REG - Mandarin Oriental Jardine Matheson Hdg - Half-year Results
28/07/2023 10:45
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RNS Number : 5682H Mandarin Oriental International Ltd 28 July 2023
Announcement
28th July 2023
The following announcement was issued today to a Regulatory Information
Service approved by the Financial Conduct Authority in the United Kingdom.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2023
HIGHLIGHTS
· Underlying profit of US$28 million in first half, more than double
2019
· Record fee income in Management Business, with particular strength in
Europe and the Middle East
· Robust pipeline with several new openings scheduled in 2023
· Dividend payments recommence with interim dividend of US¢1.50 per
share
"Mandarin Oriental performed well in the first half of 2023. There was
particularly strong operating and financial performance by the Management
Business, which is well set for further growth. The strength of the Group's
brand, together with its existing portfolio of properties and strong pipeline,
give the Board confidence in the future success of Mandarin Oriental."
Ben Keswick
Chairman
RESULTS
(unaudited)
Six months ended 30th June
2023 2022 Change
US$m US$m %
Combined total revenue of hotels under management((1)) 881.5 679.4 +30
Revenue 260.7 198.4 +31
Underlying EBITDA (Earnings before interest, tax, depreciation, and 76.7 28.4 +170
amortisation)((2))
Underlying profit/(loss) attributable to shareholders((3)) 27.8 (21.0) n/a
Revaluation (loss)/gain on investment properties (140.2) 2.7 n/a
Gain on sale of a subsidiary 43.2 - n/a
Loss attributable to shareholders (69.2) (18.3) -278
US¢ US¢ %
Underlying earnings/(loss) per share((3)) 2.20 (1.66) n/a
Loss per share (5.48) (1.45) -278
Interim dividend per share 1.50 - n/a
US$ US$ %
Net asset value per share((4)) 2.58 2.61 -1
Adjusted net asset value per share((4)(5)) 3.83 3.87 -1
Net debt/shareholders' funds((4)) 7% 11%
Net debt/adjusted shareholders' funds((4)(5)) 5% 8%
(1) Combined revenue includes turnover of the Group's subsidiary hotels in
addition to 100% of revenue from associate, joint venture, and managed hotels.
(2) EBITDA of subsidiaries plus the Group's share of EBITDA of associates
and joint ventures.
(3) The Group uses 'underlying profit/loss' in its internal financial
reporting to distinguish between ongoing business performance and non-trading
items, as more fully described in note 7 to the condensed financial
statements. Management considers this to be a key measure which provides
additional information to enhance understanding of the Group's underlying
business performance.
(4) At 30th June 2023 and 31st December 2022, respectively.
(5) The Group's investment properties are carried at fair value on the
basis of valuations carried out by independent valuers at 30th June 2023 and
31st December 2022. The other freehold and leasehold interests are carried
at amortised cost in the consolidated balance sheet. Both the adjusted net
asset value per share and net debt/adjusted shareholders' funds for 30th June
2023 and 31st December 2022 have included the market value of the Group's
freehold and leasehold interests which were appraised as at 31st December
2022.
The interim dividend of US¢1.50 per share will be payable on 11th October
2023 to shareholders on the register of members at the close of business on
18th August 2023.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2023
OVERVIEW
The Group performed strongly in the first six months of 2023, recording an
underlying profit of US$28 million, a significant improvement compared to the
underlying loss in the first half of 2022 and more than double 2019. The
Group's portfolio of managed hotels continues to grow, with several new
openings planned in 2023 and significant additions made in the period to the
pipeline.
MANAGEMENT BUSINESS PERFORMANCE
The Group's combined Revenue per Available Room ('RevPAR') was well ahead of
both 2022 and 2019. The Group continued to deliver strong rates in many
locations, with resorts performing especially well. Occupancy also
strengthened significantly across all regions compared to the first half of
2022.
Particular strength was seen in Europe and the Middle East where almost all of
the hotels achieved record rates and strong occupancies, with RevPAR well
above both 2022 and 2019 levels. In America, hotels also delivered higher
RevPAR than in prior years, driven by improved occupancy. In Asia, RevPAR
performance from the Chinese mainland hotels improved significantly from 2022
and 2019 levels, due to the relaxation of travel restrictions. Hong Kong
continued its recovery after the relaxation of travel restrictions in early
2023. Mandarin Oriental, Hong Kong saw higher numbers of both international
and Chinese mainland visitors, leading to robust improvements in both rate and
occupancy from 2022 levels.
The combined total revenue of hotels under management in the first half of
2023 was US$882 million, representing a 30% increase compared to the same
period last year, and 38% higher than 2019.
NEW DEVELOPMENTS
The growth of the Management Business continues at pace, with several new
openings scheduled in the second half of 2023, comprising:
- four new hotels: a beachfront retreat in Costa Navarino, a second
London hotel in Mayfair, a resort in Muscat and the opening of a landmark
hotel in Zurich;
- a rebranding in Riyadh; and
- a standalone residences project on Fifth Avenue in New York.
Our hotel in Singapore remains on track to reopen in September 2023, following
a comprehensive renovation.
The Group's pipeline continues to grow, with four new hotel management
contracts and a standalone residences project in Madrid announced in the first
half of the year. The new hotel management contracts include a beach resort
in Mallorca, a new landmark hotel and residences in Athens, a hotel and
residences in Bankside - reinforcing the brand's strong position in London -
and a redevelopment of our hotel in Miami. These developments expand the
Group's pipeline to 27 hotels - 14 of which have residences - and two
standalone residences over the next five years.
FINANCIAL PERFORMANCE
Underlying profit for the first half of 2023 was US$28 million, substantially
improved compared to an underlying loss of US$21 million in the equivalent
period in 2022, driven by the recovery of key owned hotels in Asia. The result
also exceeded 2019 levels, due to the increasing scale and record level of
profitability of the Management Business, particularly in Europe and the
Middle East, although this was slightly offset by the more gradual recovery of
business in Hong Kong and the temporary closure of the Singapore hotel in
March 2023 for refurbishment.
The Group sold its Jakarta property during the period. The hotel will
continue to be managed as a Mandarin Oriental hotel. This transaction
generated a post-tax gain on disposal of US$43 million. The valuation of the
Causeway Bay site under development decreased between 31st December 2022 and
30th June 2023, resulting in a non-trading loss for the Group of US$141
million. Total losses attributable to shareholders were US$69 million in the
first half of 2023, compared to losses of US$18 million in the same period
last year.
Net debt fell to US$233 million at 30th June 2023, from US$376 million at the
end of 2022. The Group remains well funded, with headroom of US$840 million
in its available cash and committed facilities. Gearing as a percentage of
adjusted shareholders' funds was 5% at the end of June 2023, taking into
account the market value of the Group's properties.
An interim dividend of US¢1.50 per share has been declared.
PEOPLE
Laurent Kleitman will succeed James Riley as Group Chief Executive with effect
from 1st September 2023. Laurent joins the Group from Parfums Christian
Dior, the largest luxury fashion beauty business of LVMH. We want to thank
James for his seven years as Group Chief Executive. He has been instrumental
in continuing to expand Mandarin Oriental's development pipeline, elevating
the Mandarin Oriental brand globally and driving a wide range of
sustainability initiatives across the Group.
OUTLOOK
Mandarin Oriental performed well in the first half of 2023. There was
particularly strong operating and financial performance by the Management
Business, which is well set for further growth. The strength of the Group's
brand, together with its existing portfolio of properties and strong pipeline,
give the Board confidence in the future success of Mandarin Oriental.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2023
(unaudited)
Six months ended 30th June Year ended 31st December
2023 2022 2022
Underlying Non-trading Total Underlying Non-trading Total Underlying Non-trading Total
business performance Items US$m business Items US$m business Items US$m
US$m US$m performance US$m performance US$m
US$m US$m
Revenue 260.7 - 260.7 198.4 - 198.4 454.1 - 454.1
(note 2)
Cost of sales (152.8) - (152.8) (150.0) - (150.0) (302.7) - (302.7)
Gross profit 107.9 - 107.9 48.4 - 48.4 151.4 - 151.4
Selling and distribution costs (13.7) - (13.7) (11.7) - (11.7) (27.0) - (27.0)
Administration expenses (57.8) - (57.8) (52.5) - (52.5) (109.2) - (109.2)
Other operating income - - - 3.5 - 3.5 5.7 - 5.7
Change in fair value of investment properties - (140.2) (140.2) - 2.7 2.7 - (104.1) (104.1)
Gains on sale of a subsidiary/ asset disposals (notes 10 & 11) - 45.7 45.7 - - - - 40.6 40.6
Operating (loss)/profit (note 3) 36.4 (94.5) (58.1) (12.3) 2.7 (9.6) 20.9 (63.5) (42.6)
Financing charges (9.3) - (9.3) (6.7) - (6.7) (16.7) - (16.7)
Interest income 2.4 - 2.4 0.6 - 0.6 2.3 - 2.3
Net financing charges (6.9) - (6.9) (6.1) - (6.1) (14.4) - (14.4)
Share of results of associates and joint ventures (note 4) 1.0 - 1.0 (1.0) - (1.0) 9.7 - 9.7
(Loss)/profit before tax 30.5 (94.5) (64.0) (19.4) 2.7 (16.7) 16.2 (63.5) (47.3)
Tax (note 5) (2.6) (2.5) (5.1) (1.6) - (1.6) (8.5) 6.4 (2.1)
(Loss)/profit after tax 27.9 (97.0) (69.1) (21.0) 2.7 (18.3) 7.7 (57.1) (49.4)
Attributable to:
Shareholders of the Company (notes 6 & 7) 27.8 (97.0) (69.2) (21.0) 2.7 (18.3) 7.6 (57.1) (49.5)
Non-controlling interests 0.1 - 0.1 - - - 0.1 - 0.1
27.9 (97.0) (69.1) (21.0) 2.7 (18.3) 7.7 (57.1) (49.4)
US¢ US¢ US¢ US¢ US¢ US¢
(Loss)/earnings per share
(note 6)
- basic 2.20 (5.48) (1.66) (1.45) 0.60 (3.92)
- diluted 2.20 (5.48) (1.66) (1.45) 0.60 (3.92)
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2023
(unaudited) Year ended
Six months ended 31st
30th June December
2023 2022 2022
US$m US$m US$m
Loss for the period (69.1) (18.3) (49.4)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans - - (2.1)
Revaluation surplus of right-of-use assets before transfer to investment - - 79.8
properties
Tax on items that will not be reclassified - - 0.3
- - 78.0
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
- net gain/(loss) arising during the period 14.7 (82.4) (58.2)
- transfer to profit and loss 33.0 - -
Cash flow hedges
- net (loss)/gain arising during the period (11.1) 12.2 16.6
Tax relating to items that may be reclassified 0.5 (1.5) (2.4)
Share of other comprehensive (expense)/income of associates and joint ventures (1.9) (1.0) 0.7
35.2 (72.7) (43.3)
Other comprehensive income/(expense) for the period, net of tax 35.2 (72.7) 34.7
Total comprehensive expense for the period (33.9) (91.0) (14.7)
Attributable to:
Shareholders of the Company (34.1) (90.8) (14.7)
Non-controlling interests 0.2 (0.2) -
(33.9) (91.0) (14.7)
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 30th June 2023
(unaudited) At 31st
At 30th June December
2023 2022 2022
US$m US$m US$m
Net assets
Intangible assets 40.2 46.4 45.7
Tangible assets 920.8 1,011.4 916.3
Right-of-use assets 229.6 248.3 242.4
Investment properties (note 8) 2,354.2 2,459.5 2,472.6
Associates and joint ventures 158.6 188.2 203.8
Other investments 13.8 14.1 14.0
Deferred tax assets 12.1 12.9 14.2
Pension assets 2.2 6.7 3.0
Non-current debtors 11.1 17.1 12.2
Non-current assets 3,742.6 4,004.6 3,924.2
Stocks 5.2 4.7 5.0
Current debtors 84.3 64.5 90.5
Current tax assets 1.7 1.9 6.8
Bank and cash balances 349.3 179.0 226.2
Current assets 440.5 250.1 328.5
Current creditors (155.8) (147.9) (159.1)
Current borrowings (note 9) (581.4) (65.3) (2.2)
Current lease liabilities (4.4) (5.4) (5.9)
Current tax liabilities (16.9) (8.9) (18.4)
Current liabilities (758.5) (227.5) (185.6)
Net current (liabilities)/assets (318.0) 22.6 142.9
Long-term borrowings (note 9) (0.6) (632.8) (599.8)
Non-current lease liabilities (112.5) (123.0) (123.5)
Deferred tax liabilities (42.6) (49.8) (41.6)
Pension liabilities - (0.3) (0.1)
Non-current creditors (4.7) - (4.5)
Non-current liabilities (160.4) (805.9) (769.5)
3,264.2 3,221.3 3,297.6
Total equity
Share capital 63.2 63.2 63.2
Share premium 500.9 500.7 500.7
Revenue and other reserves 2,695.3 2,654.1 2,730.2
Shareholders' funds 3,259.4 3,218.0 3,294.1
Non-controlling interests 4.8 3.3 3.5
3,264.2 3,221.3 3,297.6
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2023
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 2023 (unaudited)
At 1st January 2023 63.2 500.7 258.9 (428.8) 3,023.2 15.4 (138.5) 3,294.1 3.5 3,297.6
Total comprehensive income - - - (69.2) - (10.6) 45.7 (34.1) 0.2 (33.9)
Subsidiary disposed of - - (0.6) - - - - (0.6) 1.1 0.5
Transfer - 0.2 (0.2) - - - - - - -
At 30th June 2023 63.2 500.9 258.1 (498.0) 3,023.2 4.8 (92.8) 3,259.4 4.8 3,264.2
Six months ended 30th June 2022 (unaudited)
At 1st January 2022 63.2 500.5 259.1 (377.7) 2,943.4 0.9 (80.6) 3,308.8 3.5 3,312.3
Total comprehensive income - - - (18.3) - 11.0 (83.5) (90.8) (0.2) (91.0)
Transfer - 0.2 (0.2) - - - - - - -
At 30th June 2022 63.2 500.7 258.9 (396.0) 2,943.4 11.9 (164.1) 3,218.0 3.3 3,221.3
Year ended 31st December 2022
At 1st January 2022 63.2 500.5 259.1 (377.7) 2,943.4 0.9 (80.6) 3,308.8 3.5 3,312.3
Total comprehensive income - - - (51.1) 79.8 14.5 (57.9) (14.7) - (14.7)
Transfer - 0.2 (0.2) - - - - - - -
At 31st December 2022 63.2 500.7 258.9 (428.8) 3,023.2 15.4 (138.5) 3,294.1 3.5 3,297.6
Revenue reserves as at 30th June 2023 included cumulative fair value losses on
the investment property under development of US$861.3 million (US$613.4
million as at 30th June 2022 and US$720.2 million as at 31st December 2022).
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2023
(unaudited) Year ended
Six months ended 31st
30th June December
2023 2022 2022
US$m US$m US$m
Operating activities
Operating loss (58.1) (9.6) (42.6)
Depreciation, amortisation and impairment 27.3 31.4 58.2
Other non-cash items 94.4 (3.0) 63.5
Movements in working capital (1.0) (0.9) (1.1)
Interest received 3.0 1.2 2.1
Interest and other financing charges paid (9.4) (6.5) (15.6)
Tax refund/(paid) 2.0 (2.3) (8.0)
58.2 10.3 56.5
Dividends and interest from associates and joint ventures 1.5 - -
Cash flows from operating activities 59.7 10.3 56.5
Investing activities
Purchase of tangible assets (5.4) (3.4) (12.8)
Additions to investment properties (35.8) (13.7) (30.2)
Purchase of intangible assets (0.7) (2.4) (6.1)
Additions to right-of-use assets - - (0.2)
Refund on Munich expansion - 4.0 4.0
Purchase of other investments (0.1) (0.2) (0.2)
Purchase of an associate - (1.0) (1.0)
Advance to associates and joint ventures (20.7) (0.4) (2.4)
Repayment of loans to associates and joint ventures 66.4 1.9 4.2
Sale of a subsidiary (note 10) 76.6 - -
Net proceeds from asset disposals (note 11) - - 131.4
Cash flows from investing activities 80.3 (15.2) 86.7
Financing activities
Drawdown of borrowings 38.9 6.4 23.0
Repayment of borrowings (60.5) (24.1) (139.5)
Principal elements of lease payments (3.2) (3.2) (5.7)
Cash flows from financing activities (24.8) (20.9) (122.2)
Net increase/(decrease) in cash and cash equivalents 115.2 (25.8) 21.0
Cash and cash equivalents at beginning of period 226.2 212.8 212.8
Effect of exchange rate changes 7.9 (8.0) (7.6)
Cash and cash equivalents at end of period 349.3 179.0 226.2
Mandarin Oriental International Limited
Notes to Condensed Financial Statements
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed financial statements have been prepared in accordance with IAS
34 'Interim Financial Reporting' and on a going concern basis. The condensed
financial statements have not been audited or reviewed by the Group's auditors
pursuant to the UK Auditing Practices Board guidance on the review of interim
financial information.
There are no changes to the accounting policies as described in the 2022
annual financial statements. A number of amendments were effective from 1st
January 2023. Those relevant to the Group's operations are set out below:
Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
(effective from 1st January 2023)
The amendment requires deferred tax to be recognised on transactions that, on
initial recognition, give rise to equal amounts of taxable and deductible
temporary differences. They typically apply to transactions such as leases of
lessees and decommissioning obligations and require the recognition of
additional deferred tax assets and liabilities.
Amendments to IAS 12 - International Tax Reform - Pillar Two Model Rules
(effective for annual reporting period commencing on or after 1st January
2023)
The amendment provides a temporary mandatory exception from deferred tax
accounting in respect of Pillar Two income taxes and certain additional
disclosure requirements. The Group is in the process of assessing the
estimated impact of Pillar Two income taxes to its consolidated financial
statements and appropriate disclosures will be made in the financial
statements for the year ending 31st December 2023.
The Group has not early adopted any amendments that have been issued but not
yet effective.
2. REVENUE
Six months ended 30th June
2023 2022
US$m US$m
By business activity:
Hotel ownership 230.9 177.2
Hotel & Residences branding and management 40.2 27.3
Less: intra-segment revenue (10.4) (6.1)
260.7 198.4
By geographical area:
Asia 107.2 53.8
Europe, Middle East and Africa ('EMEA') 130.4 101.9
America 23.1 42.7
260.7 198.4
Revenue from contracts with customers:
Recognised at a point in time 77.8 62.0
Recognised over time 173.7 127.2
251.5 189.2
Revenue from other sources:
Rental income 9.2 9.2
260.7 198.4
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION)
Six months ended 30th June
2023 2
0
US$m 2
2
U
S
$
m
By business activity:
Hotel ownership 40.5 5.7
Hotel & Residences branding and management 23.2 13.4
Underlying EBITDA from subsidiaries 63.7 19.1
Non-trading items (note 7)
Change in fair value of investment properties (140.2) 2.7
Gain on sale of a subsidiary 45.7 -
(94.5) 2.7
EBITDA from subsidiaries (30.8) 21.8
Underlying depreciation and amortisation from
subsidiaries (27.3) (31.4)
Operating loss (58.1) (9.6)
By geographical area:
Asia 23.3 (13.5)
EMEA 39.8 28.4
America 0.6 4.2
Underlying EBITDA from subsidiaries 63.7 19.1
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
EBITDA Depreciation Operating profit/ Net Tax Net
US$m and (loss) financing US$m profit/
amortisation US$m charges (loss)
US$m US$m US$m
Six months ended
30th June 2023
By business activity:
Hotel ownership 12.9 (7.9) 5.0 (4.0) 0.2 1.2
Other 0.1 (0.2) (0.1) (0.1) - (0.2)
13.0 (8.1) 4.9 (4.1) 0.2 1.0
By geographical area:
Asia 5.8 (5.3) 0.5 (1.4) 0.2 (0.7)
EMEA 2.8 (1.8) 1.0 (1.4) - (0.4)
America 4.4 (1.0) 3.4 (1.3) - 2.1
13.0 (8.1) 4.9 (4.1) 0.2 1.0
Six months ended
30th June 2022
By business activity:
Hotel ownership 9.2 (7.2) 2.0 (2.5) (0.3) (0.8)
Other 0.1 (0.2) (0.1) (0.1) - (0.2)
9.3 (7.4) 1.9 (2.6) (0.3) (1.0)
By geographical area:
Asia 3.5 (4.5) (1.0) (1.3) (0.3) (2.6)
EMEA 1.6 (1.8) (0.2) (0.5) - (0.7)
America 4.2 (1.1) 3.1 (0.8) - 2.3
9.3 (7.4) 1.9 (2.6) (0.3) (1.0)
5. TAX
Six months ended 30th June
2023 2022
US$m US$m
Tax (charged)/credited to profit and loss is analysed as follows:
Current tax (1.9) (1.7)
Deferred tax (3.2) 0.1
(5.1) (1.6)
By business activity:
Hotel ownership (2.4) (0.7)
Hotel & Residences branding and management (2.7) (0.9)
(5.1) (1.6)
By geographical area:
Asia (5.4) (0.2)
EMEA 1.0 (1.3)
America (0.7) (0.1)
(5.1) (1.6)
Tax credit relating to cash flow hedges of US$0.5 million (2022: tax charge of
US$1.5 million) is included in other comprehensive income or expense.
Tax on profits has been calculated at rates of taxation prevailing in the
territories in which the Group operates.
In 2023, current tax included a non-trading capital gain tax charge of US$2.5
million in relation to the sale of 96.9% ownership stake in P.T. Jaya Mandarin
Agung, the owning company of Mandarin Oriental, Jakarta (note 10).
The Group has applied the exception to recognising and disclosing information
about deferred tax assets and liabilities relating to Pillar Two income taxes.
Share of tax credit of associates and joint ventures of US$0.2 million (2022:
tax charge of US$0.3 million) is included in share of results of associates
and joint ventures (note 4).
6. (LOSS)/EARNINGS PER SHARE
Basic loss per share is calculated using loss attributable to shareholders of
US$69.2 million (2022: US$18.3 million) and the weighted average number of
1,263.8 million (2022: 1,263.7 million) shares in issue during the period.
Diluted loss per share is calculated using loss attributable to shareholders
of US$69.2 million (2022: US$18.3 million) and the weighted average number of
1,263.8 million (2022: 1,263.8 million) shares in issue after adjusting for
the number of shares which are deemed to be issued for no consideration under
the share-based long-term incentive plans based on the average share price
during the period.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2023 2022
Weighted average number of shares for basic loss per share calculation 1,263.8 1,263.7
Adjustment for shares deemed to be issued for no consideration under the - 0.1
share-based long-term incentive plans
Weighted average number of shares for diluted loss per share calculation 1,263.8 1,263.8
Additional basic and diluted earnings/loss per share are also calculated based
on underlying profit/loss attributable to shareholders. A reconciliation of
loss/earnings is set out below:
Six months ended 30th June
2023 2022
US$m Basic Diluted US$m Basic Diluted
(loss)/ (loss)/ loss loss
earnings earnings per share per share
per share per share US¢ US¢
US¢ US¢
Loss attributable to shareholders (69.2) (5.48) (5.48) (18.3) (1.45) (1.45)
Non-trading items 97.0 (2.7)
(note 7)
Underlying profit/(loss) attributable to shareholders 27.8 2.20 2.20 (21.0) (1.66) (1.66)
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment properties and investments which are measured at fair value through
profit and loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable intangible assets
and other investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other credits and
charges of a non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Six months ended 30th June
2023 2022
US$m US$m
Change in fair value of investment properties (note 8) (140.2) 2.7
Gain on sale of a subsidiary (note 10) 43.2 -
(97.0) 2.7
8. INVESTMENT PROPERTIES
Six months ended Year ended 31st December
30th June
2023 2022 2022
US$m US$m US$m
Fair value at beginning of period 2,472.6 2,462.0 2,462.0
Exchange differences (12.7) (15.2) 0.6
Additions 34.5 10.0 26.4
Transfer from tangible assets - - 0.6
Transfer from right-of-use assets - - 87.1
(Decrease)/increase in fair value (140.2) 2.7 (104.1)
Fair value at end of period 2,354.2 2,459.5 2,472.6
In the second half of 2022, an own-use property, including tangible assets of
US$0.6 million and right-of use assets of US$87.1 million, was transferred to
a completed residential investment property following a change of its future
use determined by the Directors.
At 30th June 2023, investment properties comprised a commercial investment
property under development of US$2,266.0 million (US$2,459.5 million as at
30th June 2022 and US$2,384.9 million as at 31st December 2022) and a
completed residential investment property of US$88.2 million (nil as at 30th
June 2022 and US$87.7 million as at 31st December 2022).
9. BORROWINGS
The Group has borrowing facilities of US$752 million due to mature in the
first half of 2024. Based on the Group's consistent track record of securing
external financing in a timely manner, its operating performance and strong
balance sheet, the Group is confident that it will complete the refinancing of
these bank facilities if necessary before the maturity dates.
10. SALE OF A SUBSIDIARY
In June 2023, the Group completed the sale of 96.9% ownership stake in P.T.
Jaya Mandarin Agung, the owning company of Mandarin Oriental, Jakarta in
Indonesia, to P.T. Astra Land Indonesia, a subsidiary of Jardine Matheson
Holdings Limited, the Group's ultimate holding company, at a total
consideration of US$85.0 million. The Group has recognised a post-tax,
non-trading gain of US$43.2 million (net of tax charge of US$2.5 million).
The Group has retained the hotel management contracts. Mandarin Oriental,
Jakarta has become a managed hotel of the Group following the sale.
Net cash inflow for the sale of P.T. Jaya Mandarin Agung is summarised as
follows:
Six months ended 30th June
Sale of a subsidiary 2023 2022
US$m US$m
Non-current assets 3.7 -
Currents assets 5.3 -
Non-current liabilities (0.4) -
Current liabilities (4.0) -
Non-controlling interests 0.4 -
Net assets 5.0 -
Cumulative exchange translation difference 33.1 -
Profit on disposal before tax 45.7 -
Sales proceeds (net of selling expenses) 83.8 -
Adjustment for deferred payments (3.2) -
Cash and cash equivalents of subsidiaries disposed of (4.0) -
Net cash inflow 76.6 -
The revenue and loss after tax in respect of the subsidiary disposed of during
the six months ended 30th June 2023 amounted to US$6.0 million and US$0.6
million, respectively.
11. ASSET DISPOSALS
In September 2022, the Group completed the sale of Mandarin Oriental,
Washington D.C., including tangible assets and stocks of US$90.8 million, for
gross proceeds of US$139.0 million. After taking into account the selling
expenses and sales related taxes of US$7.6 million, the net proceeds were
US$131.4 million. As a result, the Group has recognised a post-tax,
non-trading gain of US$47.0 million which included a net tax credit of US$6.4
million.
12. DIVIDENDS
An interim dividend in respect of 2023 of US¢1.50 (2022: nil) per share
amounting to a total of US$19.0 million (2022: nil) has been declared by the
Board and will be accounted for as an appropriation of revenue reserves in the
second half of the year ending 31st December 2023.
13. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2023 and 31st December 2022 amounted to
US$405.0 million and US$512.2 million, respectively.
14. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities, together with
carrying amounts at 30th June 2023 and 31st December 2022 are as follows:
Fair value of hedging instruments Financial assets at amortised cost Other
US$m Fair value through US$m financial liabilities Total Fair
profit and loss US$m carrying value
US$m amount US$m
US$m
30th June 2023
Financial assets measured at fair value
Other investments - 13.8 - - 13.8 13.8
Derivative financial instruments 6.3 - - - 6.3 6.3
6.3 13.8 - - 20.1 20.1
Financial assets not measured at fair value
Debtors - - 72.4 - 72.4 72.4
Bank and cash balances - - 349.3 - 349.3 349.3
- - 421.7 - 421.7 421.7
Financial liabilities not measured at fair value
Borrowings - - - (582.0) (582.0) (582.0)
Lease liabilities - - - (116.9) (116.9) (116.9)
Trade and other payable excluding non-financial liabilities - - - (134.3) (134.3) (134.3)
- - - (833.2) (833.2) (833.2)
Fair value of hedging instruments Financial assets at amortised cost Other
US$m Fair value through US$m financial liabilities Total Fair
profit and loss
US$m carrying amount value
US$m
US$m US$m
31st December 2022
Financial assets measured at fair value
Other investments - 14.0 - - 14.0 14.0
Derivative financial instruments 17.4 - - - 17.4 17.4
17.4 14.0 - - 31.4 31.4
Financial assets not measured at fair value
Debtors - - 69.8 - 69.0 69.8
Bank and cash balances - - 226.2 - 226.2 226.2
- - 296.0 - 296.0 296.0
Financial liabilities not measured at fair value
Borrowings - - - (602.0) (602.0) (602.0)
Lease liabilities - - - (129.4) (129.4) (129.4)
Trade and other payable excluding non-financial liabilities - - - (141.6) (141.6) (141.6)
- - - (873.0) (873.0) (873.0)
Fair value estimation
(i) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the balance
sheet, the corresponding fair value measurements are disclosed by level of the
following fair value measurement hierarchy:
(a) Inputs other than quoted prices in active markets that are observable
for the asset or liability, either directly or indirectly ('observable current
market transactions')
The fair values of derivative financial instruments are determined using rates
quoted by the Group's bankers at the balance sheet date. The rates for
interest rate swaps and caps and forward foreign exchange contracts are
calculated by reference to market interest rates and foreign exchange rates.
The fair values of unlisted investments mainly include club and school
debentures, are determined using prices quoted by brokers at the balance sheet
date.
(b) Inputs for assets or liabilities that are not based on observable
market data ('unobservable inputs')
The fair values of other unlisted investments are determined using valuation
techniques by reference to observable current market transactions (including
price-to earnings and price-to book ratios of listed securities of entities
engaged in similar industries) or the market prices of the underlying
investments with certain degree of entity specific estimates or discounted
cash flow by projecting the cash flows from these investments.
There were no changes in valuation techniques during the six months ended 30th
June 2023 and the year ended 31st December 2022.
The table below analyses financial instruments carried at fair value at 30th
June 2023 and 31st December 2022, by the levels in the fair value measurement
hierarchy:
Observable Unobservable Total
Market inputs US$m
current transactions
US$m
US$m
30th June 2023
Assets
Other investments 6.0 7.8 13.8
Derivative financial instruments at fair value 6.3 - 6.3
- through other comprehensive income
12.3 7.8 20.1
31st December 2022
Assets
Other investments 6.0 8.0 14.0
Derivative financial instruments at fair value
- through other comprehensive income 17.4 - 17.4
23.4 8.0 31.4
There were no transfers among the two categories during the six months ended
30th June 2023 and the year ended 31st December 2022.
Movement of financial instruments which are valued based on unobservable
inputs during the six months ended 30th June 2023 and the year ended 31st
December 2022 are as follows:
Unlisted investments
US$m
At 1st January 2023 8.0
Disposals (0.2)
At 30th June 2023 7.8
At 1st January 2022 10.5
Additions 0.2
Disposals (2.7)
At 31st December 2022 8.0
(ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank and cash balances, current creditors,
current borrowings and current lease liabilities are assumed to approximate
their carrying amounts due to the short-term maturities of these assets and
liabilities.
The fair values of long-term borrowings are based on market prices or are
estimated using the expected future payments discounted at market interest
rates. The fair values of non-current lease liabilities are estimated using
the expected future payments discounted at market interest rates.
15. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Limited ('JSL') and the
ultimate holding company of the Group is Jardine Matheson Holdings Limited
('JMH'). Both JMH and JSL are incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety of
transactions with its associates and joint ventures and with JMH's
subsidiaries, associates and joint ventures. The more significant of these
transactions during the six months ended 30th June 2023 are described below:
The Group managed six (2022: six) associate and joint venture hotels and
received management fees of US$7.0 million (2022: US$5.7 million) based on
long-term management agreements on normal commercial terms.
The Group provided hotel management services to Hongkong Land group ('HKL'), a
subsidiary of JMH. Total management fees received from HKL amounted to
US$1.2 million (2022: US$0.6 million), based on long-term management
agreements on normal commercial terms.
The Group rented a property to DFI Retail Group, a subsidiary of JMH, and
received rental income of US$0.3 million (2022: US$0.3 million), based on
lease agreements on normal commercial terms.
In respect of the Causeway Bay site under development, the Group paid
consultancy fees of US$0.9 million (2022: US$0.7 million) to HKL in
consideration for project management consultancy services. In addition,
Gammon Construction Limited ('GCL'), a joint venture of JMH, completed value
of works of US$22.5 million (2022: US$6.6 million). The HKL agreement and
GCL contract were arranged on normal commercial terms.
In June 2023, the Group completed the sale of 96.9% ownership stake in P.T.
Jaya Mandarin Agung, the owning company of Mandarin Oriental, Jakarta in
Indonesia, to P.T. Astra Land Indonesia, a subsidiary of JMH, the Group's
ultimate holding company, at a total consideration of US$85.0 million.
There were no other related party transactions that might be considered to
have a material effect on the financial position or performance of the Group
that were entered into or changed during the first six months of the current
financial year.
The outstanding balances with associates and joint ventures are included in
debtors as appropriate.
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal
control. The following have been identified previously as the areas of
principal risk and uncertainty facing the Company, and they remain relevant in
the second half of the year.
· Reputational Risk and Value of the Brand
· Concentration Risk
· Commercial Risk
· Environmental and Climate Risk
· Financial Strength and Funding
· Governance and Misconduct
· Health, Safety and Product Quality
· IT and Cybersecurity
· Pandemic
· Political and Economic Risk
· People and Talent
· Compliance with and Changes to Laws and Regulations
For greater detail, please refer to pages 130 and 136 of the Company's 2022
Annual Report, a copy of which is available on the Company's website
www.mandarinoriental.com (http://www.mandarinoriental.com) .
Mandarin Oriental International Limited
Responsibility Statements
The Directors of the Company confirm to the best of their knowledge that:
(a) the condensed financial statements prepared in accordance with IAS 34
'Interim Financial Reporting' give a true and fair view of the assets,
liabilities, financial position and profit and losses of the Group; and
(b) the interim management report includes a fair review of all
information required to be disclosed under Rules 4.2.7 and 4.2.8 of the
Disclosure Guidance and Transparency Rules issued by the Financial Conduct
Authority in the United Kingdom.
For and on behalf of the Board
James Riley
Matthew Bishop
Directors
Mandarin Oriental International Limited
Dividend Information for Shareholders
The interim dividend of US¢1.50 per share will be payable on 11th October
2023 to shareholders on the register of members at the close of business on
18th August 2023. The shares will be quoted ex-dividend on 17th August 2023,
and the share registers will be closed from 21st to 25th August 2023,
inclusive.
Shareholders will receive cash dividends in United States Dollars, except when
elections are made for alternate currencies in the following circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register can elect for their
dividends to be paid in Sterling. These shareholders may make new currency
elections for the 2023 interim dividend by notifying the United Kingdom
transfer agent in writing by 22nd September 2023. The Sterling equivalent of
dividends declared in United States Dollars will be calculated by reference to
a rate prevailing on 27th September 2023.
Shareholders holding their shares through CREST in the United Kingdom will
receive cash dividends in Sterling only, as calculated above.
Shareholders on the Singapore branch register who hold their shares through
The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service ('DCS')
Those shareholders on CDP's DCS will receive their cash dividends in Singapore
Dollars unless they opt out of CDP Currency Conversion Service, through CDP,
to receive United States Dollars.
Shareholders who are not on CDP's DCS
Those shareholders not on CDP's DCS will receive their cash dividends in
United States Dollars unless they elect, through CDP, to receive Singapore
Dollars.
Shareholders on the Singapore branch register who wish to deposit their shares
into the CDP system by the dividend record date, being 18th August 2023, must
submit the relevant documents to M & C Services Private Limited, the
Singapore branch registrar, by no later than 5.00 p.m. (local time) on 17th
August 2023.
Mandarin Oriental International Limited
About Mandarin Oriental Hotel Group
Mandarin Oriental Hotel Group is an international hotel investment and
management group with luxury hotels, resorts and residences in sought-after
destinations around the world. Having grown from its Asian roots over 60
years ago into a global brand, the Group now operates 36 hotels and nine
residences in 24 countries and territories, with each property reflecting the
Group's oriental heritage, local culture and unique design. Mandarin
Oriental regularly receives international recognition and awards for
outstanding service and quality management, and has a strong pipeline of
hotels and residences under development. The Group has equity interests in a
number of its properties and adjusted net assets worth approximately US$4.8
billion as at 30th June 2023.
Mandarin Oriental continues to drive its reputation as an innovative leader in
luxury hospitality, seeking selective opportunities to expand the reach of the
brand, with the aim to maximise profitability and long-term shareholder value.
The parent company, Mandarin Oriental International Limited, is incorporated
in Bermuda and has a primary listing in the standard segment on the London
Stock Exchange, with secondary listings in Bermuda and Singapore. Mandarin
Oriental Hotel Group International Limited, which operates from Hong Kong,
manages the activities of the Group's hotels. Mandarin Oriental is a member
of the Jardine Matheson Group.
- end -
For further information, please contact:
Mandarin Oriental Hotel Group International Limited
James Riley / Matthew Bishop (852) 2895 9288
Chris Orlikowski (852) 2895 9167
Brunswick Group Limited
William Brocklehurst (852) 5685 9881
As permitted by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority in the United Kingdom, the Company will not be
posting a printed version of the Half-Year Results announcement for the six
months ended 30th June 2023 to shareholders. This Half-Year Results
announcement will be made available on the Company's website,
www.mandarinoriental.com, together with other Group announcements.
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