TIDMMDO TIDMJDS TIDMJAR
RNS Number : 7129V
Mandarin Oriental International Ltd
26 July 2018
To: Business Editor 26th July 2018
For immediate release
The following announcement was issued today to a Regulatory
Information Service approved by the Financial Conduct Authority in
the United Kingdom.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
Highlights
-- Underlying profit 49% higher due to improved performances across portfolio
-- Five new management contracts signed
-- Strategic review of The Excelsior, Hong Kong ongoing
"Underlying profit was higher during the first half of the year
due to generally improved performances across the portfolio,
notably in Hong Kong. This positive trend is expected to continue
in the second half of the year. The Group is working towards an
anticipated partial reopening of Mandarin Oriental Hyde Park,
London in the fourth quarter of this year."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th June
2018 2017 Change
US$m US$m %
--------------------------------------------------------- ------ ----- ------
Combined total revenue of hotels under
management(1) 700.2 644.8 +9
Underlying EBITDA (Earnings before interest,
tax, depreciation and amortisation)(2) 79.6 61.5 +29
Underlying profit attributable to shareholders(3) 22.3 15.0 +49
Profit attributable to shareholders 22.3 15.0 +49
USc USc %
--------------------------------------------------------- ------ ----- ------
Underlying earnings per share(3) 1.77 1.19 +49
Earnings per share 1.77 1.19 +49
Interim dividend per share 1.50 1.50 -
US$ US$ %
--------------------------------------------------------- ------ ----- ------
Net asset value per share(4) 0.99 1.01 -2
Adjusted net asset value per share(4)(5) 4.54 4.57 -1
Net debt/shareholders' funds(4) 26% 26%
Net debt/adjusted shareholders' funds(4)(5) 6% 6%
--------------------------------------------------------- ------ ----- ------
(1) Combined revenue includes turnover of the Group's subsidiary
hotels in addition to 100% of revenue from associate, joint
venture and managed hotels.
(2) EBITDA of subsidiaries plus the Group's share of EBITDA
of associates and joint ventures.
(3) The Group uses 'underlying profit' in its internal financial
reporting to distinguish between ongoing business performance
and non-trading items, as more fully described in note 7 to
the condensed financial statements. Management considers this
to be a key measure which provides additional information to
enhance understanding of the Group's underlying business performance.
(4) At 30th June 2018 and 31st December 2017, respectively.
(5) The Group's freehold and leasehold interests are carried
in the consolidated balance sheet at amortised cost. Both the
adjusted net asset value per share and net debt/adjusted shareholders'
funds for 30th June 2018 and 31st December 2017 have been adjusted
to include the market value of the Group's freehold and leasehold
interests which were appraised as at 31st December 2017.
--------------------------------------------------------------------------------
The interim dividend of USc1.50 per share will be payable on
10th October 2018 to shareholders on the register of members at the
close of business on 17th August 2018.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
OVERVIEW
Underlying profit was higher during the first half of the year
due to generally improved performances across the Group's
portfolio, notably in Hong Kong. Results were, however, impacted by
the commencement of the restoration of Hotel Ritz, Madrid.
The Group is working with its insurers to assess the impact of
the fire at Mandarin Oriental Hyde Park, London in June.
Strategic options for The Excelsior, Hong Kong, including the
possible redevelopment of the site into a commercial building,
remain under consideration.
FINANCIAL PERFORMANCE
Underlying earnings before interest, tax, depreciation and
amortisation for the first six months of 2018 were US$80 million,
up from US$62 million in the first half of 2017. These results
include an early termination fee in respect of the cessation of the
Group's management of the Las Vegas hotel from the end of August
2018.
Underlying profit for the period was US$22 million, compared
with US$15 million in the equivalent period in 2017. Underlying
earnings per share were USc1.77, up from USc1.19 in 2017. The
Group's US$20 million estimate of a write-off of tangible assets in
relation to the London fire has been offset by insurance claims
recoverable.
In light of the ongoing programme of renovations, an interim
dividend of USc1.50 per share has been declared, unchanged from
last year.
At 30th June 2018, the Group's net debt was US$325 million,
compared to US$327 million at the end of 2017. Gearing as a
percentage of adjusted shareholders' funds at 30th June 2018 was
6%, in line with that reported at the end of 2017.
HOTEL PERFORMANCE
Results were higher during the first half of the year due to
improved performances across most of the portfolio, particularly
from Hong Kong, Singapore, Bangkok and Tokyo. There were also signs
of recovery in Paris after several years of weak demand. In The
Americas, there were weaker performances in Boston and in
Washington D.C. compared with the same period last year, with the
latter having benefited from the Presidential Inauguration in 2017.
Overall results were impacted by the closure of Hotel Ritz, Madrid
in February 2018 for a comprehensive 19-month restoration.
Mandarin Oriental Hyde Park, London has closed for the necessary
repairs but it is anticipated that the hotel will be able to
partially reopen in the fourth quarter of this year. The impact of
the fire is being assessed by insurers with the estimate of a
write-off of tangible assets offset by insurance claims
recoverable. Given the coverage under the Group's insurance
arrangements, the impact on the Group's profitability is expected
to be modest. We would like to express our appreciation for the
efforts of all our colleagues in dealing with what were very
difficult circumstances.
STRATEGIC REVIEW OF THE EXCELSIOR, HONG KONG
In June 2017, the Group announced that consideration was being
given to potential strategic options for The Excelsior, Hong Kong.
The Group is still considering all options for the site, including
possible redevelopment as a commercial property.
NEW DEVELOPMENTS
In addition to the hotel in Viña del Mar, Chile and residences
in Barcelona mentioned at the time of the Group's preliminary
results, three other new management contracts have been signed in
the first six months of the year. A new hotel in Ho Chi Minh City,
the Group's first property in Vietnam, is scheduled to open in
2020. Two new properties, both with branded residences, in Muscat,
Oman and Grand Cayman, will follow in 2021.
In the next 12 months, the Group expects to open its first
hotels in Beijing, Doha and Dubai, as well as The Residences at
Mandarin Oriental in Bangkok.
PEOPLE
Dr Richard Lee and Lord Powell of Bayswater stepped down as
Directors on 9th May 2018. We would like to thank them both for
their significant contributions to the Company over many years. We
would also like to welcome Jack Yilun Chen, who has joined the
Board.
As announced earlier this week, Stuart Dickie is to step down as
Chief Financial Officer on 31st October 2018 and will be succeeded
by Craig Beattie. We would like to thank Stuart for his major
contribution to the Group's development.
OUTLOOK
Underlying profit was higher during the first half of the year
due to generally improved performances across the portfolio,
notably in Hong Kong. This positive trend is expected to continue
in the second half of the year. The Group is working towards an
anticipated partial reopening of Mandarin Oriental Hyde Park,
London in the fourth quarter of this year.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2018 2017 2017
Underlying Non-trading Underlying Non-trading Underlying Non-trading
business Items business Items business Items
performance (note 7) Total performance (note 7) Total performance (note 7) Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue (note 2) 307.9 - 307.9 286.7 - 286.7 610.8 - 610.8
Cost of sales (195.8) - (195.8) (189.1) - (189.1) (389.7) - (389.7)
------- ----------- ----------- ------- -------
Gross profit 112.1 - 112.1 97.6 - 97.6 221.1 - 221.1
Selling and
distribution
costs (19.9) - (19.9) (19.8) - (19.8) (38.2) - (38.2)
Administration
expenses (60.2) - (60.2) (55.3) - (55.3) (113.9) - (113.9)
Other operating
income 3.3 - 3.3 - - - - - -
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Operating profit
(note
3) 35.3 - 35.3 22.5 - 22.5 69.0 - 69.0
Financing charges (6.7) - (6.7) (6.2) - (6.2) (12.3) - (12.3)
Interest income 0.8 - 0.8 0.6 - 0.6 1.3 - 1.3
Net financing
charges (5.9) - (5.9) (5.6) - (5.6) (11.0) - (11.0)
Share of results
of
associates and
joint
ventures (note
4) 1.3 - 1.3 3.0 - 3.0 11.5 - 11.5
----------- ----------- -------
Profit before tax 30.7 - 30.7 19.9 - 19.9 69.5 - 69.5
Tax (note 5) (8.4) - (8.4) (4.7) - (4.7) (15.0) - (15.0)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Profit after tax 22.3 - 22.3 15.2 - 15.2 54.5 - 54.5
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Attributable to:
Shareholders of
the
Company 22.3 - 22.3 15.0 - 15.0 54.9 - 54.9
Non-controlling
interests - - - 0.2 - 0.2 (0.4) - (0.4)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
22.3 - 22.3 15.2 - 15.2 54.5 - 54.5
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
USc USc USc USc USc USc
Earnings per
share
(note 6)
- basic 1.77 1.77 1.19 1.19 4.37 4.37
- diluted 1.77 1.77 1.19 1.19 4.35 4.35
----------- ------- ----------- ------- ----------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
(unaudited) Year ended
Six months ended 31st
30th June December
2018 2017 2017
US$m US$m US$m
Profit for the period 22.3 15.2 54.5
Other comprehensive (expense)/income
--------
Items that will not be reclassified
to profit or loss:
---------- -------- ----------
Remeasurements of defined benefit
plans 0.2 - 7.7
Tax on items that will not be reclassified - - (1.2)
---------- -------- ----------
0.2 - 6.5
Items that may be reclassified subsequently
to profit or loss:
---------- -------- ----------
Net exchange translation differences
- net (losses)/gains arising during
the period (28.8) 61.6 87.1
Cash flow hedges
- net gains/(losses) arising during
the period 1.6 (0.5) 0.8
Tax relating to items that may be
reclassified (0.3) 0.1 (0.2)
Share of other comprehensive (expense)/income
of associates and joint ventures (1.6) 4.6 8.4
---------- -------- ----------
(29.1) 65.8 96.1
Other comprehensive (expense)/income
for the period, net of tax (28.9) 65.8 102.6
---------- -------- ----------
Total comprehensive (expense)/income
for the period (6.6) 81.0 157.1
---------- -------- ----------
Attributable to:
Shareholders of the Company (6.4) 80.6 157.3
Non-controlling interests (0.2) 0.4 (0.2)
---------- -------- ----------
(6.6) 81.0 157.1
---------- -------- ----------
Mandarin Oriental International Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2018 2017 2017
US$m US$m US$m
Net assets
Intangible assets 47.8 44.5 47.7
Tangible assets 1,409.2 1,416.0 1,453.2
Associates and joint ventures 194.7 176.6 196.6
Other investments 11.1 10.7 11.0
Deferred tax assets 10.7 2.2 11.0
Pension assets 4.2 - 4.9
Other non-current assets 1.7 - 0.5
--------- --------- ----------
Non-current assets 1,679.4 1,650.0 1,724.9
Stocks 6.2 6.1 6.4
Debtors and prepayments 112.8 84.6 100.2
Current tax assets 3.2 4.4 4.0
Bank and cash balances 204.4 157.2 183.9
--------- --------- ----------
Current assets 326.6 252.3 294.5
--------- --------- ----------
Creditors and accruals (139.5) (131.4) (151.4)
Current borrowings (2.6) (0.2) (2.6)
Current tax liabilities (23.6) (9.2) (17.8)
--------- --------- ----------
Current liabilities (165.7) (140.8) (171.8)
--------- --------- ----------
Net current assets 160.9 111.5 122.7
Long-term borrowings (527.0) (477.8) (508.1)
Deferred tax liabilities (57.7) (55.7) (58.6)
Pension liabilities (0.4) (3.8) (0.6)
Other non-current liabilities - (1.0) (0.2)
--------- --------- ----------
1,255.2 1,223.2 1,280.1
--------- --------- ----------
Total equity
Share capital 63.0 62.9 62.9
Share premium 497.6 492.8 493.9
Revenue and other reserves 688.7 663.1 717.2
--------- --------- ----------
Shareholders' funds 1,249.3 1,218.8 1,274.0
Non-controlling interests 5.9 4.4 6.1
--------- --------- ----------
1,255.2 1,223.2 1,280.1
--------- --------- ----------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
Attributable
to Attributable
shareholders to non-
Share Share Capital Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months
ended 30th
June 2018
(unaudited)
At 1st January
2018 62.9 493.9 265.9 526.5 0.1 (75.3) 1,274.0 6.1 1,280.1
Total
comprehensive
income - - - 22.5 1.4 (30.3) (6.4) (0.2) (6.6)
Dividends paid
by the
Company - - - (18.9) - - (18.9) - (18.9)
Issue of
shares 0.1 0.1 - - - - 0.2 - 0.2
Share-based
long-term
incentive
plans - - 0.4 - - - 0.4 - 0.4
Transfer - 3.6 (3.6) - - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------ -------
At 30th June
2018 63.0 497.6 262.7 530.1 1.5 (105.6) 1,249.3 5.9 1,255.2
Six months
ended 30th
June 2017
(unaudited)
At 1st January
2017 62.8 490.4 286.2 501.2 (0.6) (170.6) 1,169.4 4.0 1,173.4
Total
comprehensive
income - - - 15.0 (0.4) 66.0 80.6 0.4 81.0
Dividends paid
by the
Company - - - (31.4) - - (31.4) - (31.4)
Issue of
shares 0.1 - - - - - 0.1 - 0.1
Share-based
long-term
incentive
plans - - 0.1 - - - 0.1 - 0.1
Transfer - 2.4 (18.9) 16.5 - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------ -------
At 30th June
2017 62.9 492.8 267.4 501.3 (1.0) (104.6) 1,218.8 4.4 1,223.2
------- ------- -------- -------- -------- -------- ------------ ------------ -------
Total comprehensive income for the six months ended 30th June
2018 included in revenue reserves comprised profit attributable to
shareholders of the Company of US$22.3 million (2017: US$15.0
million) and net actuarial gain on employee defined benefit plans
of US$0.2 million (2017: nil).
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity (continued)
Attributable
to Attributable
shareholders to non-
Share Share Capital Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Year ended
31st December
2017
At 1st January
2017 62.8 490.4 286.2 501.2 (0.6) (170.6) 1,169.4 4.0 1,173.4
Total
comprehensive
income - - - 61.3 0.7 95.3 157.3 (0.2) 157.1
Dividends paid
by the
Company - - - (50.3) - - (50.3) - (50.3)
Issue of
shares 0.1 0.6 - - - - 0.7 - 0.7
Share-based
long-term
incentive
plans - - (0.8) - - - (0.8) - (0.8)
Change in
interest in a
subsidiary - - - (2.3) - - (2.3) 2.3 -
Transfer - 2.9 (19.5) 16.6 - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------ -------
At 31st
December 2017 62.9 493.9 265.9 526.5 0.1 (75.3) 1,274.0 6.1 1,280.1
------- ------- -------- -------- -------- -------- ------------ ------------ -------
Total comprehensive income for the year ended 31st December 2017
included in revenue reserves comprised profit attributable to
shareholders of the Company of US$54.9 million and net actuarial
gain on employee defined benefit plans of US$6.4 million.
Change in interest in a subsidiary included the Group's increase
in attributable interest in Portals Hotel Site LLC, the owner of
Mandarin Oriental, Washington D.C., from 80% to 83.6% as a result
of a non-controlling member of the subsidiary failing to fund an
additional capital contribution in 2017.
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
(unaudited) Year ended
Six months ended 31st
30th June December
2018 2017 2017
US$m US$m US$m
Operating activities
----------------- ------ ----------
Operating profit 35.3 22.5 69.0
Depreciation 29.5 26.0 56.7
Amortisation of intangible assets 2.4 1.0 2.1
Other non-cash items 20.5 0.3 0.2
Movements in working capital (24.1) 5.7 9.6
Interest received 0.7 0.7 1.3
Interest and other financing charges
paid (6.5) (7.0) (12.3)
Tax paid (1.9) (4.5) (13.3)
----------------- ------ ----------
55.9 44.7 113.3
Dividends and interest from associates
and
joint ventures 3.2 2.0 6.6
Cash flows from operating activities 59.1 46.7 119.9
Investing activities
----------------- ------ ----------
Purchase of tangible assets (34.0) (36.2) (82.6)
Purchase of intangible assets (2.2) (0.9) (5.7)
Payment on Munich expansion - (2.9) (3.1)
Purchase of other investments (0.8) (0.7) (0.9)
Advance to associates and joint ventures (4.9) (1.9) (11.4)
Repayment of loans to associates
and joint ventures 0.4 0.8 1.3
Sale of other investments - - 0.4
Cash flows from investing activities (41.5) (41.8) (102.0)
Financing activities
----------------- ------ ----------
Issue of shares 0.1 - 0.6
Drawdown of borrowings 24.1 - 30.8
Repayment of borrowings (0.1) (2.4) (2.5)
Dividends paid by the Company (note
8) (18.9) (31.4) (50.3)
Cash flows from financing activities 5.2 (33.8) (21.4)
----------------- ------ ----------
Net increase/(decrease) in cash and
cash equivalents 22.8 (28.9) (3.5)
Cash and cash equivalents at beginning
of period 183.9 182.5 182.5
Effect of exchange rate changes (2.3) 3.6 4.9
----------------- ------ ----------
Cash and cash equivalents at end
of period 204.4 157.2 183.9
----------------- ------ ----------
Mandarin Oriental International Limited
Notes to Condensed Financial Statements
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' and on a going
concern basis. The condensed financial statements have not been
audited or reviewed by the Group's auditors pursuant to the UK
Auditing Practices Board guidance on the review of interim
financial information.
There are no changes to the accounting policies as described in
the 2017 annual financial statements except for the adoption of
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts
with Customers' from 1st January 2018 as set out below.
The other amendments, which are effective in 2018 and relevant
to the Group's operations, do not have a significant effect on the
Group's accounting policies.
The Group has not early adopted any standard, interpretation or
amendment that have been issued but not yet effective.
IFRS 9 'Financial Instruments'
Under IFRS 9, the gains and losses arising from changes in fair
value of the Group's investments in equity securities, previously
classified as available-for-sale, will be recognised in profit and
loss, instead of through other comprehensive income. Such fair
value gains or losses on revaluation of these investments are
classified as non-trading items, and do not have any impact on the
Group's underlying profit attributable to shareholders and
shareholders' funds. The new forward-looking expected credit loss
model, which replaces the incurred loss impairment model, does not
affect the Group's impairment provisions and earnings. The new
hedge accounting rules, which align the accounting for hedging
instruments closely with the Group's risk management practices, has
no significant impact to the Group.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 establishes a comprehensive framework for the
recognition of revenue. It replaces IAS 11 'Construction Contracts'
and IAS 18 'Revenue' which covers contracts for goods and services.
The core principle in the framework is that revenue is recognised
when control of a good or service transfers to a customer. The new
standard does not change the Group's revenue recognition from hotel
ownership, hotel management, rendering of services and sales of
goods.
Changes to accounting policies on adoption of IFRS 9 and 15 have
been applied retrospectively but the adoption does not have impact
to the comparative financial statements.
Changes in principal accounting policies on adoption of IFRS 9
and 15
Investments
The Group's investments are measured at fair value through
profit and loss, fair value through other comprehensive income or
at amortised cost. Their classification is based on the
management's business model and their contractual cash flows
characteristics.
Equity investments are measured at fair value with fair value
gains and losses recognised in profit and loss, unless management
has elected to recognise the fair value gains and losses through
other comprehensive income. For equity investments fair value
through other comprehensive income, there is no subsequent
reclassification of the fair value gains and losses to profit and
loss upon its derecognition.
All purchases and sales of investments are recognised on the
trade date, which is the date that the Group commits to purchase or
sell the investments.
Debtors
Debtors, excluding derivative financial instruments, are
measured at amortised cost except where the effect of discounting
would be immaterial. The impairment measurement is subject to
whether there has been a significant increase in credit risk. The
Group applied the simplified approach permitted by IFRS 9, which
requires expected lifetime losses to be recognised from initial
recognition of the trade debtors. The carrying amount of the asset
is reduced through the use of an allowance account and the amount
of the loss is recognised in arriving at operating profit. When a
debtor is uncollectible, it is written off against the allowance
account. Subsequent recoveries of amount previously written off are
credited to profit and loss.
Debtors with maturities greater than 12 months after the balance
sheet date are classified under non-current assets.
Non-trading items
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of equity investments which are fair value through
profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of
non-depreciable intangible assets and other investments; provisions
for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a
non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
Revenue recognition
Revenue is measured at the fair value of the consideration
received and receivable and represents amounts receivable for goods
and service provided in the normal course of business, net of
discounts and sales related taxes.
i) Revenue from hotel ownership comprises amounts earned in
respect of services, facilities and goods supplied by the
subsidiary hotels. Revenue from the rendering of services is
recognised when services are performed, provided that the amount
can be measured reliably. Revenue from the sale of goods is
recognised when or as the control of the assets is transferred to
the customers, which generally coincides with the time when the
goods are delivered to customers.
ii) Revenue from hotel management comprises gross fees earned
from the management of all the hotels operated by the Group.
Management fees are recognised when earned as determined by the
management contract. Management fees charged to the subsidiary
hotels are eliminated upon consolidation.
iii) Receipts under operating leases are accounted for on an accrual basis over the lease terms.
iv) Interest income from a financial asset is recognised on a
time proportion basis using the effective interest method.
v) Dividend income is recognised when the right to receive payment is established.
2. REVENUE
Six months ended 30th June
2018 2017
US$m US$m
By geographical area:
Hong Kong 118.5 109.8
Other Asia 55.5 51.5
Europe 76.3 72.9
The Americas 57.6 52.5
307.9 286.7
----- -----
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION)
Six months ended 30th June
2018 2017
US$m US$m
By geographical area:
Hong Kong 34.1 31.4
Other Asia 16.2 13.2
Europe 7.7 1.1
The Americas 9.2 3.8
------- -------
Underlying EBITDA from subsidiaries 67.2 49.5
Non-trading items
------ -------
- Write-off of tangible assets (note 7) (20.3) -
- Insurance claim for material damage of
tangible assets (note 7) 20.3 -
- -
EBITDA from subsidiaries 67.2 49.5
Less: depreciation and amortisation (31.9) (27.0)
------- -------
Operating profit 35.3 22.5
------- -------
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Operating Net Net
and profit/ financing profit/
EBITDA amortisation (loss) charges Tax (loss)
US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2018
By geographical area:
Other Asia 12.3 (4.4) 7.9 (0.6) (1.5) 5.8
Europe (1.5) (2.1) (3.6) - - (3.6)
The Americas 1.6 (1.4) 0.2 (1.1) - (0.9)
------ ------------- --------- ---------- ----- --------
12.4 (7.9) 4.5 (1.7) (1.5) 1.3
Six months ended
30th June 2017
By geographical area:
Other Asia 10.2 (4.2) 6.0 (0.7) (1.1) 4.2
Europe 0.9 (0.4) 0.5 - - 0.5
The Americas 0.9 (1.5) (0.6) (1.1) - (1.7)
------ ------------- --------- ---------- ----- --------
12.0 (6.1) 5.9 (1.8) (1.1) 3.0
------ ------------- --------- ---------- ----- --------
5. TAX
Six months ended 30th June
2018 2017
US$m US$m
Tax (charged)/credited to profit and loss is
analysed as follows:
Current tax (8.5) (5.9)
Deferred tax 0.1 1.2
----- -----
(8.4) (4.7)
----- -----
By geographical area:
Hong Kong (5.7) (4.0)
Other Asia (1.1) (0.1)
Europe (1.5) (0.6)
The Americas (0.1) -
----- -----
(8.4) (4.7)
----- -----
Tax charge relating to cash flow hedges of US$0.3 million (2017:
tax credit of US$0.1 million) is included in other comprehensive
income or expense.
Tax on profits has been calculated at rates of taxation
prevailing in the territories in which the Group operates.
Share of tax of associates and joint ventures of US$1.5 million
(2017: US$1.1 million) is included in share of results of
associates and joint ventures (note 4).
6. EARNINGS PER SHARE
Basic earnings per share are calculated on the profit
attributable to shareholders of US$22.3 million (2017: US$15.0
million) and on the weighted average number of 1,259.9 million
(2017: 1,257.2 million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$22.3 million (2017: US$15.0 million) and on
the weighted average number of 1,263.2 million (2017: 1,261.0
million) shares after adjusting for the number of shares which are
deemed to be issued for no consideration under the share-based
long-term incentive plans based on the average share price during
the period.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2018 2017
Weighted average number of shares for basic
earnings per share calculation 1,259.9 1,257.2
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans 3.3 3.8
------- -------
Weighted average number of shares for diluted
earnings per share calculation 1,263.2 1,261.0
------- -------
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
Six months ended 30th June
2018 2017
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 22.3 1.77 1.77 15.0 1.19 1.19
Non-trading items
(note 7) - -
Underlying profit
attributable to
shareholders 22.3 1.77 1.77 15.0 1.19 1.19
---- ----
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of equity investments which are fair value through
profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of
non-depreciable intangible assets and other investments; provisions
for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a
non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
Following the fire at Mandarin Oriental Hyde Park, London on 6th
June 2018, the hotel has closed for the necessary repairs in order
to restore the asset. The impact of the fire is being assessed by
insurers, however, given the extent of the coverage under the
Group's insurance arrangements, the impact on the Group's
profitability is expected to be modest.
Based on the initial assessment by the Group, the estimated
write-off of tangible assets and estimated insurance claim
receivable for material damage of tangible assets caused by the
fire recognised as non-trading items during the period are analysed
as follows:
Six months ended 30th June
2018 2017
US$m US$m
Write-off of tangible assets (estimated at
GBP15 million) (20.3) -
Insurance claim for material damage of tangible
assets 20.3 -
------ -----
- -
------ -----
On 18th July 2018, the insurers made an advance interim payment
of GBP20 million (US$27 million) to the Group in respect of the
cover available under the insurance policies.
The process of repairs is now underway and it is anticipated
that the hotel will be able to partially reopen in the fourth
quarter of this year.
8. DIVIDS
Six months ended 30th June
2018 2017
US$m US$m
Final dividend in respect of 2017 of USc1.50
(2016: USc2.50) per share 18.9 31.4
----- -----
An interim dividend in respect of 2018 of USc1.50 (2017:
USc1.50) per share amounting to a total of US$18.9 million (2017:
US$18.9 million) has been declared by the Board and will be
accounted for as an appropriation of revenue reserves in the second
half of the year ending 31st December 2018.
9. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2018 and 31st December
2017 amounted to US$221.9 million and US$254.3 million
respectively.
10. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2018 and 31st December
2017 are as follows:
Financial
Fair value assets
Fair value through at Other Total
of hedging profit amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
30th June 2018
Financial assets
measured at fair
value
Other investments
* equity investments - 11.1 - - 11.1 11.1
Derivative financial
instruments 1.9 - - - 1.9 1.9
------------ ------------
1.9 11.1 - - 13.0 13.0
------------ ------------ ----------- ------------ ---------- -------
Financial assets
not measured
at fair value
Debtors - - 80.0 - 80.0 80.0
Bank and cash
balances - - 204.4 - 204.4 204.4
------------ ------------
- - 284.4 - 284.4 284.4
------------ ------------ ----------- ------------ ---------- -------
Financial liabilities
not measured
at fair value
Borrowings - - - (529.6) (529.6) (529.6)
Trade and other
payable excluding
non-financial
liabilities - - - (133.5) (133.5) (133.5)
------------ ------------
- - - (663.1) (663.1) (663.1)
------------ ------------ ----------- ------------ ---------- -------
Financial
Fair value assets
Fair value through at Other Total
of hedging profit amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
31st December
2017
Financial assets
measured at fair
value
Other investments
* equity investments - 11.0 - - 11.0 11.0
Derivative financial
instruments 0.5 - - - 0.5 0.5
------------ ------------
0.5 11.0 - - 11.5 11.5
------------ ------------ ----------- ------------ ---------- -------
Financial assets
not measured at
fair value
Debtors - - 65.5 - 65.5 65.5
Bank and cash
balances - - 183.9 - 183.9 183.9
------------ ------------
- - 249.4 - 249.4 249.4
------------ ------------ ----------- ------------ ---------- -------
Financial assets
not measured at
fair value
Derivative financial
instruments (0.2) - - - (0.2) (0.2)
------------ ------------ ----------- ------------ ---------- -------
Financial liabilities
not measured at fair
value
Borrowings - - - (510.7) (510.7) (510.7)
Trade and other
payable excluding
non-financial
liabilities - - - (146.3) (146.3) (146.3)
------------ ------------
- - - (657.0) (657.0) (657.0)
------------ ------------ ----------- ------------ ---------- -------
Fair value estimation
(i) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the
balance sheet, the corresponding fair value measurements are
disclosed by level of the following fair value measurement
hierarchy:
(a) Inputs other than quoted prices in active markets that are
observable for the asset or liability, either directly or
indirectly ('observable current market transactions')
The fair values of derivative financial instruments are
determined using rates quoted by the Group's bankers at the balance
sheet date. The rates for interest rate swaps and caps and forward
foreign exchange contracts are calculated by reference to market
interest rates and foreign exchange rates.
The fair values of unlisted investments mainly include club and
school debentures, are determined using prices quoted by brokers at
the balance sheet date.
(b) Inputs for assets or liabilities that are not based on
observable market data ('unobservable inputs')
The fair values of other unlisted investments are determined
using valuation techniques by reference to observable current
market transactions (including price-to earnings and price-to book
ratios of listed securities of entities engaged in similar
industries), or the market prices of the underlying investments
with certain degree of entity specific estimates, or determined
with reference to the underlying cash flow from investments,
discounted using a risk-adjusted discount rate.
There were no changes in valuation techniques during the six
months ended 30th June 2018 and the year ended 31st December
2017.
The table below analyses financial instruments carried at fair
value at 30th June 2018 and 31st December 2017, by the levels in
the fair value measurement hierarchy:
Observable
market current Unobservable
transactions inputs Total
US$m US$m US$m
30th June 2018
Assets
Other investments
- equity investments 1.7 9.4 11.1
Derivative financial instruments
at fair value
- through other comprehensive
income 1.9 - 1.9
--------------- ------------ -----
3.6 9.4 13.0
--------------- ------------ -----
31st December 2017
Assets
Other investments
- equity investments 1.7 9.3 11.0
Derivative financial instruments
at fair value
- through other comprehensive
income 0.5 - 0.5
--------------- ------------ -----
2.2 9.3 11.5
--------------- ------------ -----
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income (0.2) - (0.2)
--------------- ------------ -----
There were no transfers among the two categories during the six
months ended 30th June 2018 and the year ended 31st December
2017.
Movement of financial instruments which are valued based on
unobservable inputs during the six months ended 30th June 2018 and
the year ended 31st December 2017 are as follows:
Unlisted
equity
investments
US$m
At 1st January 2018 9.3
Additions 0.1
------------
At 30th June 2018 9.4
------------
At 1st January 2017 8.6
Additions 0.7
------------
At 31st December 2017 9.3
------------
(i) Financial instruments that are not measured at fair
value
The fair values of current debtors, bank and cash balances,
current creditors and current borrowings are assumed to approximate
their carrying amounts due to the short-term maturities of these
assets and liabilities.
The fair values of long-term borrowings are based on market
prices or are estimated using the expected future payments
discounted at market interest rates.
11. RELATED PARTY TRANSACTIONS
In the normal course of business, the Group undertakes a variety
of transactions with certain of its associates and joint
ventures.
The most significant of such transactions are management fees of
US$7.3 million (2017: US$6.2 million) received from the Group's six
(2017: six) associate and joint venture hotels which are based on
long-term management agreements on normal commercial terms.
There were no other related party transactions that might be
considered to have a material effect on the financial position or
performance of the Group that were entered into or changed during
the first six months of the current financial year.
Amounts of outstanding balances with associates and joint
ventures are included in debtors and prepayments, as
appropriate.
___________________________________________________________________________
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and
internal control. The following have been identified previously as
the areas of principal risk and uncertainty facing the Company, and
they remain relevant in the second half of the year.
-- Economic and Financial Risk
-- Commercial and Market Risk
-- Pandemic, Terrorism and Natural Disasters
-- Key Agreements
-- Reputational Risk and Value of the Brand
-- Regulatory and Political Risk
For greater detail, please refer to pages 95 and 96 of the
Company's 2017 Annual Report, a copy of which is available on the
Company's website www.mandarinoriental.com.
Responsibility Statement
The Directors of the Company confirm to the best of their
knowledge that:
(a) the condensed financial statements have been prepared in
accordance with IAS 34; and
(b) the interim management report includes a fair review of all
information required to be disclosed by the Disclosure Guidance and
Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct
Authority in the United Kingdom.
For and on behalf of the Board
James Riley
Stuart Dickie
Directors
The interim dividend of USc1.50 per share will be payable
on 10th October 2018 to shareholders on the register of members
at the close of business on 17th August 2018. The shares
will be quoted ex-dividend on the Singapore Exchange and
the London Stock Exchange on 15th and 16th August 2018, respectively.
The share registers will be closed from 20th to 24th August
2018, inclusive.
Shareholders will receive their cash dividends in United
States Dollars, unless they are registered on the Jersey
branch register, in which case they will have the option
to elect for their dividends to be paid in Sterling. These
shareholders may make new currency elections for the 2018
interim dividend by notifying the United Kingdom transfer
agent in writing by 21st September 2018. The Sterling equivalent
of dividends declared in United States Dollars will be calculated
by reference to a rate prevailing on 26th September 2018.
Shareholders holding their shares through CREST in the United
Kingdom will receive their cash dividends in Sterling only
as calculated above. Shareholders holding their shares through
The Central Depository (Pte) Limited ('CDP') in Singapore
will receive their cash dividends in United States Dollars
unless they elect, through CDP, to receive Singapore Dollars.
Shareholders on the Singapore branch register who wish to
deposit their shares into the CDP system by the dividend
record date, being 17th August 2018, must submit the relevant
documents to M & C Services Private Limited, the Singapore
branch registrar, by no later than 5.00 p.m. (local time)
on 16th August 2018.
Mandarin Oriental Hotel Group
Mandarin Oriental Hotel Group is an international hotel
investment and management group with deluxe and first class hotels,
resorts and residences in sought-after destinations around the
world. Having grown from its Asian roots into a global brand, the
Group now operates 31 hotels and eight residences in 21 countries
and territories, with each property reflecting the Group's oriental
heritage and unique sense of place. Mandarin Oriental has a strong
pipeline of hotels and residences under development. The Group has
equity interests in a number of its properties and adjusted net
assets worth approximately US$5.7 billion as at 30th June 2018.
Mandarin Oriental's aim is to be recognised as the world's best
luxury hotel group. This will be achieved by investing in the
Group's exceptional facilities and its people, and seeking
selective opportunities for expansion around the world, while
maximising profitability and long-term shareholder value. The Group
regularly receives recognition and awards for outstanding service
and quality management. The Group is committed to exceeding its
guests' expectations through exceptional levels of hospitality,
while maintaining its position as an innovative leader in the hotel
industry.
The parent company, Mandarin Oriental International Limited, is
incorporated in Bermuda and has a standard listing on the London
Stock Exchange, with secondary listings in Bermuda and Singapore.
Mandarin Oriental Hotel Group International Limited, which operates
from Hong Kong, manages the activities of the Group's hotels.
Mandarin Oriental is a member of the Jardine Matheson Group.
- end -
For further information, please contact:
Mandarin Oriental Hotel Group International
Limited
James Riley / Stuart Dickie (852) 2895 9288
Jill Kluge / Sally de Souza (852) 2895 9167
Brunswick Group Limited
Karin Wong (852) 3512 5077
As permitted by the Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority in the United Kingdom, the
Company will not be posting a printed version of the Half-Yearly
Results announcement to shareholders. The Half-Yearly Results
announcement will remain available on the Company's website,
www.mandarinoriental.com, together with other Group
announcements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEMSAIFASEEW
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