REG - Mandarin Oriental Jardine Matheson Hdg - Half Year Results
28/07/2022 10:30
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RNS Number : 0678U Mandarin Oriental International Ltd 28 July 2022
Announcement
28th July 2022
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 MONTHS ENDED 30TH JUNE 2022
HIGHLIGHTS
· Improved EBITDA profitability in the first half of 2022, with underlying
losses reducing significantly
· Business performance continued to improve in the second quarter in most
markets with strong room rates and increasing occupancy
· Four new management contracts announced in the first half
"Business activity in most parts of the world has improved as COVID-19
restrictions have been relaxed, leading to improved operating profitability
and a reduction in underlying losses. Challenges remain, however, in China,
particularly Hong Kong, and Japan, where restrictions continue to hamper our
operations. The Group continues to add management contracts for
brand-enhancing properties to grow the portfolio further."
Ben Keswick
Chairman
RESULTS
(Unaudited)
Six months ended 30th June
2022 2021 Change
US$m US$m %
Combined total revenue of hotels under management((1)) 679.4 381.8 +78
198.4 101.8 +95
Revenue
Underlying EBITDA (Earnings before interest, tax, depreciation and 28.4 (17.0) n/a
amortisation)((2))
(21.0) (66.8) +69
Underlying loss attributable to shareholders((3))
Revaluation gain/(loss) on investment property under development 2.7 (89.1) n/a
Loss attributable to shareholders (18.3) (155.9) +88
US¢ US¢ %
Underlying loss per share((3)) (1.66) (5.29) +69
Loss per share (1.45) (12.34) +88
US$ US$ %
Net asset value per share((4)) 2.55 2.62 -3
Adjusted net asset value per share((4)(5)) 3.86 3.93 -2
Net debt/shareholders' funds((4)) 16% 16%
Net debt/adjusted shareholders' funds((4)(5)) 11% 10%
(1) Combined revenue includes turnover of the Group's subsidiary hotels in
addition to 100% of revenue from associates, joint ventures 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 2022 and 31st December 2021, 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 2022
and31st December 2021. 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
2022 and 31st December 2021 have included the market value of the Group's
freehold and leasehold interests which were appraised as at 31st December 2021
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2022
OVERVIEW
In 2022, the business returned to EBITDA profitability in the first half, with
underlying losses reducing significantly. The business benefitted from
increased leisure travel in most parts of the world, and the management
business in particular continued its strong progress with increased
revenues. The Group continues to add management contracts for
brand-enhancing properties to grow the portfolio further.
HOTEL PERFORMANCE
In Europe, the Middle East and Africa ('EMEA') and America, where pandemic
restrictions have largely relaxed, the Group benefitted from strong leisure
demand, with rates at or above pre-pandemic levels and improving occupancy
levels. In Asia, demand in China remained impacted by government
restrictions to contain outbreaks of COVID-19. In other Asian markets
however, pandemic restrictions have slowly eased, allowing a gradual recovery
in occupancy levels.
The combined total revenue of hotels under management increased by 78% in the
first half of 2022, compared to the equivalent period in 2021.
FINANCIAL PERFORMANCE
Earnings before interest, tax, depreciation and amortisation ('EBITDA') for
the first half of 2022 were US$28 million, a significant improvement compared
to EBITDA losses of US$17 million in the first half of 2021. Results
benefitted from increased business levels in EMEA and America, where travel
restrictions have been lifted. In addition, the management business showed
improved profitability in the period, due to increased management fees in line
with higher total revenues, as well as cost control.
Underlying losses for the period were US$21 million, a 69% improvement
compared toUS$67 million for the first half of 2021. The valuation of the
Causeway Bay site under development remained broadly in line with the
valuation at 31st December 2021, resulting in a non-trading gain of US$3
million. Total losses attributable to shareholders were US$18 million in the
first half, compared to US$156 million in the same period in 2021.
At 30th June 2022, net debt was US$519 million, broadly in line with US$517
million at the end of 2021. The Group remains well funded, with headroom of
US$488 million in its available cash and committed facilities. The Group's
gearing as a percentage of adjusted shareholders' funds was 11%, taking into
account the market value of the Group's properties.
No interim dividend will be paid in respect of 2022 first-half results.
BUSINESS DEVELOPMENTS
Four new management contracts were announced in the first half of the year:
Mandarin Oriental, Costa Navarino - the Group's first property in Greece;
Mandarin Oriental Shepheard, Cairo - a comprehensive renovation of the
historic Shepheard Hotel in Egypt; Mandarin Oriental, Cristallo, Cortina - the
Group's first alpine resort; and a new resort on a private island in the
Maldives.
Our pipeline remains robust, with 25 projects to open in the next five years,
comprising 11 standalone hotel projects, 11 projects with hotel and residences
components and three standalone residences projects.
In the second half of 2022, we expect to open a new hotel in Lucerne and two
standalone residences projects in Barcelona and Beverly Hills.
On 19th July 2022, the Group announced the sale of Mandarin Oriental,
Washington D.C. for US$139 million, and the hotel will cease to be operated by
Mandarin Oriental on 8th September 2022. The Group's portfolio has developed
significantly over recent years, with many new, unique properties across the
world that are more in line with our long-term vision for the brand than this
property. With strong interest from investors, the time was right to sell
this property.
OUTLOOK
Luxury hospitality trading conditions continue to improve in most markets and,
despite continuing constraints on travel in China and Japan, the Group expects
to see improved results in the second half and will continue to benefit from
its robust pipeline and opening of new properties and residences. The Board
remains confident that the strength of the Mandarin Oriental brand will
underpin the long-term success of the Group in the future.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2022
(unaudited)
Six months ended 30th June Year ended 31st December
2022 2021 2021
Underlying Non-trading Total Underlying Non-trading Total Underlying Non-trading Total
business performance Items US$m business Items US$m business Items US$m
US$m US$m performance US$m performance US$m
US$m US$m
Revenue (note 2) 198.4 - 198.4 101.8 - 101.8 316.9 - 316.9
Cost of sales (150.0) - (150.0) (114.7) - (114.7) (261.3) - (261.3)
Gross profit/(loss) 48.4 - 48.4 (12.9) - (12.9) 55.6 - 55.6
Selling and distribution costs (11.7) - (11.7) (9.8) - (9.8) (20.7) - (20.7)
Administration expenses (52.5) - (52.5) (44.8) - (44.8) (104.1) - (104.1)
Other operating income 3.5 - 3.5 22.1 - 22.1 43.2 0.6 43.8
Change in fair value of investment property under development - 2.7 2.7 - (89.1) (89.1) - (73.9) (73.9)
Operating loss (note 3) (12.3) 2.7 (9.6) (45.4) (89.1) (134.5) (26.0) (73.3) (99.3)
Financing charges (6.7) - (6.7) (6.9) - (6.9) (13.8) - (13.8)
Interest income 0.6 - 0.6 0.5 - 0.5 1.1 - 1.1
Net financing charges (6.1) - (6.1) (6.4) - (6.4) (12.7) - (12.7)
Share of results of associates and joint ventures (note 4) (1.0) - (1.0) (15.0) - (15.0) (21.8) - (21.8)
- -
Loss before tax (19.4) 2.7 (16.7) (66.8) (89.1) (155.9) (60.5) (73.3) (133.8)
Tax (note 5) (1.6) - (1.6) - - - (7.6) - (7.6)
Loss after tax (21.0) 2.7 (18.3) (66.8) (89.1) (155.9) (68.1) (73.3) (141.4)
Attributable to:
Shareholders of the Company (notes 6 & 7) (21.0) 2.7 (18.3) (66.8) (89.1) (155.9) (68.1) (73.3) (141.4)
Non-controlling interests - - - - - - - - -
(21.0) 2.7 (18.3) (66.8) (89.1) (155.9) (68.1) (73.3) (141.4)
US¢ US¢ US¢ US¢ US¢ US¢
Loss per share (note 6)
- basic (1.66) (1.45) (5.29) (12.34) (5.39) (11.19)
- diluted (1.66) (1.45) (5.29) (12.34) (5.39) (11.19)
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2022
(unaudited) Year ended
Six months ended 31st
30th June December
2022 2021 2021
US$m US$m US$m
Loss for the period (18.3) (155.9) (141.4)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans - - 3.5
Tax on items that will not be reclassified - - (0.6)
- - 2.9
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
- net losses arising during the period (82.4) (25.7) (70.7)
Cash flow hedges
- net gains arising during the period 12.2 2.7 11.6
Tax relating to items that may be reclassified (1.5) (0.5) (1.3)
Share of other comprehensive expense of associates and joint ventures (1.0) (1.9) (2.0)
(72.7) (25.4) (62.4)
Other comprehensive expense for the period, net of tax (72.7) (25.4) (59.5)
Total comprehensive expense for the period (91.0) (181.3) (200.9)
Attributable to:
Shareholders of the Company (90.8) (181.1) (200.7)
Non-controlling interests (0.2) (0.2) (0.2)
(91.0) (181.3) (200.9)
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 30th June 2022
(unaudited) At 31st
At 30th June December
2022 2021 2021
US$m US$m US$m
Net assets
Intangible assets 46.4 44.0 46.7
Tangible assets 1,011.4 1,147.2 1,098.2
Right-of-use assets 248.3 283.6 273.3
Investment property under development (note 8) 2,459.5 2,447.1 2,462.0
Associates and joint ventures 188.2 216.3 201.5
Other investments 14.1 15.5 16.5
Deferred tax assets 12.9 17.7 13.7
Pension assets 6.7 5.0 7.1
Non-current debtors 17.1 4.8 8.9
Non-current assets 4,004.6 4,181.2 4,127.9
Stocks 4.7 5.5 5.3
Current debtors 64.5 99.2 68.8
Current tax assets 1.9 3.0 2.2
Bank and cash balances 179.0 137.7 212.8
Current assets 250.1 245.4 289.1
Current creditors (147.9) (138.7) (157.2)
Current borrowings (65.3) (2.6) (2.5)
Current lease liabilities (5.4) (6.7) (6.3)
Current tax liabilities (8.9) (9.5) (9.9)
Current liabilities (227.5) (157.5) (175.9)
Net current assets 22.6 87.9 113.2
Long-term borrowings (632.8) (725.1) (727.8)
Non-current lease liabilities (123.0) (156.7) (147.4)
Deferred tax liabilities (49.8) (47.7) (50.1)
Pension liabilities (0.3) (0.3) (0.3)
Non-current creditors - (7.4) (3.2)
3,221.3 3,331.9 3,312.3
Total equity
Share capital 63.2 63.2 63.2
Share premium 500.7 499.9 500.5
Revenue and other reserves 2,654.1 2,765.3 2,745.1
Shareholders' funds 3,218.0 3,328.4 3,308.8
Non-controlling interests 3.3 3.5 3.5
3,221.3 3,331.9 3,312.3
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2022
Share Share Capital Revenue Asset revaluation reserves US$m Hedging Exchange Attributable to shareholders of the Company US$m Attributable to non- Total
capital premium reserves reserves reserves reserves controlling interests equity
US$m US$m US$m US$m US$m US$m US$m US$m
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
Six months ended 30th June 2021 (unaudited)
At 1st January 2021 63.2 499.7 260.3 (240.3) 2,943.4 (9.7) (7.1) 3,509.5 3.7 3,513.2
Total comprehensive income - - - (155.9) - 2.1 (27.3) (181.1) (0.2) (181.3)
Transfer - 0.2 (0.5) 0.3 - - - - - -
At 30th June 2021 63.2 499.9 259.8 (395.9) 2,943.4 (7.6) (34.4) 3,328.4 3.5 3,331.9
Year ended 31st December 2021
At 1st January 2021 63.2 499.7 260.3 (240.3) 2,943.4 (9.7) (7.1) 3,509.5 3.7 3,513.2
Total comprehensive income - - - (137.8) - 10.6 (73.5) (200.7) (0.2) (200.9)
Transfer - 0.8 (1.2) 0.4 - - - - - -
At 31st December 2021 63.2 500.5 259.1 (377.7) 2,943.4 0.9 (80.6) 3,308.8 3.5 3,312.3
Revenue reserves as at 30th June 2022 included cumulative fair value loss on
the investment property under development of US$613.4 million (US$631.3
million as at 30th June 2021 and US$616.1 million as at 31st December 2021).
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2022
(unaudited) Year ended
Six months ended 31st
30th June December
2022 2021 2021
US$m US$m US$m
Operating activities
Operating loss (9.6) (134.5) (99.3)
Depreciation, amortisation and impairment 31.4 35.4 68.5
Other non-cash items (3.0) 88.1 71.2
Movements in working capital (0.9) (4.3) 0.9
Interest received 1.2 0.3 0.4
Interest and other financing charges paid (6.5) (6.9) (13.5)
Tax paid (2.3) (0.6) (1.8)
Cash flows from operating activities 10.3 (22.5) 26.4
Investing activities
Purchase of tangible assets (3.4) (10.0) (15.3)
Additions to investment property under development (13.7) (11.8) (19.7)
Purchase of intangible assets (2.4) (0.8) (6.1)
Refund/(payment) on Munich expansion 4.0 (28.6) 13.0
Purchase of other investments (0.2) (0.2) (0.3)
Purchase of an associate (1.0) - -
Advance to associates and joint ventures (0.4) (7.0) (7.1)
Repayment of loans to associates and joint ventures 1.9 0.5 3.0
Cash flows from investing activities (15.2) (57.9) (32.5)
Financing activities
Drawdown of borrowings 6.4 117.8 130.6
Repayment of borrowings (24.1) (61.3) (66.4)
Principal elements of lease payments (3.2) (1.3) (3.3)
Cash flows from financing activities (20.9) 55.2 60.9
Net (decrease)/increase in cash and cash equivalents (25.8) (25.2) 54.8
Cash and cash equivalents at beginning of period 212.8 164.6 164.6
Effect of exchange rate changes (8.0) (1.7) (6.6)
Cash and cash equivalents at end of period 179.0 137.7 212.8
Mandarin Oriental International Limited
Notes to Condensed Financial Statements
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
(a) Going Concern
The Group's operations and financial performance have been severely impacted
by the unprecedented decline in both international and domestic travel since
the COVID-19 pandemic began. Prior to the pandemic the Group had significant
headroom in its committed debt facilities and cash balances available to
finance operating losses. This has increased with new debt facilities in
February 2021.
Operating conditions continued to improve in most markets in the first half of
2022 as COVID-19 restrictions have been relaxed, leading to improved operating
profitability and a reduction in underlying losses. Challenges remain,
however, in China, particularly Hong Kong, and Japan, where restrictions
continue to hamper our operations. A return of profitability to pre-pandemic
levels by the Group will be dependent on the extent of travel restrictions
that are maintained by governments.
In the first half of 2022, the Group recorded a total cash inflow from
operating activities of US$10 million, a significant improvement from a total
cash outflow from operating activities of US$23 million in the first half of
2021.
The Group's balance sheet is underpinned by equity interests in a number of
prime hotel properties which are carried on the Group's balance sheet at
historical cost less depreciation. Taking into account the market value of
the Group's property interests, the adjusted shareholders' funds were US$4.9
billion at 30th June 2022.
At 30th June 2022, the Group had total liquidity of US$488 million, comprising
US$309 million of undrawn committed facilities and US$179 million of cash
balances. The Group's facilities are not subject to any cash flow covenants
and had an average remaining tenor of 1.6 years. Overall, the Group's
balance sheet position remains strong.
In adopting the going concern basis for preparing the condensed financial
statements, the Directors have considered a downside cash flow forecast which
assumes the flagship hotel of the Group in Hong Kong continues to operate at
substantially reduced levels of business as a consequence of travel
restrictions maintained by the government for a period of 12 months from the
date of approval of the condensed financial statements.
Having considered the outcome of the downside cash flow forecast, the
Directors are of the opinion that the Group has sufficient financial resources
to continue operating for a period of at least 12 months from the date of
approval of the condensed financial statements. Accordingly, the condensed
financial statements have been prepared on a going concern basis.
(b) Basis of preparation
The condensed financial statements have been prepared in accordance with IAS
34 'Interim Financial Reporting' and on a going concern basis. The condensed
financial statements have not been audited or reviewed by the Group's auditors
pursuant to the UK Auditing Practices Board guidance on the review of interim
financial information.
There are no changes to the accounting policies as described in the 2021
annual financial statements and the Group has not early adopted any standard
or amendments that have been issued but not yet effective.
2. REVENUE
Six months ended 30th June
2022 2021
US$m US$m
By business activity:
Hotel ownership 177.2 87.1
Hotel & Residences branding and management 27.3 17.6
Less: intra-segment revenue (6.1) (2.9)
198.4 101.8
By geographical area:
Asia 53.8 54.1
Europe, Middle East and Africa ('EMEA') 101.9 33.9
America 42.7 13.8
198.4 101.8
Revenue from contracts with customers:
Recognised at a point in time 62.0 37.4
Recognised over time 127.2 54.6
189.2 92.0
Revenue from other sources:
Rental income 9.2 9.8
198.4 101.8
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION)
Six months ended 30th June
2022 2021
US$m US$m
By business activity:
Hotel ownership 5.7 (12.7)
Hotel & Residences branding and management 13.4 2.7
Underlying EBITDA from subsidiaries 19.1 (10.0)
Non-trading items (note 7)
Change in fair value of investment property
under development 2.7 (89.1)
EBITDA from subsidiaries 21.8 (99.1)
Underlying depreciation and amortisation from
subsidiaries (31.4) (35.4)
Operating loss (9.6) (134.5)
By geographical area:
Asia (13.5) (7.0)
EMEA 28.4 5.9
America 4.2 (8.9)
Underlying EBITDA from subsidiaries 19.1 (10.0)
The Group had received government grants of US$3.5 million (2021: US$18.1
million) and rent concessions of nil (2021: US$2.1 million) for the six months
ended 30th June 2022. These amounts were in relation to the COVID-19
pandemic and were accounted for as other operating income.
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
EBITDA Depreciation Operating profit/ Net Tax Net
US$m and (loss) financing US$m (loss)/
amortisation US$m charges profit
US$m US$m US$m
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)
Six months ended 30th June 2021
By business activity:
Hotel ownership (6.9) (7.3) (14.2) (1.9) 1.5 (14.6)
Other (0.1) (0.3) (0.4) - - (0.4)
(7.0) (7.6) (14.6) (1.9) 1.5 (15.0)
By geographical area:
Asia (3.0) (5.2) (8.2) (0.9) 1.5 (7.6)
EMEA (3.5) (1.2) (4.7) (0.2) - (4.9)
America (0.5) (1.2) (1.7) (0.8) - (2.5)
(7.0) (7.6) (14.6) (1.9) 1.5 (15.0)
The results of associates and joint ventures included the Group's share of
government grants of US$0.2 million (2021: US$0.7 million) and rent
concessions of US$0.2 million (2021: US$0.1 million) for the six months ended
30th June 2022. These amounts were in relation to the COVID-19 pandemic.
5. TAX
Six months ended 30th June
2022 2021
US$m US$m
Tax (charged)/credited to profit and loss is analysed as follows:
Current tax (1.7) (0.1)
Deferred tax 0.1 0.1
(1.6) -
By business activity:
Hotel ownership (0.7) 0.7
Hotel & Residences branding and management (0.9) (0.7)
(1.6) -
By geographical area:
Asia (0.2) (0.3)
EMEA (1.3) 0.3
America (0.1) -
(1.6) -
Tax charge relating to cash flow hedges of US$1.5 million (2021: US$0.5
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.
Share of tax charge of associates and joint ventures of US$0.3 million (2021:
tax credit of US$1.5 million) is included in share of results of associates
and joint ventures (note 4).
6. LOSS PER SHARE
Basic loss per share is calculated on loss attributable to shareholders of
US$18.3 million (2021: US$155.9 million) and the weighted average number of
1,263.7 million (2021: 1,263.2 million) shares in issue during the period.
Diluted loss per share is calculated on loss attributable to shareholders of
US$18.3 million (2021: US$155.9 million) and the weighted average number of
1,263.8 million (2021: 1,263.6 million) shares in issue after adjusting for
the number of shares which are deemed to be issued for no consideration under
the share-based long-term incentive plans based on the average share price
during the period.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2022 2021
Weighted average number of shares for basic earnings per share calculation 1,263.7 1,263.2
Adjustment for shares deemed to be issued for no consideration under the 0.1 0.4
share-based long-term incentive plans
Weighted average number of shares for diluted earnings per share calculation 1,263.8 1,263.6
Additional basic and diluted loss per share are also calculated based on
underlying loss attributable to shareholders. A reconciliation of losses is
set out below:
Six months ended 30th June
2022 2021
US$m Basic Diluted US$m Basic Diluted
loss loss loss loss
per share per share per share per share
US¢ US¢ US¢ US¢
Loss attributable to shareholders (18.3) (1.45) (1.45) (155.9) (12.34) (12.34)
Non-trading items (note 7) (2.7) 89.1
Underlying loss attributable to shareholders (21.0) (1.66) (1.66) (66.8) (5.29) (5.29)
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment property under development and investments which are measured at
fair value through profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of non-depreciable
intangible assets and other investments; provisions for the closure of
businesses; acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require inclusion in order
to provide additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Six months ended 30th June
2022 2021
US$m US$m
Change in fair value of investment 2.7 (89.1)
property under
development (note 8)
8. INVESTMENT PROPERTY UNDER DEVELOPMENT
Six months ended Year ended 31st December
30th June
2022 2021 2021
US$m US$m US$m
Fair value at beginning of period 2,462.0 2,528.3 2,528.3
Exchange differences (15.2) (3.9) (15.0)
Additions 10.0 11.8 22.6
Increase/(decrease) in fair value 2.7 (89.1) (73.9)
Fair value at end of period 2,459.5 2,447.1 2,462.0
9. DIVIDENDS
In light of the substantially reduced levels of business due to the impact of
the COVID-19 pandemic, no interim dividend in respect of the six months ended
30th June 2022 has been declared by the Board (2021: nil).
10. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2022 and 31st December 2021 amounted to
US$545.6 million and US$550.3 million, respectively.
11. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities, together with
carrying amounts at 30th June 2022 and 31st December 2021 are as follows:
Fair value of hedging instruments Financial assets at amortised cost Other
US$m Fair value through US$m financial liabilities Total Fair
profit and loss US$m carrying value
US$m amount US$m
US$m
30th June 2022
Financial assets measured at fair value
Other investments - 14.1 - - 14.1 14.1
Derivative financial instruments 13.1 - - - 13.1 13.1
13.1 14.1 - - 27.2 27.2
Financial assets not measured at fair value
Debtors - - 53.1 - 53.1 53.1
Bank and cash balances - - 179.0 - 179.0 179.0
- - 232.1 - 232.1 232.1
Financial liabilities not measured at fair value
Borrowings - - - (698.1) (698.1) (698.1)
Lease liabilities - - - (128.4) (128.4) (128.4)
Trade and other payable excluding non-financial liabilities - - - (134.8) (134.8) (134.8)
- - - (961.3) (961.3) (961.3)
Fair value of hedging instruments Financial assets at amortised cost Other
US$m Fair value through profit and loss US$m financial liabilities Total Fair
US$m US$m carrying amount value
US$m US$m
31st December 2021
Financial assets measured at fair value
Other investments - 16.5 - - 16.5 16.5
Derivative financial instruments 4.4 - - - 4.4 4.4
4.4 16.5 - - 20.9 20.9
Financial assets not measured at fair value
Debtors - - 58.0 - 58.0 58.0
Bank and cash balances - - 212.8 - 212.8 212.8
- - 270.8 - 270.8 270.8
Financial liabilities
measured at fair value
Derivative financial instruments (3.6) - - - (3.6) (3.6)
Financial liabilities not measured
at fair value
Borrowings - - - (730.3) (730.3) (730.3)
Lease liabilities - - - (153.7) (153.7) (153.7)
Trade and other payable excluding non-financial liabilities - - - (129.9) (129.9) (129.9)
- - - (1,013.9) (1,013.9) (1,013.9)
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 2022 and the year ended 31st December 2021.
The table below analyses financial instruments carried at fair value at 30th
June 2022 and 31st December 2021, by the levels in the fair value measurement
hierarchy:
Observable Unobservable Total
market current transactions inputs US$m
US$m US$m
30th June 2022
Assets
Other investments 6.0 8.1 14.1
Derivative financial instruments at fair value - through other comprehensive 13.1 - 13.1
income
19.1 8.1 27.2
31st December 2021
Assets
Other investments 6.0 10.5 16.5
Derivative financial instruments at fair value
- through other comprehensive income 4.4 - 4.4
10.4 10.5 20.9
Liabilities
Derivative financial instruments at fair value
- through other comprehensive income (3.6) - (3.6)
There were no transfers among the two categories during the six months ended
30th June 2022 and the year ended 31st December 2021.
Movement of financial instruments which are valued based on unobservable
inputs during the six months ended 30th June 2022 and the year ended 31st
December 2021 are as follows:
Unlisted investments
US$m
At 1st January 2022 10.5
Disposals (2.4)
At 30th June 2022 8.1
At 1st January 2021 10.7
Disposals (0.2)
At 31st December 2021 10.5
(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.
12. 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 2022 are described below:
The Group managed six (2021: six) associate and joint venture hotels and
received management fees of US$5.7 million (2021: US$2.6 million) based on
long-term management agreements on normal commercial terms.
The Group provided hotel management services to Hongkong Land ('HKL'), a
subsidiary of JMH. Total management fees received from HKL amounted to US$0.6
million (2021: US$0.6 million), based on long-term management agreements on
normal commercial terms.
In respect of the Causeway Bay site under development, the Group paid
consultancy fees of US$0.7 million (2021: US$0.4 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$6.6 million (2021: US$9.8 million). The HKL agreement and GCL
contract were arranged 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.
13. POST BALANCE SHEET EVENT
On 19th July 2022, the Group announced that it has entered into an agreement
to sell Mandarin Oriental, Washington D.C. to Henderson Park, a private equity
real estate manager headquartered in London. On completion of the sale,
which is scheduled to occur on 8th September 2022, the property will cease to
be operated by Mandarin Oriental.
Following the sale, the Group will receive gross proceeds of approximately
US$139 million with a post-tax, non-trading gain of approximately US$45
million, which will be recognised in the second half of 2022.
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control.
The following have been identified previously as the areas of principal risk
and uncertainty facing the Company, and they remain relevant in the second
half of the year.
· Economic Risk
· Commercial Risk
· Financial and Treasury Risk
· Pandemic, Terrorism and Natural Disasters
· Key Agreements
· Reputational Risk and Value of the Brand
· Regulatory and Political Risk
· Cybersecurity Risk
· People Risk
· Environmental and Climate Risk
For greater detail, please refer to pages 125 to 128 of the Company's 2021
Annual Report, a copy of which is available on the Company's website
www.mandarinoriental.com (http://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
Matthew Bishop
Directors
Dividend Information for Shareholders
In light of the substantially reduced levels of business, no interim dividend
will be paid in respect of the six months ended 30th June 2022.
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 50
years ago into a global brand, the Group now operates 36 hotels and seven
residences in 24 countries and territories, with each property reflecting the
Group's oriental heritage and unique sense of place. 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$4.9 billion as
at 30th June 2022.
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 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
Andrea Newman (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 2022 to shareholders. This Half-Year Results
announcement will be made available on the Company's website,
www.mandarinoriental.com
(https://brunswickgroupllp-my.sharepoint.com/personal/lcorrigan_brunswickgroup_com/Documents/www.mandarinoriental.com)
, together with other Group announcements.
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