan
Freehold
Freehold
Copthorne Orchid Hotel Penang
Jalan Tanjung Bungah, 11200 Penang, Malaysia
Freehold
Grand Millennium Kuala Lumpur
160 Jalan Bukit Bintang,
55100 Kuala Lumpur, Malaysia
Freehold
564
139
497
116
10,329
7,670
307
459
Angsana Velavaru
South Nilandhe Atoll,
Republic of Maldives
Raffles Maldives Meradhoo (previously
Dhevanafushi Maldives Luxury Resort)
Meradhoo Island,
Gaafu Alifu Atoll,
Republic of Maldives
50-year title commencing from 26. 08.1997
67,717
113
50-year lease commencing from 15.06.2006
53,576
37
The Heritage Hotel Manila
Roxas Boulevard at corner of EDSA Pasay City,
Metropolitan Manila, Philippines
Fee simple
9,888
450
Copthorne King’s Hotel Singapore
403 Havelock Road, Singapore
99-year lease commencing from 01.02.1968
5,637
Grand Copthorne Waterfront Hotel Singapore
392 Havelock Road, Singapore
75-year lease commencing from 19.07.2006
10,860
M Hotel Singapore
81 Anson Road, Singapore
Freehold
Novotel Singapore Clarke Quay
177A River Valley Road, Singapore
97 years and 30 days leasehold interest
commencing from 02.04.1980
Orchard Hotel Singapore
442 Orchard Road, Singapore
Studio M Hotel
3 Nanson Road, Singapore
Freehold
99-year lease commencing from
26.02.2007
2,134
12,925
8,588*
2,932
310
574
415
403
656
360
38
38
100
100
38
38
66
38
38
38
38
38
38
117
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
HOTELS
Millennium Hilton Seoul
50 Sowol-ro, Jung-gu,
Seoul, South Korea 100-802
TENURE
Freehold
Land Site in Seoul
Located at Chung-gu, Namdaeumro 5 Ga 652-1
Freehold
Grand Hyatt Taipei
2, SongShou Road
Taipei, Taiwan, 11051
* Includes Claymore Connect
Europe
HOTELS
Copthorne Hotel Aberdeen
122 Huntly Street,
Aberdeen AB10 1SU, Scotland
Copthorne Hotel Birmingham
Paradise Circus,
Birmingham B3 3HJ, England
Copthorne Hotel Cardiff-Caerdydd
Copthorne Way, Culverhouse Cross,
Cardiff CF5 6DH, Wales
Copthorne Hotel Effingham Gatwick
West Park Road, Copthorne,
West Sussex RH10 3EU, England
Copthorne Hotel London Gatwick
Copthorne Way, Copthorne, West Sussex
RH10 3PG, England
Copthorne Hotel Manchester
Clippers Quay, Salford Quays,
Manchester M50 3SN, England
50 years starting from 7 March 1990
The lease agreement is extendable for
another 30 years.
TENURE
Freehold
Freehold
Freehold
Freehold
Freehold
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
18,787
680
100
1,564
14,193
–
850
100
84
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
1,302
87
83
2,188
211
100
26,305
135
100
161,878
122
100
404,694
227
100
Leasehold to year 2135
9,800
166
100
Copthorne Hotel Merry Hill-Dudley
The Waterfront, Level Street, Brierley Hill,
Dudley, West Midlands DY5 1UR, England
Copthorne Hotel Newcastle
The Close, Quayside, Newcastle upon Tyne
NE1 3RT, England
Freehold
Freehold
Copthorne Hotel Plymouth
Armada Way, Plymouth PL1 1AR, England
Leasehold to year 2110
Copthorne Hotel Slough-Windsor
Cippenham Lane, Slough, Berkshire
SL1 2YE, England
Copthorne Tara Hotel London Kensington
Scarsdale Place, Kensington, London
W8 5SY, England
Freehold
Freehold
13,734
138
100
9,200
156
96
1,853
6,880
135
219
100
100
7,535
833
100
Hard Days Night Hotel Liverpool
Central Buildings North John Street
Liverpool, L2 6RR, England
Leasehold to year 2129
5,275
110
100
Hilton Cambridge City Centre Hotel
Grand Arcade 20, Downing St,
Cambridge CB2 3DT, England
125-year lease commencing
from 25.12.1990 and extendable
for a further 50 years
The Lowry Hotel
50 Dearmans Place,
Salford, Manchester
M3 5LH, United Kingdom
150-year lease commencing
from 18.03.1997
3,600
198
2,200
165
38
38
118
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
HOTELS
The Bailey’s Hotel London
140 Gloucester Road,
London SW7 4QH, England
Millennium Gloucester Hotel London
Kensington
Harrington Gardens
London SW7 4LH, England
TENURE
Freehold
Freehold
Millennium Hotel Glasgow
George Square, Glasgow G2 1DS, Scotland
Leasehold to year 2109
Leasehold to year 2091
Millennium Hotel London Knightsbridge
17 Sloane Street, Knightsbridge,
London SW1X 9NU, England
The Biltmore, Mayfair – LXR Hotels & Resorts
44 Grosvenor Square, Mayfair,
London W1K 2HP, England
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
1,923
212
100
6,348
610
100
5,926
809
61
222
100
100
Leasehold to year 2096
4,260
308
100
Millennium Hotel Paris Opéra
12 Boulevard Haussmann,
75009 Paris, France
Millennium Hotel Paris Charles de Gaulle
Zone Hoteliere, Allée du Verger, 95700
Roissy-en-France, France
Pullman Hotel Munich
Theodor-Dombart-Strasse 4,
Munich 80805, Germany
Grand Hotel Palace Rome
Via Veneto, 70, Rome, 00187, Italy
Freehold
Freehold
Freehold
Freehold
The Chelsea Harbour Hotel
Chelsea Harbour, London, SW10 0XG, England
Leasehold to year 2112
Hotel Cerretani Florence, MGallery
bySofitel
Via de’ Cerretani, 68, 50123 Florence, Italy
Freehold
1,093
163
100
11,657
239
100
8,189
337
36
801
2,561
1,350
86
158
86
100
100
36
North America
HOTELS
The Bostonian Boston
26 North Street
At Faneuil Hall Marketplace, Boston
MA 02109, USA
The Lakefront Anchorage
4800 Spenard Road, Anchorage,
AK 99517, USA
TENURE
Freehold
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
2,769
204
100
Hotel: Freehold
Dock: Leasehold to 2040
14,159
248
100
Millennium Biltmore Los Angeles
506 South Grand Avenue, Los Angeles,
CA 90071, USA
Freehold
11,305
683
100
Millennium Buffalo
2040 Walden Avenue
Buffalo, NY 14225, USA
Leasehold to year 2022
(with one 10-year option)
31,726
301
100
119
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
HOTELS
Millennium Harvest House Boulder
1345 28th Street
Boulder, CO 80302, USA
Millennium Knickerbocker Hotel Chicago
163 East Walton Place, Chicago,
IL 60611, USA
Millennium Cincinnati (sold effective
14 February 2020)
150 West Fifth Street, Cincinnati,
OH 45202, USA
Millennium Durham
2800 Campus Walk Avenue, Durham,
NC 27705, USA
Millennium Minneapolis
1313 Nicollet Mall, Minneapolis,
MN 55403, USA
TENURE
Freehold
Freehold
Freehold
Freehold
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
64,019
269
100
2,007
306
100
6,839
872
100
42,814
324*
100
Leasehold to year 2030
4,537
321
100
Millennium Maxwell House Nashville
2025 Rosa L. Parks Boulevard, Nashville
TN 37228, USA
Leasehold to year 2030
(with two 10-year options)
17,140
287
100
Millennium Broadway New York Times
Square
145 West 44th Street, New York,
NY 10036, USA
Freehold
1,762
626
100
Millennium Premier New York Times Square
133 West 44th Street, New York,
NY 10036, USA
Freehold
Millennium Hilton New York ONE UN Plaza
1 UN Plaza, 44th Street at 1st Avenue,
New York, NY 10017, USA
East tower freehold/
West tower leasehold to
year 2079
Millennium Hotel St Louis (closed)
200 South 4th Street, St Louis,
MO 63102, USA
Freehold
The McCormick Scottsdale
7421 North Scottsdale Road,
Scottsdale, AZ 85208, USA
Leasehold to year 2033
(with two 10-year options)
Millennium Hilton New York Downtown
55 Church Street, New York, NY 10007, USA
Freehold
Novotel New York Times Square
226 W 52nd Street, New York, NY 10019, USA
Fee simple estate, a leasehold interest,
and a leased fee interest
Maingate Lakeside Resort
7769 W Irlo Bronson Memorial Highway,
Kissimmee, FL 34747, USA
Freehold
360
124
100
4,554
439
100
17,033
780
100
32,819
125
100
1,680
1,977
93,796
569
480
475
100
100
100
Novotel Penthouse
1651-65 Broadway,
New York, NY 10019, USA
Leasehold to year 2080
307
–
100
Comfort Inn Near Vail Beaver Creek
161 West Beaver Creek Boulevard, Avon,
CO 81620, USA
Pine Lake Trout Club
17021 Chillicothe Road, Chagrin Falls
OH 44023, USA
Freehold
Freehold
*Currently only 290 rooms are available for sale.
11,209
146
100
331,074
6
100
120
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
Australasia
HOTELS
Copthorne Hotel & Apartments
Queenstown Lakeview
88 Frankton Road,
Queenstown, New Zealand
TENURE
Freehold/Strata title
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
4,713
85
76
Copthorne Hotel & Resort Bay of Islands
Tau Henare Drive, Paihia,
New Zealand
Leasehold land to year
2021 (renewal option to May 2087)
62,834
180
Freehold
18,709
240
Perpetual leasehold land
2,495
110
Copthorne Hotel & Resort Queenstown
Lakefront
Corner Adelaide Street & Frankton Road,
Queenstown, New Zealand
Copthorne Hotel Auckland City
150 Anzac Avenue
Auckland, New Zealand
M Social Auckland
196-200 Quay Street
Auckland, New Zealand
Copthorne Hotel Palmerston North
110 Fitzherbert Avenue,
Palmerston North, New Zealand
Copthorne Hotel Rotorua
Fenton Street,
Rotorua, New Zealand
Freehold
Freehold
Freehold
Copthorne Hotel Wellington Oriental Bay
100 Oriental Parade,
Wellington, New Zealand
Freehold
Freehold
Freehold
Freehold/Perpetual
leasehold land
Freehold
Ibis Perth
334 Murray Street
Perth, Western Australia, Australia
Kingsgate Hotel Dunedin
10 Smith Street,
Dunedin, New Zealand
Kingsgate Hotel Greymouth
32 Mawhera Quay,
Greymouth, New Zealand
Kingsgate Hotel Te Anau
20 Lakefront Drive,
Te Anau, New Zealand
Mercure Perth
10 Irwin Street
Perth, Western Australia, Australia
Strata freehold
757
239
2,407
190
15,514
124
35,935
136
3,904
118
1,480
192
2,193
2,807
8,819
55
98
94
37
76
76
76
76
76
76
38
76
76
76
38
121
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
HOTELS
Millennium Hotel Queenstown
Corner Frankton Road & Stanley Street
Queenstown, New Zealand
TENURE
Freehold
Millennium Hotel Rotorua
Corner Eruera & Hinemaru Streets,
Rotorua, New Zealand
Freehold/Perpetual
leasehold land
Millennium Hotel New Plymouth,
Waterfront
1 Egmont St, New Plymouth, New Zealand
Freehold
APPROXIMATE
SITE AREA
(SQ. METRES)
NUMBER
OF ROOMS
EFFECTIVE
GROUP
INTEREST
(%)
7,453
220
10,109
227
1,149
42
76
76
76
38
38
Novotel Brisbane
200 Creek Street
Brisbane, Queensland, Australia
Strata volumetric freehold
6,235
296
Grand Millennium Auckland
71-87 Mayoral Drive, Auckland, New Zealand
Freehold
5,910
452
INVESTMENT PROPERTIES
Tanglin Shopping Centre
A shopping-cum-office complex situated at
Tanglin Road, Singapore, within the Orchard
Road tourist district. The Group owns 83 out
of 362 strata-titled units and 325 car park lots.
TENURE
Freehold
APPROXIMATE
LETTABLE
STRATA AREA
(SQ. METRES)
EFFECTIVE
GROUP
INTEREST
(%)
6,029
100
Freehold/
Leasehold – 30 years from 25 March 2009
1,040/130
(site area)
70
Freehold
34,249
100
Millennium Mitsui Garden Hotel Tokyo
5-11-1 Ginza, Chuo-Ku,
Tokyo 104-0061
329 bedroom hotel.
Biltmore Court & Tower
Situated at 500/520 South Grand Avenue, Los
Angeles, CA 90071.
Comprising the Court which has 22,133
square metres Class “B” lettable office space
within the Biltmore hotel structure and the
Tower which has 12,116 square metres of
Class “A” office space.
Land site in Sunnyvale
City of Sunnyvale, California, USA
Freehold
35,717
100
122
MILLENNIUM & COPTHORNE HOTELS LIMITED
MAJOR GROUP PROPERTIES (continued)
OWNED BY FIRST SPONSOR GROUP LIMITED,
AN ASSOCIATE OF THE COMPANY:
TENURE
APPROXIMATE
LETTABLE
STRATA AREA
(SQ. METRES)
EFFECTIVE
GROUP
INTEREST
(%)
Poortgebouw Property
3rd floor up to and including the 9th floor of the
Poortgebouw
Hoog Catharijne,
Catharijne Esplanade 13,
3511WK, Utrecht, the Netherlands
Expected to comprise two hotels with 320 hotel rooms
in total on completion.
Arena Towers
(Holiday Inn Amsterdam/Holiday Inn Express
Amsterdam Hotels)
Hoogoorddreef 66 and 68, Amsterdam, the
Netherlands, Comprising 443 hotel rooms and 509 car
park lots.
Crowne Plaza Chengdu Wenjiang Hotel & Holiday
Inn Express Chengdu Wenjiang Hotspring Hotel
No 619 A/B North Phoenix Street,
Wenjiang District, Chengdu, Sichuan Province, the
PRC.
Comprising 608 hotel rooms and suites, and a hot
spring facility.
Leasehold to year 2069
11,604
36
Perpetual leasehold
Ground rent paid until 2053
17,396
36
Leasehold to year 2051
81,041
(Gross fl area)
36
123
MILLENNIUM & COPTHORNE HOTELS LIMITED
MILLENNIUM & COPTHORNE HOTELS WORLDWIDE
For the year ended 31 December 2019
ASIA
China
Crowne Plaza Chengdu Wenjiang Hotel & Holiday Inn Express Chengdu Wenjiang Hotspring Hotel
Grand Millennium Beijing
Grand Millennium Shanghai Hongqiao
Millennium Harbourview Hotel Xiamen
Millennium Hotel Chengdu
Millennium Hotel Fuqing
Millennium Hotel Wuxi
Millennium Residences @ Beijing Fortune Plaza
Millennium Resort Hangzhou
Millennium Hotel Zunyi
Millennium Resort Wuyishan
Hong Kong
JW Marriott Hotel Hong Kong
New World Millennium Hong Kong Hotel
Indonesia
Millennium Hotel Sirih Jakarta
Japan
Hotel MyStays Asakusabashi
Hotel MyStays Kamata
Millennium Mitsui Garden Hotel Tokyo
Malaysia
Copthorne Hotel Cameron Highlands
Copthorne Orchid Hotel Penang
Grand Millennium Kuala Lumpur
Maldives
Angsana Velavaru
Raffles Maldives Meradhoo (previously Dhevanafushi Maldives Luxury Resort)
Philippines
The Heritage Hotel Manila
Singapore
Copthorne King’s Hotel Singapore
Grand Copthorne Waterfront Hotel Singapore
M Hotel Singapore
M Social Singapore
Novotel Singapore Clarke Quay
Orchard Hotel Singapore
Studio M Hotel
South Korea
Millennium Hilton Seoul
Taiwan
Grand Hyatt Taipei
Millennium Hotel Taichung
Millennium Gaea Resort Hualien
Thailand
Millennium Resort Patong Phuket
124
MILLENNIUM & COPTHORNE HOTELS LIMITED
MILLENNIUM & COPTHORNE HOTELS WORLDWIDE (continued)
AUSTRALASIA
Australia
Ibis Perth
Mercure Perth
Novotel Brisbane
New Zealand
Copthorne Hotel Auckland City
Copthorne Hotel & Apartments Queenstown Lakeview
Copthorne Hotel Grand Central New Plymouth
Copthorne Hotel Palmerston North
Copthorne Hotel & Resort Bay of Islands
Copthorne Hotel & Resort Hokianga
Copthorne Hotel & Resort Queenstown Lakefront
Copthorne Hotel & Resort Solway Park Wairarapa
Copthorne Hotel Rotorua
Copthorne Hotel Wellington Oriental Bay
Grand Millennium Auckland
Kingsgate Hotel Autolodge Paihia
Kingsgate Hotel Dunedin
Kingsgate Hotel Greymouth
Kingsgate Hotel Te Anau
Kingsgate Hotel The Avenue Wanganui
Millennium Hotel New Plymouth, Waterfront
Millennium Hotel Queenstown
Millennium Hotel Rotorua
Millennium Hotel & Resort Manuels Taupo
M Social Auckland
MIDDLE EAST*
Iraq
Copthorne Hotel Baranan
Grand Millennium Hotel Sulaimani
Millennium Kurdistan Hotel and Spa
Jordan
Grand Millennium Amman
Kuwait
Copthorne Al-Jahra Hotel & Resort
Copthorne Kuwait City
Millennium Hotel and Convention Centre Kuwait
Oman
Grand Millennium Muscat
Millennium Executive Apartments Muscat
Millennium Resort Salalah
Millennium Resort Mussanah
Palestine
Millennium Palestine Ramallah
*As a result of the sale of M&C’s joint venture interest in the Group’s Middle East operating entity, Millennium & Copthorne Middle East Holdings
Limited (“MCMEHL”), to the other shareholder in December 2016, properties that were previously shown as being managed by the Group are now
shown as franchised, although as of the date hereof the properties continue to be managed or franchised by MCMEHL, with support from the Group,
under a master license and services arrangement.
125
MILLENNIUM & COPTHORNE HOTELS LIMITED
MILLENNIUM & COPTHORNE HOTELS WORLDWIDE (continued)
Qatar
Copthorne Hotel Doha
Kingsgate Hotel Doha
Millennium Hotel Doha
Millennium Plaza Doha
Saudi Arabia
Copthorne Al Naseem
M Hotel Makkah by Millennium
M Hotel Makkah Al Aziziyah
Millennium Al Aqeeq Hotel
Millennium Makkah Al Naseem
Millennium Medina Airport
Millennium Hail Hotel Saudi Arabia
Millennium Taiba Hotel
United Arab Emirates
Bab Al Qasr Hotel
Copthorne Hotel Dubai
Copthorne Hotel Sharjah
Grand Millennium Al Wahda
Grand Millennium Business Bay
Grand Millennium Dubai
Kingsgate Hotel Abu Dhabi by Millennium
M Hotel Downtown by Millennium
Millennium Airport Hotel Dubai
Millennium Atria Business Bay
Millennium Deyaar Atria Residences
Millennium Deyaar Hotel & Apartments
Millennium Mont Rose Apartments
Millennium Place Dubai Marina
Millennium Place Hotel & Apartments Barsha Heights
Millennium Plaza Hotel Dubai
Studio M Arabia Plaza
EUROPE
France
Millennium Hotel Paris Charles de Gaulle
Millennium Hotel Paris Opéra
Germany
Pullman Hotel Munich
Georgia
The Biltmore Hotel Tbilisi
Italy
Grand Hotel Palace Rome
Hotel Cerretani Florence, Mgallery by Sofitel
Turkey
Millennium Istanbul Golden Horn
126
MILLENNIUM & COPTHORNE HOTELS LIMITED
MILLENNIUM & COPTHORNE HOTELS WORLDWIDE (continued)
United Kingdom
Copthorne Hotel Aberdeen
Copthorne Hotel Birmingham
Copthorne Hotel Cardiff-Caerdydd
Copthorne Hotel at Chelsea Football Club
Copthorne Hotel Effingham Gatwick
Copthorne Hotel London Gatwick
Copthorne Hotel Manchester
Copthorne Hotel Merry Hill-Dudley
Copthorne Hotel Newcastle
Copthorne Hotel Plymouth
Copthorne Hotel Sheffield
Copthorne Hotel Slough-Windsor
Copthorne Tara Hotel London Kensington
Hard Days Night Hotel Liverpool
Hilton Cambridge City Centre Hotel
Millennium Hotel at Chelsea Football Club
Millennium Gloucester Hotel London Kensington
Millennium Hotel Glasgow
Millennium Hotel London Knightsbridge
Millennium Madejski Hotel Reading (management contract terminated 10 December 2019)
The Bailey’s Hotel London
The Biltmore, Mayfair – LXR Hotels & Resorts
The Chelsea Harbour Hotel
The Lowry Hotel
THE AMERICAS
USA
Comfort Inn Near Vail Beaver Creek
Maingate Lakeside Resort
Millennium Biltmore Los Angeles
Millennium Broadway New York Times Square
Millennium Buffalo
Millennium Cincinnati (sold effective 14 February 2020)
Millennium Durham
Millennium Harvest House Boulder
Millennium Hilton New York Downtown
Millennium Hilton New York ONE UN Plaza
Millennium Hotel St Louis (closed)
Millennium Knickerbocker Hotel Chicago
Millennium Maxwell House Nashville
Millennium Minneapolis
Millennium Premier New York Times Square
Novotel New York Times Square
Pine Lake Trout Club
The Bostonian Boston
The Lakefront Anchorage
The McCormick Scottsdale
END
127