REG - Mandarin Oriental Jardine Matheson Hdg Jardine Strategic - 2016 PRELIMINARY ANNOUNCEMENT OF RESULTS <Origin Href="QuoteRef">JARD.SI</Origin> <Origin Href="QuoteRef">JSH.SI</Origin> <Origin Href="QuoteRef">MOIL.SI</Origin> - Part 2
02/03/2017 09:10
- Part 2: For the preceding part double click ID:nRSB0760Ya
(1.6) (261.5)
Dividends paid by the Company (note 14) (56.5) (75.3)
Dividends paid to non-controlling interests (0.1) -
Cash flows from financing activities (6.7) (22.8)
Net decrease in cash and cash equivalents (121.8) (7.0)
Cash and cash equivalents at 1st January 308.6 324.3
Effect of exchange rate changes (4.3) (8.7)
Cash and cash equivalents at 31st December 182.5 308.6
Mandarin Oriental International Limited
Notes
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information contained in this announcement has been based on the
preliminary results for the year ended 31st December 2016 which have been
prepared in conformity with International Financial Reporting Standards
('IFRS'), including International Accounting Standards ('IAS') and
Interpretations adopted by the International Accounting Standards Board.
Amendments effective in 2016 which are relevant to the Group's operations:
Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations
Amendments to IAS 1 Disclosure Initiative: Presentation of Financial Statements
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortization
Annual Improvements to IFRSs 2012 - 2014 Cycle
The adoption of these amendments does not have a significant effect on the
Group's accounting policies and disclosures.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.
2. REVENUE
2016US$m 2015US$m
By geographical area:
Hong Kong 224.5 238.6
Other Asia 106.4 100.1
Europe 177.8 204.9
The Americas 88.7 63.7
597.4 607.3
3. EBITDA (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND
AMORTIZATION) AND OPERATING PROFIT FROM SUBSIDIARIES
2016US$m 2015US$m
By geographical area:
Hong Kong 69.3 83.2
Other Asia 29.2 27.8
Europe 25.2 44.5
The Americas 5.9 5.2
Underlying EBITDA from subsidiaries 129.6 160.7
Non-trading items- acquisition-related costs (note 7) (1.8) (0.5)
EBITDA from subsidiaries 127.8 160.2
Less: depreciation and amortization (59.8) (52.9)
Operating profit 68.0 107.3
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Net Net
and Operating financing profit/
EBITDA amortization profit charges Tax (loss)
US$m US$m US$m US$m US$m US$m
2016
By geographical area:
Other Asia 20.9 (7.8) 13.1 (1.5) (2.3) 9.3
Europe 1.8 (0.7) 1.1 - - 1.1
The Americas 5.9 (3.0) 2.9 (2.2) 0.1 0.8
28.6 (11.5) 17.1 (3.7) (2.2) 11.2
Non-trading items- provision for litigation (note 7) (0.3) - (0.3) - - (0.3)
28.3 (11.5) 16.8 (3.7) (2.2) 10.9
2015
By geographical area:
Other Asia 21.1 (7.7) 13.4 (1.4) (2.2) 9.8
Europe 1.5 (0.3) 1.2 - (0.3) 0.9
The Americas 5.1 (2.8) 2.3 (2.1) 0.1 0.3
27.7 (10.8) 16.9 (3.5) (2.4) 11.0
Non-trading items- acquisition-related costs (note 7) (0.5) - (0.5) - - (0.5)
27.2 (10.8) 16.4 (3.5) (2.4) 10.5
5. TAX
2016US$m 2015US$m
Tax (charged)/credited to profit and loss is analyzed as follows:
Current tax (14.9) (17.9)
Deferred tax 1.2 1.3
(13.7) (16.6)
By geographical area:
Hong Kong (8.8) (10.7)
Other Asia (3.5) (1.7)
Europe (0.9) (4.1)
The Americas (0.5) (0.1)
(13.7) (16.6)
Tax relating to components of other comprehensive income or expense is
analyzed as follows:
Remeasurements of defined benefit plans 0.5 0.9
Cash flow hedges (0.4) -
0.1 0.9
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$2.2 million (2015:
US$2.4million) is included in share of results of associates and joint
ventures (note 4).
6. EARNINGS PER SHARE
Basic earnings per share are calculated on profit attributable to shareholders
of US$55.2 million (2015: US$89.3 million) and on the weighted average number
of 1,255.9 million (2015: 1,199.6 million) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable to
shareholders of US$55.2 million (2015: US$89.3 million) and on the weighted
average number of 1,261.5 million (2015: 1,204.5 million) shares after
adjusting for the number of shares which are deemed to be issued for no
consideration under the share-based long-term incentive plans based on the
average share price during the year.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2016 2015
Weighted average number of shares for basic earnings per share calculation 1,255.9 1,199.6
Adjustment for shares deemed to be issued for no consideration under the share-based long-term incentive plans 5.6 4.9
Weighted average number of shares for diluted earnings per share calculation 1,261.5 1,204.5
Additional basic and diluted earnings per share are also calculated based on
underlying profit attributable to shareholders. A reconciliation of earnings
is set out below:
2016 2015
US$m Basicearningsper shareUS¢ Dilutedearningsper shareUS¢ US$m Basicearningsper shareUS¢ Dilutedearningsper shareUS¢
Profit attributable to shareholders 55.2 4.40 4.38 89.3 7.44 7.41
Non-trading items (note 7) 2.1 1.0
Underlying profit attributable to shareholders 57.3 4.56 4.54 90.3 7.53 7.50
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include gains and losses arising from the sale of
businesses, investments and properties; impairment of non-depreciable
intangible assets and other investments; provisions for the closure of
businesses; acquisition-related costs in business combinations; provisions
against asset impairment and writebacks; and other credits and charges of a
non-recurring nature that require inclusion in order to provide additional
insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
2016US$m 2015US$m
Acquisition-related costs
- administration expenses 1.8 0.5
- share of results of associates and joint ventures - 0.5
1.8 1.0
Provision for litigation
- share of results of associates and joint ventures 0.3 -
2.1 1.0
8. TANGIBLE ASSETS
2016US$m 2015US$m
Opening net book value 1,255.0 1,315.1
Exchange differences (61.5) (59.1)
Additions 216.9 49.9
Disposals (0.6) (0.3)
Depreciation charge (57.7) (50.6)
Closing net book value 1,352.1 1,255.0
Freehold properties include a property of US$111.6 million (2015: US$104.6
million), which is stated net of tax increment financing of US$22.2 million
(2015: US$23.0 million) (note 10).
9. BORROWINGS
2016US$m 2015US$m
Bank overdrafts 0.1 -
Bank loans 473.9 434.1
Other borrowings 4.2 4.6
Tax increment financing (note 10) 1.7 1.7
479.9 440.4
Current 2.5 4.2
Long-term 477.4 436.2
479.9 440.4
10. TAX INCREMENT FINANCING
2016US$m 2015US$m
Netted off against the net book value of property (note 8) 22.2 23.0
Loan (note 9) 1.7 1.7
23.9 24.7
A development agreement was entered into between one of the Group's
subsidiaries and the District of Columbia ('District'), pursuant to which the
District agreed to provide certain funds to the subsidiary out of the net
proceeds obtained through the issuance and sale of certain tax increment
financing bonds ('TIF Bonds') for the development and construction of Mandarin
Oriental, Washington D.C.
The District agreed to contribute to the subsidiary US$33.0 million through
the issuance of TIF Bonds in addition to US$1.7 million issued in the form of
a loan, bearing simple interest at an annual rate of 6.0%. The US$1.7 million
loan plus all accrued interest will be due on the earlier of 10th April 2017
or the date of the first sale of the hotel.
The receipt of the TIF Bonds has been treated as a government grant and netted
off against the net book value in respect of the property (note 8). The loan
of US$1.7 million (2015: US$1.7 million) is included in current (2015:
long-term) borrowings (note 9).
11. ACQUISITION OF MANDARIN ORIENTAL, BOSTON
On 27th April 2016, the Group completed its US$140.0 million acquisition of
Mandarin Oriental, Boston, a hotel that the Group has managed since its
opening in 2008. The consideration of US$140.0 million represented the fair
values of the tangible assets acquired at the acquisition date. There was no
goodwill arising on acquisition.
12. ACQUISITION OF HOTEL RITZ, MADRID
In May 2015, the Group acquired a 50% interest in the Hotel Ritz, Madrid for
E65 million (US$73.3 million) in a joint venture with The Olayan Group, with
Mandarin Oriental managing the hotel under a long-term management agreement.
The hotel is to undergo a comprehensive renovation in 2018 and 2019, currently
estimated to cost a total of some E90 million, of which the Group's share will
be E45 million (US$47 million).
13. ISSUE OF SHARES
In April 2015, the Group completed a 1 for 4 rights issue with 250.9 million
new ordinary shares issued at US$1.26 per share, raising US$316.2 million of
gross proceeds. The proceeds of the issue were used to pay down debt in
advance of the refurbishment of Mandarin Oriental Hyde Park, London and to
fund the Group's acquisition of a 50% interest in the Hotel Ritz, Madrid. The
Group paid expenses of US$3.6 million in connection with the rights issue in
2015.
The Group issued 1.3 million new ordinary shares under the share-based
long-term incentive plans with proceeds of US$1.4 million in 2015.
14. DIVIDENDS
2016US$m 2015US$m
Final dividend in respect of 2015 of US¢3.00(2014: US¢5.00) per share 37.7 50.2
Interim dividend in respect of 2016 of US¢1.50(2015: US¢2.00) per share 18.8 25.1
56.5 75.3
A final dividend in respect of 2016 of US¢2.50 (2015: US¢3.00) per share
amounting to a total of US$31.4 million (2015: US$37.7 million) is proposed by
the Board. The dividend proposed will not be accounted for until it has been
approved at the 2017 Annual General Meeting. The amount will be accounted for
as an appropriation of revenue reserves in the year ending 31st December
2017.
15. CAPITAL COMMITMENTS
At 31st December 2016, total capital commitments of the Group amounted
to US$270.9 million (2015: US$321.4 million).
16. 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$13.2
million (2015: US$13.2 million) received from the Group's six (2015: 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 current financial year.
Amount 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 process by which the Group identifies and manages risk will be set out in
more detail in the Corporate Governance section of the Company's 2016 Annual
Report (the 'Report'). The following are the principal risks and
uncertainties facing the Company as required to be disclosed pursuant to the
Disclosure Guidance and Transparency Rules issued by the Financial Conduct
Authority in the United Kingdom and are in addition to the matters referred to
in the Chairman's Statement and Group Chief Executive's Review.
1. Economic and Financial Risk
The Group's business is exposed to the risk of negative developments in global
and regional economies and financial markets, either directly or through the
impact on the Group's investment partners, third-party hotel owners and
developers, bankers, suppliers or customers. These developments can result in
recession, inflation, deflation, currency fluctuations, restrictions in the
availability of credit, business failures, or increases in financing costs.
Such developments may increase operating costs, reduce revenues, lower asset
values or result in the Group being unable to meet in full its strategic
objectives. These developments could also adversely affect travel patterns
which would impact demand for the Group's products and services.
The steps taken by the Group to manage its exposure to financial risk will be
set out in the Financial Risk Management section in the Financial Statements
in the Report.
2. Commercial and Market Risk
Risks are an integral part of normal commercial practices, and where
practicable steps are taken to mitigate such risks.
The Group operates within the global hotel industry which is highly
competitive. Failure to compete effectively in terms of quality of product,
levels of service or price can have an adverse effect on earnings.
Significant competitive pressure or the oversupply of hotel rooms in a
specific market can lead to reduced margins. Advances in technology creating
new or disruptive competitive pressures might also negatively affect the
trading environment.
The Group competes with other luxury hotel operators for new opportunities in
the areas of hotel management, residences management and residences branding.
Failure to establish and maintain relationships with hotel owners or
developers could adversely affect the Group's business. The Group also makes
investment decisions in respect of acquiring new hotel properties and
undertaking major renovations at hotels in which it has an ownership interest.
The success of these investments is measured over the longer term and as a
result is subject to market risk.
Mandarin Oriental's continued growth depends on the opening of new hotels and
branded residences. Most of the Group's new developments are controlled by
third-party owners and developers and can be subject to delays due to issues
attributable to planning and construction, sourcing of finance, and the sale
of residential units. In extreme circumstances, such factors might lead to
the cancellation of a project.
3. Pandemic, Terrorism and Natural Disasters
The Group's business would be impacted by a global or regional pandemic as
this would impact travel patterns, demand for the Group's products and
services and could also affect the Group's ability to operate effectively.
The Group's hotels are also vulnerable to the effects of terrorism, either
directly through the impact of an act of terrorism or indirectly through the
impact of generally reduced economic activity in response to the threat of or
an actual act of terrorism. In addition, a number of the territories in which
the Group operates can experience from time to time natural disasters such as
typhoons, floods, earthquakes and tsunamis.
4. Key Agreements
The Group's business is reliant upon joint venture and partnership agreements,
property leasehold arrangements, management, license, branding and services
agreements or other key contracts. Cancellation, expiry or termination, or
the renegotiation of any of these key agreements and contracts, could have an
adverse effect on the financial performance of individual hotels as well as
the wider Group.
5. Reputational Risk and Value of the Brand
The Group's brand equity and global reputation is fundamental in supporting
its ability to offer premium products and services and to achieving acceptable
revenues and profit margins. Any damage to the Group's brand equity or
reputation, including as a result of negative effects relating to health and
safety, acts or omissions by Group personnel, information system breaches, and
any allegations of socially irresponsible policies and practices, might
adversely impact the attractiveness of the Group's properties or the loyalty
of the Group's guests.
6. Regulatory and Political Risk
The Group's business is subject to a number of regulatory environments in the
territories in which it operates. Changes in the regulatory approach to such
matters as employment legislation, tax rules, foreign ownership of assets,
planning controls and exchange controls have the potential to impact the
operations and profitability of the Group's business. Changes in the political
environment, including prolonged civil unrest, could also affect the Group's
business.
Mandarin Oriental International Limited
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
a) the consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards, including International
Accounting Standards and Interpretations adopted by the International
Accounting Standards Board; and
b) the sections of the Company's 2016 Annual Report, including the
Chairman's Statement, Group Chief Executive's Review and Principal Risks and
Uncertainties, which constitute the management report include a fair review of
all information required to be disclosed by the Disclosure Guidance and
Transparency Rules 4.1.8 to 4.1.11 issued by the Financial Conduct Authority
in the United Kingdom.
For and on behalf of the Board
James Riley
Stuart Dickie
Directors
The final dividend of US¢2.50 per share will be payable on 11th May 2017, subject to approval at the Annual General Meeting to be held on 3rd May 2017, to shareholders on
the register of members at the close of business on 17th March 2017. The shares will be quoted ex-dividend on the Singapore Exchange and the London Stock Exchange on
15th and 16th March 2017, respectively. The share registers will be closed from 20th to 24th March 2017, inclusive. Shareholders will receive their cash dividends in
United States dollars, unless they are registered on the Jersey branch register where they will have the option to elect for sterling. These shareholders may make new
currency elections for the 2016 final dividend by notifying the United Kingdom transfer agent in writing by 21st April 2017. The sterling equivalent of dividends
declared in United States dollars will be calculated by reference to a rate prevailing on 26th April 2017. 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 March 2017, must submit the relevant documents to M & C Services
Private Limited, the Singapore branch registrar, no later than 5.00 p.m. (local time) on 16th March 2017.
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 29 hotels and eight residences in
19 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 with the next hotel
opening planned in Doha. The Group has equity interests in a number of its
properties and adjusted net assets worth approximately US$3.9 billion as at
31st December 2016.
Mandarin Oriental's aim is to be recognized as the world's best luxury hotel
group. This will be achieved by investing in the Group's exceptional
facilities and its people, while maximizing 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 strategy of the Group is to open the hotels currently under development,
while continuing to seek further selective opportunities for expansion around
the world.
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
Joanna Donne (852) 3512 5070
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2016 can be accessed
through the internet at 'www.mandarinoriental.com'.
This information is provided by RNS
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