TIDMMDO TIDMJDS TIDMJAR
RNS Number : 6252U
Mandarin Oriental International Ltd
30 July 2020
30th July 2020
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 2020
Highlights
-- Underlying loss of US$102 million
-- Majority of hotels closed during second quarter
-- Group's balance sheet and funding position remain robust
"The Group saw substantial underlying losses in the first half
of the year as a consequence of the COVID-19 pandemic. A material
recovery in business levels is not expected until 2021 at the
earliest and a significant further loss is therefore likely in the
second half of 2020. The Board remains confident that the Group's
robust financial position and strong brand will enable Mandarin
Oriental to weather the downturn and return to profit when luxury
travel begins to recover."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th June
2020 2019 Change
US$m US$m %
-------------------------------------------------------------------------
Combined total revenue of hotel under management (1) 276.4 641.0 - 57
Revenue 95.5 279.6 - 66
Underlying EBITDA (Earnings before interest, tax, depreciation
and amortisation)(2) (50.1) 69.1 N/A
Underlying (loss)/profit attributable to shareholders(3) (101.8) 10.7 N/A
Loss attributable to shareholders (435.5) (12.1) N/A
USc USc %
----------- ------
Underlying (loss)/earnings per share(3) (8.06) 0.85 N/A
Loss per share (34.48) (0.96) N/A
Interim dividend per share - 1.50 N/A
US$ US$ %
----------- ------
Net asset value per share(4) 2.90 3.26 - 11
Adjusted net asset value per share(4)(5) 4.34 4.70 - 8
Net debt/shareholders' funds(4) 11% 7%
Net debt/adjusted shareholders' funds(4)(5) 8% 5%
------------------------------------------------------------------------- ----------- ------ ------
(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 2020 and 31st December 2019, respectively.
(5) The Group's investment property under development is carried at fair value
on the basis of valuations carried out by independent valuers at 30th June
2020 and 31st December 2019. 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 2020 and 31st December 2019 have included the market value of the Group's
freehold and leasehold interests which were appraised as at 31st December 2019.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2020
OVERVIEW
All of the Group's hotels were either closed or operated at
single-digit percentage occupancy levels for much of the second
quarter. Combined total revenue of hotels under management fell by
57% in the first half of 2020 compared to the equivalent period in
2019, with the majority of this decline occurring in the second
quarter, which saw combined total revenues 86% lower than the same
period last year. A number of cost containment measures have been
implemented, but significant underlying losses were incurred in the
first half of the year.
FINANCIAL PERFORMANCE
Underlying losses before interest, tax, depreciation and
amortisation for the first half of 2020 were US$50 million,
compared to earnings of US$69 million in the first half of 2019.
Underlying losses for the period were US$102 million, compared to
an underlying profit of US$11 million in the first half of
2019.
The biannual revaluation of The Excelsior site at 30th June 2020
resulted in a non-cash decrease of 10% or US$334 million, as a
result of a decline in open market office and retail rents in Hong
Kong in the first half of the year. Together with the underlying
loss, this resulted in a total loss attributable to shareholders
for the period of US$436 million.
At 30th June 2020, net debt was US$412 million compared to
US$300 million at the end of 2019. This reflected US$52 million of
capital expenditure during the period, primarily in relation to the
renovation of Mandarin Oriental Ritz, Madrid and the redevelopment
of The Excelsior site. Gearing was 8% of adjusted shareholders'
funds, compared to 5% at the end of 2019. The Group's financial
position remains robust and it is well-placed to weather a
prolonged downturn. At 30th June 2020, the Group had US$187 million
of cash reserves and US$217 million in available, committed debt
facilities.
In light of the substantially reduced levels of business, no
interim dividend will be paid.
HOTEL PERFORMANCE
In Europe and America, all hotels were closed from late March
onwards. Hotels in Asia and the Middle East mostly remained open
during the first half, although operating at very low occupancy
levels once anti-pandemic restrictions and border controls were
imposed.
The Group's flagship Hong Kong hotel remained open, but with
single-digit percentage occupancy levels for most of the second
quarter, and the hotel made a loss during the first half. It did,
however, benefit from a partial recovery in food & beverage
business when government anti-pandemic measures were relaxed. The
remainder of the Group's owned hotels also incurred losses in the
second quarter, despite cost containment measures.
On a more positive note, in June the Group's hotels on the
Chinese mainland saw a significant recovery in occupancy levels to
some 40%. Elsewhere, a number of the Group's hotels have begun to
reopen in anticipation of some demand but, in many cases, this
demand is expected to remain low and not in line with normal market
conditions.
NEW DEVELOPMENTS
A management contract was signed in July 2020 for a new hotel
and residences project in Vienna, which is scheduled to open in
2023.
PEOPLE
On behalf of the Board, I would like to thank all our colleagues
for their continuing dedication, hard work and professionalism
during such challenging times.
I stepped down as Managing Director on 15th June 2020 and was
succeeded by John Witt, who joins the Board. I will continue as
Chairman.
OUTLOOK
The Group saw substantial underlying losses in the first half of
the year as a consequence of the COVID-19 pandemic. A material
recovery in business levels is not expected until 2021 at the
earliest and a significant further loss is therefore likely in the
second half of 2020. The Board remains confident that the Group's
robust financial position and strong brand will enable Mandarin
Oriental to weather the downturn and return to profit when luxury
travel begins to recover.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
(unaudited) Year ended 31st
Six months ended 30th June December
2020 2019 2019
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) 95.5 - 95.5 279.6 - 279.6 566.5 - 566.5
Cost of sales (122.1) - (122.1) (185.8) - (185.8) (364.7) - (364.7)
------- --------- ----------- ------- -------
Gross
(loss)/profit (26.6) - (26.6) 93.8 - 93.8 201.8 - 201.8
Selling and
distribution
costs (16.2) - (16.2) (21.2) - (21.2) (38.8) - (38.8)
Administration
expenses (52.7) - (52.7) (58.8) - (58.8) (117.2) - (117.2)
Other operating
income/(expense) 14.4 - 14.4 11.8 (32.3) (20.5) 25.2 (32.7) (7.5)
Change in fair
value
of investment
property
under development - (333.7) (333.7) - 8.8 8.8 - (67.3) (67.3)
----------- ----------- ------- --------- ----------- ------- --------- ----------- -------
Operating
(loss)/profit
(note 3) (81.1) (333.7) (414.8) 25.6 (23.5) 2.1 71.0 (100.0) (29.0)
Financing charges (8.0) - (8.0) (9.4) - (9.4) (18.1) - (18.1)
Interest income 1.1 - 1.1 1.8 - 1.8 3.4 - 3.4
Net financing
charges (6.9) - (6.9) (7.6) - (7.6) (14.7) - (14.7)
Share of results
of
associates and
joint
ventures (note 4) (13.5) - (13.5) (1.6) - (1.6) (1.7) - (1.7)
--------- -----------
(Loss)/profit
before
tax (101.5) (333.7) (435.2) 16.4 (23.5) (7.1) 54.6 (100.0) (45.4)
Tax (note 5) (0.3) - (0.3) (5.8) 0.7 (5.1) (13.5) 3.3 (10.2)
----------- ----------- ------- --------- ----------- ------- --------- ----------- -------
(Loss)/profit
after
tax (101.8) (333.7) (435.5) 10.6 (22.8) (12.2) 41.1 (96.7) (55.6)
----------- ----------- ------- --------- ----------- ------- --------- ----------- -------
Attributable to:
Shareholders of
the
Company (note 6 &
7) (101.8) (333.7) (435.5) 10.7 (22.8) (12.1) 41.2 (96.7) (55.5)
Non-controlling
interests - - - (0.1) - (0.1) (0.1) - (0.1)
----------- ----------- ------- --------- ----------- --------- ----------- -------
(101.8) (333.7) (435.5) 10.6 (22.8) (12.2) 41.1 (96.7) (55.6)
----------- ----------- ------- --------- ----------- --------- ----------- -------
USc USc USc USc USc USc
(Loss)/earnings
per
share (note 6)
- basic (8.06) (34.48) 0.85 (0.96) 3.26 (4.39)
- diluted (8.06) (34.48) 0.85 (0.96) 3.26 (4.39)
----------- ------- --------- ------- --------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
(unaudited) Year ended
Six months ended 31st
30th June December
2020 2019 2019
US$m US$m US$m
Loss for the period (435.5) (12.2) (55.6)
Other comprehensive (expense)/income
Items that will not be reclassified
to profit or loss:
--------- --------- ----------
Remeasurements of defined benefit
plans - (0.6) 3.4
Revaluation surplus of right-of-use
assets before transfer to investment
property under development (note
8) - 2,943.4 2,943.4
Tax on items that will not be reclassified - 0.1 (0.6)
--------- --------- ----------
- 2,942.9 2,946.2
Items that may be reclassified subsequently
to profit or loss:
--------- --------- ----------
Net exchange translation differences
- net gains arising during the period 1.3 12.8 25.0
Cash flow hedges
- net losses arising during the
period (9.9) (2.4) (0.4)
Tax relating to items that may be
reclassified 1.6 0.4 0.1
Share of other comprehensive (expense)/income
of associates and joint ventures (4.1) 2.0 3.1
--------- --------- ----------
(11.1) 12.8 27.8
Other comprehensive (expense)/income
for the period, net of tax (11.1) 2,955.7 2,974.0
--------- --------- ----------
Total comprehensive (expense)/income
for the period (446.6) 2,943.5 2,918.4
--------- --------- ----------
Attributable to:
Shareholders of the Company (446.5) 2,943.5 2,918.4
Non-controlling interests (0.1) - -
--------- --------- ----------
(446.6) 2,943.5 2,918.4
--------- --------- ----------
Mandarin Oriental International Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2020 2019 2019
US$m US$m US$m
Net assets
Intangible assets 49.5 50.4 53.0
Tangible assets 1,147.3 1,179.6 1,174.6
Right-of-use assets 297.9 305.5 300.3
Investment property under development
(note 8) 2,657.9 3,020.3 2,967.7
Associates and joint ventures 208.9 208.6 203.1
Other investments 15.3 16.2 15.9
Deferred tax assets 11.5 12.0 10.6
Pension assets 0.8 - 1.3
Non-current debtors 4.8 4.9 6.2
------- ------- --------
Non-current assets 4,393.9 4,797.5 4,732.7
Stocks 5.9 5.8 6.2
Current debtors 62.3 99.2 97.2
Current tax assets 2.2 2.0 1.9
Bank and cash balances 187.1 211.1 270.7
------- ------- --------
Current assets 257.5 318.1 376.0
------- ------- --------
Current creditors (130.1) (147.7) (166.0)
Current borrowings (41.9) (2.5) (2.5)
Current lease liabilities (7.0) (6.9) (7.0)
Current tax liabilities (11.7) (17.5) (19.1)
------- ------- --------
Current liabilities (190.7) (174.6) (194.6)
------- ------- --------
Net current assets 66.8 143.5 181.4
Long-term borrowings (557.2) (544.3) (568.6)
Non-current lease liabilities (166.2) (173.3) (168.4)
Deferred tax liabilities (58.0) (58.1) (59.4)
Pension liabilities - (2.6) (0.2)
Non-current creditors (9.3) (1.5) (0.9)
------- ------- --------
3,670.0 4,161.2 4,116.6
------- ------- --------
Total equity
Share capital 63.2 63.1 63.2
Share premium 499.7 499.7 499.7
Revenue and other reserves 3,103.9 3,594.8 3,550.1
------- ------- --------
Shareholders' funds 3,666.8 4,157.6 4,113.0
Non-controlling interests 3.2 3.6 3.6
------- ------- --------
3,670.0 4,161.2 4,116.6
------- ------- --------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
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
2020 (unaudited)
At 1st January
2020 63.2 499.7 260.3 434.8 2,943.4 - (88.4) 4,113.0 3.6 4,116.6
Total
comprehensive
income - - - (435.5) - (8.7) (2.3) (446.5) (0.1) (446.6)
Change in
interest in a
subsidiary - - - 0.3 - - - 0.3 (0.3) -
At 30th June
2020 63.2 499.7 260.3 (0.4) 2,943.4 (8.7) (90.7) 3,666.8 3.2 3,670.0
-----------
Six months ended
30th June
2019 (unaudited)
At 1st January
2019 63.1 497.8 262.5 525.0 - 0.6 (116.6) 1,232.4 3.8 1,236.2
Total
comprehensive
income - - - (12.6) 2,943.4 (2.1) 14.8 2,943.5 - 2,943.5
Dividends paid
by the Company - - - (18.9) - - - (18.9) - (18.9)
Issue of shares - 0.1 - - - - - 0.1 - 0.1
Share-based
long-term
incentive
plans - - 0.3 - - - - 0.3 - 0.3
Change in
interest in a
subsidiary - - - 0.2 - - - 0.2 (0.2) -
Transfer - 1.8 (1.8) - - - - - - -
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
At 30th June
2019 63.1 499.7 261.0 493.7 2,943.4 (1.5) (101.8) 4,157.6 3.6 4,161.2
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
Revenue reserves as at 30th June 2020 included cumulative fair
value loss on the investment property under development of US$401.0
million.
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity (continued)
Attributable
to Attributable
Asset shareholders to non-
Share Share Capital Revenue revaluation Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Year ended 31st
December
2019
At 1st January
2019 63.1 497.8 262.5 525.0 - 0.6 (116.6) 1,232.4 3.8 1,236.2
Total
comprehensive
income - - - (52.6) 2,943.4 (0.6) 28.2 2,918.4 - 2,918.4
Dividends paid
by the Company - - - (37.9) - - - (37.9) - (37.9)
Issue of shares 0.1 0.1 - - - - - 0.2 - 0.2
Share-based
long-term
incentive
plans - - (0.3) - - - - (0.3) - (0.3)
Change in
interest in a
subsidiary - - - 0.2 - - - 0.2 (0.2) -
Transfer - 1.8 (1.9) 0.1 - - - - - -
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ --------
At 31st December
2019 63.2 499.7 260.3 434.8 2,943.4 - (88.4) 4,113.0 3.6 4,116.6
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ --------
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
(unaudited) Year ended
Six months ended 31st
30th June December
2020 2019 2019
US$m US$m US$m
Operating activities
----------------- ------- ----------
Operating (loss)/profit (414.8) 2.1 (29.0)
Depreciation and amortisation 37.4 59.7 91.9
Other non-cash items 335.6 (8.0) 69.0
Movements in working capital (0.9) (22.0) (3.1)
Interest received 1.3 1.7 3.4
Interest and other financing charges
paid (8.1) (10.4) (19.2)
Tax paid (8.3) (3.7) (6.0)
----------------- ------- ----------
(57.8) 19.4 107.0
Dividends and interest from associates
and
joint ventures - 3.2 5.9
Cash flows from operating activities (57.8) 22.6 112.9
Investing activities
----------------- ------- ----------
Purchase of tangible assets (14.3) (27.9) (41.7)
Additions to investment property
under development (11.1) (4.0) (15.1)
Purchase of intangible assets (3.2) (2.8) (8.3)
Payment on Munich expansion - (0.7) (1.1)
Purchase of other investments (0.4) (0.9) (1.1)
Advance to associates and joint ventures (23.1) (15.8) (16.7)
Repayment of loans to associates
and joint ventures 0.4 0.4 3.6
Cash flows from investing activities (51.7) (51.7) (80.4)
Financing activities
----------------- ------- ----------
Issue of shares - 0.1 0.1
Drawdown of borrowings 32.4 537.7 555.8
Repayment of borrowings - (523.3) (522.3)
Principal elements of lease payments (3.6) (3.2) (6.4)
Dividends paid by the Company (note
9) - (18.9) (37.9)
Cash flows from financing activities 28.8 (7.6) (10.7)
----------------- ------- ----------
Net (decrease)/increase in cash and
cash equivalents (80.7) (36.7) 21.8
Cash and cash equivalents at beginning
of period 270.7 246.8 246.8
Effect of exchange rate changes (2.9) 1.0 2.1
----------------- ------- ----------
Cash and cash equivalents at end
of period 187.1 211.1 270.7
----------------- ------- ----------
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.
The Group had early adopted the 'Interest Rate Benchmark Reform:
Amendments to IFRS 9, IAS 39 and IFRS 7' (effective 1st January
2020) for the Group's annual reporting period commencing 1st
January 2019.
There are no changes to the accounting policies as described in
the 2019 annual financial statements other than the following
changes in relation to government grants. Other amendments which
are effective in 2020 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 other standard or amendments
that have been issued but not yet effective.
Government grants
Grants from government are recognised at their fair values where
there is reasonable assurance that the grants will be received, and
the Group will comply with the conditions associated with the
grants.
Grants that compensate the Group for expenses incurred are
recognised in the profit and loss as other income on a systematic
basis in the period in which the expenses are recognised.
Unconditional grants are recognised in the profit and loss as other
income when they become receivable.
Grants related to assets are deducted in arriving at the
carrying value of the related assets.
2. REVENUE
Six months ended 30th June
2020 2019
US$m US$m
By geographical area:
Asia 43.7 150.2
Europe, Middle East and Africa ('EMEA') 37.2 77.6
America 14.6 51.8
95.5 279.6
----- -----
Revenue from contracts with customers:
Recognised at a point in time 37.8 104.8
Recognised over time 49.7 164.8
----- -----
87.5 269.6
Revenue from other sources:
Rental income 8.0 10.0
----- -----
95.5 279.6
----- -----
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION)
Six months ended 30th June
2020 2019
US$m US$m
By geographical area:
Asia (15.5) 44.6
EMEA (10.0) 13.0
America (18.2) 2.3
Underlying EBITDA from subsidiaries (43.7) 59.9
Non-trading items (note 7)
------- ------
Fire at Mandarin Oriental Hyde Park, London
- repair expenses and write-off of tangible
assets and other incidental expenses - (7.7)
- insurance recovery for replacement of
tangible assets and other incidental expenses - 7.7
Closure of The Excelsior, Hong Kong
- other costs - (6.5)
Change in fair value of investment property
under development (333.7) 8.8
Change in fair value of other investments - (0.4)
(333.7) 1.9
------- ------
EBITDA from subsidiaries (377.4) 61.8
Underlying depreciation and amortisation
from
subsidiaries (37.4) (34.3)
Non-trading items (note 7)
Closure of The Excelsior, Hong Kong
- accelerated depreciation and amortisation - (25.4)
------- ------
Operating (loss)/profit (414.8) 2.1
------- ------
Included in other operating income were government grants, the
majority of which were in support of employee retention, of US$10.1
million in relation to the COVID-19 pandemic for the six months
ended 30th June 2020.
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Operating Net Net
and (loss)/ financing (loss)/
EBITDA amortisation profit charges Tax profit
US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2020
By geographical area:
Asia (0.5) (4.5) (5.0) (1.0) 0.9 (5.1)
EMEA (2.4) (0.2) (2.6) - - (2.6)
America (3.5) (1.4) (4.9) (0.9) - (5.8)
------ ------------- --------- ---------- ----- --------
(6.4) (6.1) (12.5) (1.9) 0.9 (13.5)
Six months ended
30th June 2019
By geographical area:
Asia 9.1 (6.1) 3.0 (0.9) (1.0) 1.1
EMEA (2.0) (0.2) (2.2) - - (2.2)
America 2.1 (1.3) 0.8 (1.2) (0.1) (0.5)
------ ------------- --------- ---------- ----- --------
9.2 (7.6) 1.6 (2.1) (1.1) (1.6)
Included in share of results of associates and joint ventures
were the Group's share of government grants, the majority of which
were in support of employee retention, of US$1.6 million in
relation to the COVID-19 pandemic for the six months ended 30th
June 2020.
5. TAX
Six months ended 30th June
2020 2019
US$m US$m
Tax (charged)/credited to profit and loss is
analysed as follows:
Current tax (0.6) (8.7)
Deferred tax 0.3 3.6
----- -----
(0.3) (5.1)
----- -----
By geographical area:
Asia (0.6) (2.9)
EMEA 0.3 (1.9)
America - (0.3)
----- -----
(0.3) (5.1)
----- -----
Tax credit relating to cash flow hedges of US$1.6 million (2019:
US$0.4 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 credit of associates and joint ventures of US$0.9
million (2019: tax charge of US$1.1 million) is included in share
of results of associates and joint ventures (note 4).
6. EARNINGS PER SHARE
Basic loss/earnings per share are calculated on loss
attributable to shareholders of US$435.5 million (2019: US$12.1
million) and on the weighted average number of 1,263.2 million
(2019: 1,262.6 million) shares in issue during the period.
Diluted loss/earnings per share are calculated on loss
attributable to shareholders of US$435.5 million (2019: US$12.1
million) and on the weighted average number of 1,263.2 million
(2019: 1,263.2 million) shares after adjusting for the number of
shares which are deemed to be issued for no consideration under the
share-based long-term incentive plans based on the average share
price during the period.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2020 2019
Weighted average number of shares for basic
earnings per share calculation 1,263.2 1,262.6
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans - 0.6
------- -------
Weighted average number of shares for diluted
earnings per share calculation 1,263.2 1,263.2
------- -------
Additional basic and diluted loss/earnings per share are also
calculated based on underlying loss/profit attributable to
shareholders. A reconciliation of earnings is set out below:
Six months ended 30th June
2020 2019
Basic Diluted
Basic Diluted (loss)/ (loss)/
loss loss earnings earnings
per share per share per share per share
US$m USc USc US$m USc USc
Loss attributable
to shareholders (435.5) (34.48) (34.48) (12.1) (0.96) (0.96)
Non-trading items
(note 7) 333.7 22.8
Underlying (loss)/
profit attributable
to shareholders (101.8) (8.06) (8.06) 10.7 0.85 0.85
------- ------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investments property under development and
investments which are measured at fair value through profit and
loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable
intangible assets and other investments; provisions for the closure
of businesses; acquisition-related costs in business combinations;
and other credits and charges of a non-recurring nature that
require inclusion in order to provide additional insight into
underlying business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2020 2019
US$m US$m
Fire at Mandarin Oriental Hyde Park, London
* repair expenses and write-off of tangible assets
and other incidental expenses - (7.7)
* insurance recovery for replacement of tangible
assets and other incidental expenses - 7.7
Closure of The Excelsior, Hong Kong
* accelerated depreciation and amortisation - (25.3)
* other costs - (5.9)
Change in fair value of investment property
under development (note 8) (333.7) 8.8
Change in fair value of other investments - (0.4)
------- ------
(333.7) (22.8)
------- ------
8. INVESTMENT PROPERTY UNDER DEVELOPMENT
Following the closure of The Excelsior, Hong Kong, by the end of
March 2019, its use has been changed from a hotel property to a
commercial property for redevelopment. The site was revalued and
transferred from a right-of-use asset held at historical
depreciated cost to an investment property under development
subject to regular valuation reviews. The revaluation surplus of
US$2,943.4 million was recognised to the asset revaluation reserve
through other comprehensive income on 31st March 2019. Subsequent
fair value change of the investment property under development has
been recognised as a non-trading item in the profit and loss.
Six months ended
Year ended
30th June 31st December
2020 2019 2019
US$m US$m US$m
Fair value at beginning of period 2,967.7 - -
Transfer from right-of-use assets
on 31st March - 2,993.6 2,993.6
Exchange differences 12.8 13.9 25.5
Additions 11.1 4.0 15.9
(Decrease)/increase in fair value (333.7) 8.8 (67.3)
-------- ---------- --------------
Fair value at end of period 2,657.9 3,020.3 2,967.7
-------- ---------- --------------
9. DIVIDS
Six months ended 30th June
2020 2019
US$m US$m
No final dividend in respect of 2019
(2018: USc1.50 per share) - 18.9
----- -----
No interim dividend in respect of 2020 has been declared by the
Board (2019: USc1.50 per share amounting to a total of US$19.0
million).
10. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2020 and 31st December
2019 amounted to US$736.7 million and US$765.6 million,
respectively.
11. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2020 and 31st December
2019 are as follows:
Other
Fair value Financial financial
Fair value through assets liabilities Total
of hedging profit at amortised at amortised carrying Fair
instruments and loss cost costs amount value
US$m US$m US$m US$m US$m US$m
30th June 2020
Financial assets
measured at fair
value
Other investments - 15.3 - - 15.3 15.3
------------ ------------ ------------- ------------- ---------- -------
Financial assets
not measured
at fair value
Debtors - - 51.3 - 51.3 51.3
Bank and cash
balances - - 187.1 - 187.1 187.1
------------ -------------
- - 238.4 - 238.4 238.4
------------ ------------ ------------- ------------- ---------- -------
Financial liabilities
measured at fair
value
Derivative financial
instruments (9.3) - - - (9.3) (9.3)
------------ ------------ ------------- ------------- ---------- -------
Financial liabilities
not measured
at fair value
Borrowings - - - (599.1) (599.1) (599.1)
Lease liabilities - - - (173.2) (173.2) (173.2)
Trade and other
payable excluding
non-financial
liabilities - - - (106.4) (106.4) (106.4)
------------ -------------
- - - (878.7) (878.7) (878.7)
------------ ------------ ------------- ------------- ---------- -------
Other
Fair value Financial financial
Fair value through assets liabilities Total
of hedging profit at amortised at amortised carrying Fair
instruments and loss cost costs amount value
US$m US$m US$m US$m US$m US$m
31st December
2019
Financial assets
measured at fair
value
Other investments - 15.9 - - 15.9 15.9
Derivative financial
instruments 1.5 - - - 1.5 1.5
------------ ------------ ------------- ------------- ---------- -------
1.5 15.9 - - 17.4 17.4
------------ ------------ ------------- ------------- ---------- -------
Financial assets
not measured at
fair value
Debtors - - 61.4 - 61.4 61.4
Bank and cash
balances - - 270.7 - 270.7 270.7
------------ -------------
- - 332.1 - 332.1 332.1
------------ ------------ ------------- ------------- ---------- -------
Financial liabilities
measured at fair
value
Derivative financial
instruments (0.9) - - - (0.9) (0.9)
------------
Financial liabilities
not measured at fair
value
Borrowings - - - (571.1) (571.1) (571.1)
Lease liabilities - - - (175.4) (175.4) (175.4)
Trade and other
payable excluding
non-financial
liabilities - - - (132.4) (132.4) (132.4)
------------ -------------
- - - (878.9) (878.9) (878.9)
------------ ------------ ------------- ------------- ---------- -------
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 2020 and the year ended 31st December
2019.
The table below analyses financial instruments carried at fair
value at 30th June 2020 and 31st December 2019, by the levels in
the fair value measurement hierarchy:
Observable
market current Unobservable
transactions inputs Total
US$m US$m US$m
30th June 2020
Assets
Other investments 4.6 10.7 15.3
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income (9.3) - (9.3)
--------------- ------------ -----
31st December 2019
Assets
Other investments 4.6 11.3 15.9
Derivative financial instruments
at fair value
- through other comprehensive
income 1.5 - 1.5
--------------- ------------ -----
6.1 11.3 17.4
--------------- ------------ -----
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income (0.9) - (0.9)
--------------- ------------ -----
There were no transfers among the two categories during the six
months ended 30th June 2020 and the year ended 31st December
2019.
Movement of financial instruments which are valued based on
unobservable inputs during the six months ended 30th June 2020 and
the year ended 31st December 2019 are as follows:
Unlisted
investments
US$m
At 1st January 2020 11.3
Additions 0.4
Disposals (1.0)
------------
At 30th June 2020 10.7
------------
At 1st January 2019 9.1
Additions 2.2
------------
At 31st December 2019 11.3
------------
(ii) 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.
12. 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$2.7 million (2019: US$7.3 million) received from the Group's six
(2019: 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 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. The risk of a
global pandemic, such as COVID-19, had been highlighted as a key
risk.
-- 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 115 and 116 of the
Company's 2019 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
Craig Beattie
Directors
Dividend Information for Shareholders
In light of the substantially reduced levels of business, no
interim dividend in respect of the 2020 financial year will be
paid.
About 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 33 hotels and seven residences in 23 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$5.5 billion as at 30th June 2020.
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 / Craig Beattie (852) 2895 9288
Sally de Souza (852) 2895 9167
Brunswick Group Limited
David Ashton (852) 3512 5063
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 SDSSUSESSEIW
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July 30, 2020 06:01 ET (10:01 GMT)
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