TIDMMDO TIDMJAR
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 MONTHSED 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
Revenue 198.4 101.8 +95
Underlying EBITDA (Earnings before
interest, tax, depreciation and amortisation)(2) 28.4 (17.0) n/a
Underlying loss attributable to shareholders(3) (21.0) (66.8) +69
Revaluation gain/(loss) on investment
property under development 2.7 (89.1) n/a
Loss attributable to shareholders (18.3) (155.9) +88
--------
USc USc %
-------- -------
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 and 31st 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 MONTHSED 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 t o US$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$139 million, and the hotel will
cease to be operated by Mandarin Oriental on 8th September 2022.
The Group's portfolio has developed significantly over recent
years, with many new, unique properties across the world that are
more in line with our long-term vision for the brand than this
property. With strong interest from investors, the time was right
to sell this property.
OUTLOOK
Luxury hospitality trading conditions continue to improve in
most markets and, despite continuing constraints on travel in China
and Japan, the Group expects to see improved results in the second
half and will continue to benefit from its robust pipeline and
opening of new properties and residences. The Board remains
confident that the strength of the Mandarin Oriental brand will
underpin the long-term success of the Group in the future.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2022
(unaudited)
Six months ended 30th June Year ended 31st December
2022 2021 2021
Underlying Underlying Underlying
business Non-trading business Non-trading business Non-trading
performance Items Total performance Items Total performance Items Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue (note 2) 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)
----------- ----------- ------- ----------- ----------- ----------- ----------- --------
USc USc USc USc USc USc
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
Attributable
to Attributable
Asset shareholders to non-
Share Share Capital Revenue revaluation Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June
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$2.1
million) for the six months ended 30th June 2022. These amounts
were in relation to the COVID-19 pandemic and were accounted for as
other operating income .
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Operating Net Net
and profit/ financing (loss)/
EBITDA amortisation (loss) charges Tax profit
US$m US$m US$m 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$155.9 million) and the
weighted average number of 1,263.8 million (2021: 1,263.6 million)
shares in issue after adjusting for the number of shares which are
deemed to be issued for no consideration under the share-based
long-term incentive plans based on the average share price during
the period.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2022 2021
Weighted average number of shares for basic
earnings per share calculation 1,263.7 1,263.2
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans 0.1 0.4
------- -------
Weighted average number of shares for diluted
earnings per share calculation 1,263.8 1,263.6
------- -------
Additional basic and diluted loss per share are also calculated
based on underlying loss attributable to shareholders. A
reconciliation of losses is set out below:
Six months ended 30th June
2022 2021
Basic Diluted Basic Diluted
loss loss loss loss
per share per share per share per share
US$m USc USc US$m USc USc
Loss attributable
to shareholders (18.3) (1.45) (1.45) (155.9) (12.34) (12.34)
Non-trading items
(note 7) (2.7) 89.1
Underlying loss
attributable to
shareholders (21.0) (1.66) (1.66) (66.8) (5.29) (5.29)
------ -------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investment property under development and
investments which are measured at fair value through profit and
loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable
intangible assets and other investments; provisions for the closure
of businesses; acquisition-related costs in business combinations;
and other credits and charges of a non-recurring nature that
require inclusion in order to provide additional insight into
underlying business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2022 2021
US$m US$m
Change in fair value of investment property
under development (note 8) 2.7 (89.1)
----- ------
8. INVESTMENT PROPERTY UNDER DEVELOPMENT
Six months ended Year ended
30th June 31st December
2022 2021 2021
US$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. DIVIDS
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$550.3 million,
respectively.
11. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2022 and 31st December
2021 are as follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
30th June 2022
Financial assets
measured at fair
value
Other investments - 14.1 - - 14.1 14.1
Derivative financial
instruments 13.1 - - - 13.1 13.1
------------ ------------ ------------- ------------ ---------- -------
13.1 14.1 - - 27.2 27.2
------------ ------------ ------------- ------------ ---------- -------
Financial assets
not measured
at fair value
Debtors - - 53.1 - 53.1 53.1
Bank and cash
balances - - 179.0 - 179.0 179.0
------------ ------------
- - 232.1 - 232.1 232.1
------------ ------------ ------------- ------------ ---------- -------
Financial liabilities
not measured
at fair value
Borrowings - - - (698.1) (698.1) (698.1)
Lease liabilities - - - (128.4) (128.4) (128.4)
Trade and other
payable excluding
non-financial
liabilities - - - (134.8) (134.8) (134.8)
------------ ------------
- - - (961.3) (961.3) (961.3)
------------ ------------ ------------- ------------ ---------- -------
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
31st December
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
market current Unobservable
transactions inputs Total
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
income 13.1 - 13.1
--------------- ------------ -----
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 .
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 ,
together with other Group announcements.
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