TIDMMDO TIDMJAR
RNS Number : 5682H
Mandarin Oriental International Ltd
28 July 2023
Announcement
28th July 2023
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-YEAR RESULTS FOR THE SIX MONTHSED 30TH JUNE 2023
HIGHLIGHTS
-- Underlying profit of US$28 million in first half, more than double 2019
-- Record fee income in Management Business, with particular
strength in Europe and the Middle East
-- Robust pipeline with several new openings scheduled in 2023
-- Dividend payments recommence with interim dividend of USc1.50 per share
"Mandarin Oriental performed well in the first half of 2023.
There was particularly strong operating and financial performance
by the Management Business, which is well set for further growth.
The strength of the Group's brand, together with its existing
portfolio of properties and strong pipeline, give the Board
confidence in the future success of Mandarin Oriental."
Ben Keswick
Chairman
RESULTS
(unaudited)
Six months ended 30th June
2023 2022 Change
US$m US$m %
-------------------------------------------------------------------
Combined total revenue of hotels under
management(1) 881.5 679.4 +30
Revenue 260.7 198.4 +31
Underlying EBITDA (Earnings before interest,
tax, depreciation, and amortisation)(2) 76.7 28.4 +170
Underlying profit/(loss) attributable
to shareholders(3) 27.8 (21.0) n/a
Revaluation (loss)/gain on investment
properties (140.2) 2.7 n/a
Gain on sale of a subsidiary 43.2 - n/a
Loss attributable to shareholders (69.2) (18.3) -278
USc USc %
----------- --------
Underlying earnings/(loss) per share(3) 2.20 (1.66) n/a
Loss per share (5.48) (1.45) -278
Interim dividend per share 1.50 - n/a
US$ US$ %
----------- --------
Net asset value per share(4) 2.58 2.61 -1
Adjusted net asset value per share(4)(5) 3.83 3.87 -1
Net debt/shareholders' funds(4) 7% 11%
Net debt/adjusted shareholders' funds(4)(5) 5% 8%
------------------------------------------------------------------- ----------- -------- --------
(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/loss' 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 2023 and 31st December 2022, respectively.
(5) The Group's investment properties are carried at fair value on the basis of valuations
carried out by independent valuers at 30th June 2023 and 31st December 2022. The
other freehold and leasehold interests are carried at amortised cost in the consolidated
balance sheet. Both the adjusted net asset value per share and net debt/adjusted
shareholders' funds for 30th June 2023 and 31st December 2022 have included the market
value of the Group's freehold and leasehold interests which were appraised as at
31st December 2022.
The interim dividend of USc1.50 per share will be payable on
11th October 2023 to shareholders on the register of members at the
close of business on 18th August 2023.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHSED 30TH JUNE 2023
OVERVIEW
The Group performed strongly in the first six months of 2023,
recording an underlying profit of US$28 million, a significant
improvement compared to the underlying loss in the first half of
2022 and more than double 2019. The Group's portfolio of managed
hotels continues to grow, with several new openings planned in 2023
and significant additions made in the period to the pipeline.
MANAGEMENT BUSINESS PERFORMANCE
The Group's combined Revenue per Available Room ('RevPAR') was
well ahead of both 2022 and 2019. The Group continued to deliver
strong rates in many locations, with resorts performing especially
well. Occupancy also strengthened significantly across all regions
compared to the first half of 2022.
Particular strength was seen in Europe and the Middle East where
almost all of the hotels achieved record rates and strong
occupancies, with RevPAR well above both 2022 and 2019 levels. In
America, hotels also delivered higher RevPAR than in prior years,
driven by improved occupancy. In Asia, RevPAR performance from the
Chinese mainland hotels improved significantly from 2022 and 2019
levels, due to the relaxation of travel restrictions. Hong Kong
continued its recovery after the relaxation of travel restrictions
in early 2023. Mandarin Oriental, Hong Kong saw higher numbers of
both international and Chinese mainland visitors, leading to robust
improvements in both rate and occupancy from 2022 levels.
The combined total revenue of hotels under management in the
first half of 2023 was US$882 million, representing a 30% increase
compared to the same period last year, and 38% higher than
2019.
NEW DEVELOPMENTS
The growth of the Management Business continues at pace, with
several new openings scheduled in the second half of 2023,
comprising:
- four new hotels: a beachfront retreat in Costa Navarino, a
second London hotel in Mayfair, a resort in Muscat and the opening
of a landmark hotel in Zurich;
- a rebranding in Riyadh; and
- a standalone residences project on Fifth Avenue in New York.
Our hotel in Singapore remains on track to reopen in September
2023, following a comprehensive renovation.
The Group's pipeline continues to grow, with four new hotel
management contracts and a standalone residences project in Madrid
announced in the first half of the year. The new hotel management
contracts include a beach resort in Mallorca, a new landmark hotel
and residences in Athens, a hotel and residences in Bankside -
reinforcing the brand's strong position in London - and a
redevelopment of our hotel in Miami. These developments expand the
Group's pipeline to 27 hotels - 14 of which have residences - and
two standalone residences over the next five years.
FINANCIAL PERFORMANCE
Underlying profit for the first half of 2023 was US$28 million,
substantially improved compared to an underlying loss of US$21
million in the equivalent period in 2022, driven by the recovery of
key owned hotels in Asia. The result also exceeded 2019 levels, due
to the increasing scale and record level of profitability of the
Management Business, particularly in Europe and the Middle East,
although this was slightly offset by the more gradual recovery of
business in Hong Kong and the temporary closure of the Singapore
hotel in March 2023 for refurbishment.
The Group sold its Jakarta property during the period. The hotel
will continue to be managed as a Mandarin Oriental hotel. This
transaction generated a post-tax gain on disposal of US$43 million.
The valuation of the Causeway Bay site under development decreased
between 31st December 2022 and 30th June 2023, resulting in a
non-trading loss for the Group of US$141 million. Total losses
attributable to shareholders were US$69 million in the first half
of 2023, compared to losses of US$18 million in the same period
last year.
Net debt fell to US$233 million at 30th June 2023, from US$376
million at the end of 2022. The Group remains well funded, with
headroom of US$840 million in its available cash and committed
facilities. Gearing as a percentage of adjusted shareholders' funds
was 5% at the end of June 2023, taking into account the market
value of the Group's properties.
An interim dividend of USc1.50 per share has been declared.
PEOPLE
Laurent Kleitman will succeed James Riley as Group Chief
Executive with effect from 1st September 2023. Laurent joins the
Group from Parfums Christian Dior, the largest luxury fashion
beauty business of LVMH. We want to thank James for his seven years
as Group Chief Executive. He has been instrumental in continuing to
expand Mandarin Oriental's development pipeline, elevating the
Mandarin Oriental brand globally and driving a wide range of
sustainability initiatives across the Group.
OUTLOOK
Mandarin Oriental performed well in the first half of 2023.
There was particularly strong operating and financial performance
by the Management Business, which is well set for further growth.
The strength of the Group's brand, together with its existing
portfolio of properties and strong pipeline, give the Board
confidence in the future success of Mandarin Oriental.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2023
(unaudited)
Six months ended 30th June Year ended 31st December
2023 2022 2022
Underlying Underlying Underlying
business Non-trading business Non-trading business Non-trading
performance Items Total performance Items Total performance Items Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue
(note 2) 260.7 - 260.7 198.4 - 198.4 454.1 - 454.1
Cost of sales (152.8) - (152.8) (150.0) - (150.0) (302.7) - (302.7)
------- ------- -------
Gross profit 107.9 - 107.9 48.4 - 48.4 151.4 - 151.4
Selling and
distribution
costs (13.7) - (13.7) (11.7) - (11.7) (27.0) - (27.0)
Administration
expenses (57.8) - (57.8) (52.5) - (52.5) (109.2) - (109.2)
Other operating
income - - - 3.5 - 3.5 5.7 - 5.7
Change in fair
value
of investment
properties - (140.2) (140.2) - 2.7 2.7 - (104.1) (104.1)
Gains on sale of
a
subsidiary/
asset
disposals (notes
10
& 11) - 45.7 45.7 - - - - 40.6 40.6
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Operating
(loss)/profit
(note 3) 36.4 (94.5) (58.1) (12.3) 2.7 (9.6) 20.9 (63.5) (42.6)
Financing charges (9.3) - (9.3) (6.7) - (6.7) (16.7) - (16.7)
Interest income 2.4 - 2.4 0.6 - 0.6 2.3 - 2.3
Net financing
charges (6.9) - (6.9) (6.1) - (6.1) (14.4) - (14.4)
Share of results
of
associates and
joint
ventures (note
4) 1.0 - 1.0 (1.0) - (1.0) 9.7 - 9.7
(Loss)/profit
before
tax 30.5 (94.5) (64.0) (19.4) 2.7 (16.7) 16.2 (63.5) (47.3)
Tax (note 5) (2.6) (2.5) (5.1) (1.6) - (1.6) (8.5) 6.4 (2.1)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
(Loss)/profit
after
tax 27.9 (97.0) (69.1) (21.0) 2.7 (18.3) 7.7 (57.1) (49.4)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Attributable to:
Shareholders of
the
Company (notes 6
&
7) 27.8 (97.0) (69.2) (21.0) 2.7 (18.3) 7.6 (57.1) (49.5)
Non-controlling
interests 0.1 - 0.1 - - - 0.1 - 0.1
----------- ----------- ------- ----------- ----------- ----------- ----------- -------
27.9 (97.0) (69.1) (21.0) 2.7 (18.3) 7.7 (57.1) (49.4)
----------- ----------- ------- ----------- ----------- ----------- ----------- -------
USc USc USc USc USc USc
(Loss)/earnings
per
share
(note 6)
- basic 2.20 (5.48) (1.66) (1.45) 0.60 (3.92)
- diluted 2.20 (5.48) (1.66) (1.45) 0.60 (3.92)
----------- ------- ----------- ------- ----------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2023
(unaudited) Year ended
Six months ended 31st
30th June December
2023 2022 2022
US$m US$m US$m
Loss for the period (69.1) (18.3) (49.4)
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss:
--------- --------- ----------
Remeasurements of defined benefit plans - - (2.1)
Revaluation surplus of right-of-use
assets before transfer to investment
properties - - 79.8
Tax on items that will not be reclassified - - 0.3
--------- --------- ----------
- - 78.0
Items that may be reclassified subsequently
to profit or loss:
--------- --------- ----------
Net exchange translation differences
- net gain/(loss) arising during the
period 14.7 (82.4) (58.2)
- transfer to profit and loss 33.0 - -
Cash flow hedges
- net (loss)/gain arising during the
period (11.1) 12.2 16.6
Tax relating to items that may be reclassified 0.5 (1.5) (2.4)
Share of other comprehensive (expense)/income
of associates and joint ventures (1.9) (1.0) 0.7
--------- --------- ----------
35.2 (72.7) (43.3)
Other comprehensive income/(expense)
for the period, net of tax 35.2 (72.7) 34.7
--------- --------- ----------
Total comprehensive expense for the
period (33.9) (91.0) (14.7)
--------- --------- ----------
Attributable to:
Shareholders of the Company (34.1) (90.8) (14.7)
Non-controlling interests 0.2 (0.2) -
--------- --------- ----------
(33.9) (91.0) (14.7)
--------- --------- ----------
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 30th June 2023
(unaudited) At 31st
At 30th June December
2023 2022 2022
US$m US$m US$m
Net assets
Intangible assets 40.2 46.4 45.7
Tangible assets 920.8 1,011.4 916.3
Right-of-use assets 229.6 248.3 242.4
Investment properties (note 8) 2,354.2 2,459.5 2,472.6
Associates and joint ventures 158.6 188.2 203.8
Other investments 13.8 14.1 14.0
Deferred tax assets 12.1 12.9 14.2
Pension assets 2.2 6.7 3.0
Non-current debtors 11.1 17.1 12.2
------- ------- --------
Non-current assets 3,742.6 4,004.6 3,924.2
Stocks 5.2 4.7 5.0
Current debtors 84.3 64.5 90.5
Current tax assets 1.7 1.9 6.8
Bank and cash balances 349.3 179.0 226.2
------- ------- --------
Current assets 440.5 250.1 328.5
------- ------- --------
Current creditors (155.8) (147.9) (159.1)
Current borrowings (note 9) (581.4) (65.3) (2.2)
Current lease liabilities (4.4) (5.4) (5.9)
Current tax liabilities (16.9) (8.9) (18.4)
------- ------- --------
Current liabilities (758.5) (227.5) (185.6)
------- ------- --------
Net current (liabilities)/assets (318.0) 22.6 142.9
Long-term borrowings (note 9) (0.6) (632.8) (599.8)
Non-current lease liabilities (112.5) (123.0) (123.5)
Deferred tax liabilities (42.6) (49.8) (41.6)
Pension liabilities - (0.3) (0.1)
Non-current creditors (4.7) - (4.5)
------- ------- --------
Non-current liabilities (160.4) (805.9) (769.5)
------- ------- --------
3,264.2 3,221.3 3,297.6
------- ------- --------
Total equity
Share capital 63.2 63.2 63.2
Share premium 500.9 500.7 500.7
Revenue and other reserves 2,695.3 2,654.1 2,730.2
------- ------- --------
Shareholders' funds 3,259.4 3,218.0 3,294.1
Non-controlling interests 4.8 3.3 3.5
------- ------- --------
3,264.2 3,221.3 3,297.6
------- ------- --------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2023
Attributable
to Attributable
Asset shareholders to non-
Share Share Capital Revenue revaluation Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2023
(unaudited)
At 1st January
2023 63.2 500.7 258.9 (428.8) 3,023.2 15.4 (138.5) 3,294.1 3.5 3,297.6
Total
comprehensive
income - - - (69.2) - (10.6) 45.7 (34.1) 0.2 (33.9)
Subsidiary
disposed
of - - (0.6) - - - - (0.6) 1.1 0.5
Transfer - 0.2 (0.2) - - - - - - -
At 30th June
2023 63.2 500.9 258.1 (498.0) 3,023.2 4.8 (92.8) 3,259.4 4.8 3,264.2
-----------
Six months ended
30th June 2022
(unaudited)
At 1st January
2022 63.2 500.5 259.1 (377.7) 2,943.4 0.9 (80.6) 3,308.8 3.5 3,312.3
Total
comprehensive
income - - - (18.3) - 11.0 (83.5) (90.8) (0.2) (91.0)
Transfer - 0.2 (0.2) - - - - - - -
At 30th June
2022 63.2 500.7 258.9 (396.0) 2,943.4 11.9 (164.1) 3,218.0 3.3 3,221.3
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
Year ended 31st
December 2022
At 1st January
2022 63.2 500.5 259.1 (377.7) 2,943.4 0.9 (80.6) 3,308.8 3.5 3,312.3
Total
comprehensive
income - - - (51.1) 79.8 14.5 (57.9) (14.7) - (14.7)
Transfer - 0.2 (0.2) - - - - - - -
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
At 31st December
2022 63.2 500.7 258.9 (428.8) 3,023.2 15.4 (138.5) 3,294.1 3.5 3,297.6
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
Revenue reserves as at 30th June 2023 included cumulative fair
value losses on the investment property under development of
US$861.3 million (US$613.4 million as at 30th June 2022 and
US$720.2 million as at 31st December 2022).
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2023
(unaudited) Year ended
Six months ended 31st
30th June December
2023 2022 2022
US$m US$m US$m
Operating activities
---------- --------- ----------
Operating loss (58.1) (9.6) (42.6)
Depreciation, amortisation and impairment 27.3 31.4 58.2
Other non-cash items 94.4 (3.0) 63.5
Movements in working capital (1.0) (0.9) (1.1)
Interest received 3.0 1.2 2.1
Interest and other financing charges
paid (9.4) (6.5) (15.6)
Tax refund/(paid) 2.0 (2.3) (8.0)
58.2 10.3 56.5
Dividends and interest from associates
and joint ventures 1.5 - -
Cash flows from operating activities 59.7 10.3 56.5
Investing activities
---------- --------- ----------
Purchase of tangible assets (5.4) (3.4) (12.8)
Additions to investment properties (35.8) (13.7) (30.2)
Purchase of intangible assets (0.7) (2.4) (6.1)
Additions to right-of-use assets - - (0.2)
Refund on Munich expansion - 4.0 4.0
Purchase of other investments (0.1) (0.2) (0.2)
Purchase of an associate - (1.0) (1.0)
Advance to associates and joint ventures (20.7) (0.4) (2.4)
Repayment of loans to associates and
joint ventures 66.4 1.9 4.2
Sale of a subsidiary (note 10) 76.6 - -
Net proceeds from asset disposals (note
11) - - 131.4
Cash flows from investing activities 80.3 (15.2) 86.7
Financing activities
---------- --------- ----------
Drawdown of borrowings 38.9 6.4 23.0
Repayment of borrowings (60.5) (24.1) (139.5)
Principal elements of lease payments (3.2) (3.2) (5.7)
Cash flows from financing activities (24.8) (20.9) (122.2)
---------- --------- ----------
Net increase/(decrease) in cash and cash
equivalents 115.2 (25.8) 21.0
Cash and cash equivalents at beginning
of period 226.2 212.8 212.8
Effect of exchange rate changes 7.9 (8.0) (7.6)
---------- --------- ----------
Cash and cash equivalents at end of period 349.3 179.0 226.2
---------- --------- ----------
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 2022 annual financial statements. A number of amendments were
effective from 1st January 2023. Those relevant to the Group's
operations are set out below:
Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
(effective from 1st January 2023)
The amendment requires deferred tax to be recognised on
transactions that, on initial recognition, give rise to equal
amounts of taxable and deductible temporary differences. They
typically apply to transactions such as leases of lessees and
decommissioning obligations and require the recognition of
additional deferred tax assets and liabilities.
Amendments to IAS 12 - International Tax Reform - Pillar Two
Model Rules
(effective for annual reporting period commencing on or after
1st January 2023)
The amendment provides a temporary mandatory exception from
deferred tax accounting in respect of Pillar Two income taxes and
certain additional disclosure requirements. The Group is in the
process of assessing the estimated impact of Pillar Two income
taxes to its consolidated financial statements and appropriate
disclosures will be made in the financial statements for the year
ending 31st December 2023.
The Group has not early adopted any amendments that have been
issued but not yet effective.
2. REVENUE
Six months ended 30th June
2023 2022
US$m US$m
By business activity:
Hotel ownership 230.9 177.2
Hotel & Residences branding and management 40.2 27.3
Less: intra-segment revenue (10.4) (6.1)
260.7 198.4
------ -----
By geographical area:
Asia 107.2 53.8
Europe, Middle East and Africa ('EMEA') 130.4 101.9
America 23.1 42.7
260.7 198.4
------ -----
Revenue from contracts with customers:
Recognised at a point in time 77.8 62.0
Recognised over time 173.7 127.2
------ -----
251.5 189.2
Revenue from other sources:
Rental income 9.2 9.2
------ -----
260.7 198.4
------ -----
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION)
Six months ended 30th June
2023 2022
US$m US$m
By business activity:
Hotel ownership 40.5 5.7
Hotel & Residences branding and management 23.2 13.4
Underlying EBITDA from subsidiaries 63.7 19.1
Non-trading items (note 7)
------- ------------
Change in fair value of investment properties (140.2) 2.7
Gain on sale of a subsidiary 45.7 -
(94.5) 2.7
------- ------------
EBITDA from subsidiaries (30.8) 21.8
Underlying depreciation and amortisation from
subsidiaries (27.3) (31.4)
Operating loss (58.1) (9.6)
------- ------------
By geographical area:
Asia 23.3 (13.5)
EMEA 39.8 28.4
America 0.6 4.2
Underlying EBITDA from subsidiaries 63.7 19.1
------- ------------
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 2023
By business activity:
Hotel ownership 12.9 (7.9) 5.0 (4.0) 0.2 1.2
Other 0.1 (0.2) (0.1) (0.1) - (0.2)
------ ------------- --------- ---------- ----- --------
13.0 (8.1) 4.9 (4.1) 0.2 1.0
By geographical area:
Asia 5.8 (5.3) 0.5 (1.4) 0.2 (0.7)
EMEA 2.8 (1.8) 1.0 (1.4) - (0.4)
America 4.4 (1.0) 3.4 (1.3) - 2.1
------ ------------- --------- ---------- ----- --------
13.0 (8.1) 4.9 (4.1) 0.2 1.0
Six months ended
30th June 2022
By business activity:
Hotel ownership 9.2 (7.2) 2.0 (2.5) (0.3) (0.8)
Other 0.1 (0.2) (0.1) (0.1) - (0.2)
------ ------------- --------- ---------- ----- --------
9.3 (7.4) 1.9 (2.6) (0.3) (1.0)
By geographical area:
Asia 3.5 (4.5) (1.0) (1.3) (0.3) (2.6)
EMEA 1.6 (1.8) (0.2) (0.5) - (0.7)
America 4.2 (1.1) 3.1 (0.8) - 2.3
------ ------------- --------- ---------- ----- --------
9.3 (7.4) 1.9 (2.6) (0.3) (1.0)
5. TAX
Six months ended 30th June
2023 2022
US$m US$m
Tax (charged)/credited to profit and loss is
analysed as follows:
Current tax (1.9) (1.7)
Deferred tax (3.2) 0.1
----- -----
(5.1) (1.6)
----- -----
By business activity:
Hotel ownership (2.4) (0.7)
Hotel & Residences branding and management (2.7) (0.9)
(5.1) (1.6)
----- -----
By geographical area:
Asia (5.4) (0.2)
EMEA 1.0 (1.3)
America (0.7) (0.1)
(5.1) (1.6)
----- -----
Tax credit relating to cash flow hedges of US$0.5 million (2022:
tax charge of US$1.5 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.
In 2023, current tax included a non-trading capital gain tax
charge of US$2.5 million in relation to the sale of 96.9% ownership
stake in P.T. Jaya Mandarin Agung, the owning company of Mandarin
Oriental, Jakarta (note 10).
The Group has applied the exception to recognising and
disclosing information about deferred tax assets and liabilities
relating to Pillar Two income taxes.
Share of tax credit of associates and joint ventures of US$0.2
million (2022: tax charge of US$0.3 million) is included in share
of results of associates and joint ventures (note 4).
6. (LOSS)/EARNINGS PER SHARE
Basic loss per share is calculated using loss attributable to
shareholders of US$69.2 million (2022: US$18.3 million) and the
weighted average number of 1,263.8 million (2022: 1,263.7 million)
shares in issue during the period.
Diluted loss per share is calculated using loss attributable to
shareholders of US$69.2 million (2022: US$18.3 million) and the
weighted average number of 1,263.8 million (2022: 1,263.8 million)
shares in issue after adjusting for the number of shares which are
deemed to be issued for no consideration under the share-based
long-term incentive plans based on the average share price during
the period.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2023 2022
Weighted average number of shares for basic
loss per share calculation 1,263.8 1,263.7
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans - 0.1
------- -------
Weighted average number of shares for diluted
loss per share calculation 1,263.8 1,263.8
------- -------
Additional basic and diluted earnings/loss per share are also
calculated based on underlying profit/loss attributable to
shareholders. A reconciliation of loss/earnings is set out
below:
Six months ended 30th June
2023 2022
Basic Diluted
(loss)/ (loss)/ Basic Diluted
earnings earnings loss loss
per share per share per share per share
US$m USc USc US$m USc USc
Loss attributable
to shareholders (69.2) (5.48) (5.48) (18.3) (1.45) (1.45)
Non-trading items
(note 7) 97.0 (2.7)
Underlying profit/(loss)
attributable to
shareholders 27.8 2.20 2.20 (21.0) (1.66) (1.66)
------ ------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investment properties and investments which are
measured at fair value through profit and loss; gains and losses
arising from the sale of businesses, investments and properties;
impairment of non-depreciable intangible assets and other
investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require
inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2023 2022
US$m US$m
Change in fair value of investment properties
(note 8) (140.2) 2.7
Gain on sale of a subsidiary (note 10) 43.2 -
------- -----
(97.0) 2.7
------- -----
8. INVESTMENT PROPERTIES
Six months ended Year ended
30th June 31st December
2023 2022 2022
US$m US$m US$m
Fair value at beginning of period 2,472.6 2,462.0 2,462.0
Exchange differences (12.7) (15.2) 0.6
Additions 34.5 10.0 26.4
Transfer from tangible assets - - 0.6
Transfer from right-of-use assets - - 87.1
(Decrease)/increase in fair value (140.2) 2.7 (104.1)
-------- -------- --------------
Fair value at end of period 2,354.2 2,459.5 2,472.6
-------- -------- --------------
In the second half of 2022, an own-use property, including
tangible assets of US$0.6 million and right-of use assets of
US$87.1 million, was transferred to a completed residential
investment property following a change of its future use determined
by the Directors.
At 30th June 2023, investment properties comprised a commercial
investment property under development of US$2,266.0 million
(US$2,459.5 million as at 30th June 2022 and US$2,384.9 million as
at 31st December 2022) and a completed residential investment
property of US$88.2 million (nil as at 30th June 2022 and US$87.7
million as at 31st December 2022).
9. BORROWINGS
The Group has borrowing facilities of US$752 million due to
mature in the first half of 2024. Based on the Group's consistent
track record of securing external financing in a timely manner, its
operating performance and strong balance sheet, the Group is
confident that it will complete the refinancing of these bank
facilities if necessary before the maturity dates.
10. SALE OF A SUBSIDIARY
In June 2023, the Group completed the sale of 96.9% ownership
stake in P.T. Jaya Mandarin Agung, the owning company of Mandarin
Oriental, Jakarta in Indonesia, to P.T. Astra Land Indonesia, a
subsidiary of Jardine Matheson Holdings Limited, the Group's
ultimate holding company, at a total consideration of US$85.0
million. The Group has recognised a post-tax, non-trading gain of
US$43.2 million (net of tax charge of US$2.5 million). The Group
has retained the hotel management contracts. Mandarin Oriental,
Jakarta has become a managed hotel of the Group following the
sale.
Net cash inflow for the sale of P.T. Jaya Mandarin Agung is
summarised as follows:
Six months ended 30th
June
2023 2022
Sale of a subsidiary US$m US$m
Non-current assets 3.7 -
Currents assets 5.3 -
Non-current liabilities (0.4) -
Current liabilities (4.0) -
Non-controlling interests 0.4 -
--------------
Net assets 5.0 -
Cumulative exchange translation difference 33.1 -
Profit on disposal before tax 45.7 -
-------------- --------------
Sales proceeds (net of selling expenses) 83.8 -
Adjustment for deferred payments (3.2) -
Cash and cash equivalents of subsidiaries disposed
of (4.0) -
-------------- --------------
Net cash inflow 76.6 -
-------------- --------------
The revenue and loss after tax in respect of the subsidiary
disposed of during the six months ended 30th June 2023 amounted to
US$6.0 million and US$0.6 million, respectively.
11. ASSET DISPOSALS
In September 2022, the Group completed the sale of Mandarin
Oriental, Washington D.C., including tangible assets and stocks of
US$90.8 million, for gross proceeds of US$139.0 million. After
taking into account the selling expenses and sales related taxes of
US$7.6 million, the net proceeds were US$131.4 million. As a
result, the Group has recognised a post-tax, non-trading gain of
US$47.0 million which included a net tax credit of US$6.4
million.
12. DIVIDS
An interim dividend in respect of 2023 of USc1.50 (2022: nil)
per share amounting to a total of US$19.0 million (2022: nil) 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 2023.
13. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2023 and 31st December
2022 amounted to US$405.0 million and US$512.2 million,
respectively.
14. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2023 and 31st December
2022 are as follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
30th June 2023
Financial assets
measured
at fair value
Other investments - 13.8 - - 13.8 13.8
Derivative financial
instruments 6.3 - - - 6.3 6.3
------------ ------------ ------------- ------------ ---------- -------
6.3 13.8 - - 20.1 20.1
------------ ------------ ------------- ------------ ---------- -------
Financial assets not
measured
at fair value
Debtors - - 72.4 - 72.4 72.4
Bank and cash balances - - 349.3 - 349.3 349.3
------------ ------------
- - 421.7 - 421.7 421.7
------------ ------------ ------------- ------------ ---------- -------
Financial liabilities
not
measured at fair value
Borrowings - - - (582.0) (582.0) (582.0)
Lease liabilities - - - (116.9) (116.9) (116.9)
Trade and other payable
excluding
non-financial
liabilities - - - (134.3) (134.3) (134.3)
------------ ------------
- - - (833.2) (833.2) (833.2)
------------ ------------ ------------- ------------ ---------- -------
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
31st December 2022
Financial assets
measured
at fair value
Other investments - 14.0 - - 14.0 14.0
Derivative financial
instruments 17.4 - - - 17.4 17.4
------------ ------------ ------------- ------------ ---------- -------
17.4 14.0 - - 31.4 31.4
------------ ------------ ------------- ------------ ---------- -------
Financial assets not
measured
at fair value
Debtors - - 69.8 - 69.0 69.8
Bank and cash balances - - 226.2 - 226.2 226.2
------------ ------------
- - 296.0 - 296.0 296.0
------------ ------------ ------------- ------------ ---------- -------
Financial liabilities
not
measured at fair value
Borrowings - - - (602.0) (602.0) (602.0)
Lease liabilities - - - (129.4) (129.4) (129.4)
Trade and other payable
excluding
non-financial
liabilities - - - (141.6) (141.6) (141.6)
------------ ------------
- - - (873.0) (873.0) (873.0)
------------ ------------ ------------- ------------ ---------- -------
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 discounted cash flow
by projecting the cash flows from these investments.
There were no changes in valuation techniques during the six
months ended 30th June 2023 and the year ended 31st December
2022.
The table below analyses financial instruments carried at fair
value at 30th June 2023 and 31st December 2022, by the levels in
the fair value measurement hierarchy:
Observable
Market
current Unobservable
transactions inputs Total
US$m US$m US$m
30th June 2023
Assets
Other investments 6.0 7.8 13.8
Derivative financial instruments at fair value
- through other comprehensive income 6.3 - 6.3
------------- ------------ -----
12.3 7.8 20.1
------------- ------------ -----
31st December 2022
Assets
Other investments 6.0 8.0 14.0
Derivative financial instruments at fair value
- through other c omprehensive income 17.4 - 17.4
------------- ------------ -----
23.4 8.0 31.4
------------- ------------ -----
There were no transfers among the two categories during the six
months ended 30th June 2023 and the year ended 31st December
2022.
Movement of financial instruments which are valued based on
unobservable inputs during the six months ended 30th June 2023 and
the year ended 31st December 2022 are as follows:
Unlisted
investments
US$m
At 1st January 2023 8.0
Disposals (0.2)
------------
At 30th June 2023 7.8
------------
At 1st January 2022 10.5
Additions 0.2
Disposals (2.7)
------------
At 31st December 2022 8.0
------------
(ii) Financial instruments that are not measured at fair
value
The fair values of current debtors, bank and cash balances,
current creditors, current borrowings and current lease liabilities
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. The fair values of non-current
lease liabilities are estimated using the expected future payments
discounted at market interest rates.
15. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Limited
('JSL') and the ultimate holding company of the Group is Jardine
Matheson Holdings Limited ('JMH'). Both JMH and JSL are
incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety
of transactions with its associates and joint ventures and with
JMH's subsidiaries, associates and joint ventures. The more
significant of these transactions during the six months ended 30th
June 2023 are described below:
The Group managed six (2022: six) associate and joint venture
hotels and received management fees of US$7.0 million (2022: US$5.7
million) based on long-term management agreements on normal
commercial terms .
The Group provided hotel management services to Hongkong Land
group ('HKL'), a subsidiary of JMH. Total management fees received
from HKL amounted to US$1.2 million (2022: US$0.6 million), based
on long-term management agreements on normal commercial terms.
The Group rented a property to DFI Retail Group, a subsidiary of
JMH, and received rental income of US$0.3 million (2022: US$0.3
million), based on lease agreements on normal commercial terms.
In respect of the Causeway Bay site under development, the Group
paid consultancy fees of US$0.9 million (2022: US$0.7 million) to
HKL in consideration for project management consultancy services.
In addition, Gammon Construction Limited ('GCL'), a joint venture
of JMH, completed value of works of US$22.5 million (2022: US$6.6
million). The HKL agreement and GCL contract were arranged on
normal commercial terms.
In June 2023, the Group completed the sale of 96.9% ownership
stake in P.T. Jaya Mandarin Agung, the owning company of Mandarin
Oriental, Jakarta in Indonesia, to P.T. Astra Land Indonesia, a
subsidiary of JMH, the Group's ultimate holding company, at a total
consideration of US$85.0 million.
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.
The outstanding balances with associates and joint ventures are
included in debtors 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.
-- Reputational Risk and Value of the Brand
-- Concentration Risk
-- Commercial Risk
-- Environmental and Climate Risk
-- Financial Strength and Funding
-- Governance and Misconduct
-- Health, Safety and Product Quality
-- IT and Cybersecurity
-- Pandemic
-- Political and Economic Risk
-- People and Talent
-- Compliance with and Changes to Laws and Regulations
For greater detail, please refer to pages 130 and 136 of the
Company's 2022 Annual Report, a copy of which is available on the
Company's website www.mandarinoriental.com .
Mandarin Oriental International Limited
Responsibility Statements
The Directors of the Company confirm to the best of their
knowledge that:
(a) the condensed financial statements prepared in accordance
with IAS 34 'Interim Financial Reporting' give a true and fair view
of the assets, liabilities, financial position and profit and
losses of the Group; and
(b) the interim management report includes a fair review of all
information required to be disclosed under Rules 4.2.7 and 4.2.8 of
the Disclosure Guidance and Transparency Rules issued by the
Financial Conduct Authority in the United Kingdom.
For and on behalf of the Board
James Riley
Matthew Bishop
Directors
Mandarin Oriental International Limited
Dividend Information for Shareholders
The interim dividend of USc1.50 per share will be payable on
11th October 2023 to shareholders on the register of members at the
close of business on 18th August 2023. The shares will be quoted
ex-dividend on 17th August 2023, and the share registers will be
closed from 21st to 25th August 2023, inclusive.
Shareholders will receive cash dividends in United States
Dollars, except when elections are made for alternate currencies in
the following circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register can elect
for their dividends to be paid in Sterling. These shareholders may
make new currency elections for the 2023 interim dividend by
notifying the United Kingdom transfer agent in writing by 22nd
September 2023. The Sterling equivalent of dividends declared in
United States Dollars will be calculated by reference to a rate
prevailing on 27th September 2023.
Shareholders holding their shares through CREST in the United
Kingdom will receive cash dividends in Sterling only, as calculated
above.
Shareholders on the Singapore branch register who hold their
shares through The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service
('DCS')
Those shareholders on CDP's DCS will receive their cash
dividends in Singapore Dollars unless they opt out of CDP Currency
Conversion Service, through CDP, to receive United States
Dollars.
Shareholders who are not on CDP's DCS
Those shareholders not on CDP's DCS 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 18th August 2023, 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 17th August 2023.
Mandarin Oriental International Limited
About Mandarin Oriental Hotel Group
Mandarin Oriental Hotel Group is an international hotel
investment and management group with luxury hotels, resorts and
residences in sought-after destinations around the world. Having
grown from its Asian roots over 60 years ago into a global brand,
the Group now operates 36 hotels and nine residences in 24
countries and territories, with each property reflecting the
Group's oriental heritage, local culture and unique design.
Mandarin Oriental regularly receives international recognition and
awards for outstanding service and quality management, and 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$4.8 billion as at 30th
June 2023.
Mandarin Oriental continues to drive its reputation as an
innovative leader in luxury hospitality, seeking selective
opportunities to expand the reach of the brand, with the aim to
maximise profitability and long-term shareholder value.
The parent company, Mandarin Oriental International Limited, is
incorporated in Bermuda and has a primary listing in the standard
segment 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 / Matthew Bishop (852) 2895 9288
Chris Orlikowski (852) 2895 9167
Brunswick Group Limited
William Brocklehurst (852) 5685 9881
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-Year
Results announcement for the six months ended 30th June 2023 to
shareholders. This Half-Year Results announcement will be made
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
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END
IR FIFVADIITFIV
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