TIDMMDO TIDMJAR
RNS Number : 9023G
Mandarin Oriental International Ltd
29 July 2021
Announcement
29th July 2021
The following announcement was issued today to a Regulatory
Information Service approved by the Financial Conduct Authority in
the United Kingdom.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2021
HIGHLIGHTS
-- Underlying losses reduced by 34% compared to the same period last year
-- Business levels increased in the second quarter
-- Robust hotel development pipeline
-- Strong liquidity and funding position
"While trading conditions remain difficult, business volumes
have begun to improve in markets where vaccination programmes are
being implemented effectively, particularly in the second quarter,
leading to a reduction in underlying losses. The Group's
development pipeline remains robust, and the restored Mandarin
Oriental Ritz, Madrid, opened to critical acclaim. A return to
profitability by the Group will be dependent on the removal of
barriers to international travel, particularly in Asia."
Ben Keswick
Chairman
RESULTS
(unaudited)
Six months ended 30th June
2021 2020 Change
US$m US$m %
------------------------------------------------------ ------
Combined total revenue of hotels under management(1) 381.8 276.4 +38
Revenue 101.8 95.5 +7
Underlying EBITDA (Earnings before interest,
tax, depreciation and amortisation)(2) (17.0) (50.1) +66
Underlying loss attributable to shareholders(3) (66.8) (101.8) +34
Revaluation loss on investment property
under development (89.1) (333.7) +73
Loss attributable to shareholders (155.9) (435.5) +64
USc USc %
------- -------
Underlying loss per share(3) (5.29) (8.06) +34
Loss per share (12.34) (34.48) +64
US$ US$ %
------- -------
Net asset value per share(4) 2.63 2.78 -5
Adjusted net asset value per share(4)(5) 3.95 4.09 -3
Net debt/shareholders' funds(4) 18% 14%
Net debt/adjusted shareholders' funds(4)(5) 12% 10%
------------------------------------------------------ ------- ------- ------
(1) Combined revenue includes turnover of the Group's subsidiary
hotels in addition to 100% of revenue from associate, joint
venture and managed hotels.
(2) EBITDA of subsidiaries plus the Group's share of EBITDA
of associates and joint ventures.
(3) The Group uses 'underlying profit' in its internal financial
reporting to distinguish between ongoing business performance
and non-trading items, as more fully described in note 7 to
the condensed financial statements. Management considers this
to be a key measure which provides additional information to
enhance understanding of the Group's underlying business performance.
(4) At 30th June 2021 and 31st December 2020, 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 2021 and 31st December 2020. 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 2021 and 31st December 2020 have included the market
value of the Group's freehold and leasehold interests which
were appraised as at 31st December 2020.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2021
OVERVIEW
Operating conditions generally improved towards the end of the
first half, with all hotels under operation open in the second
quarter. During the same period in the prior year, almost all
hotels were effectively closed. Performance did, however, vary by
market, depending mostly upon vaccination roll-out progress and the
impact of government actions to curtail the spread of the virus. In
most markets, the customer base was largely domestic and
leisure-orientated.
Combined total revenue of hotels under management increased by
38% in the first half of 2021 compared to the equivalent period in
2020.
Government financial support in some markets and the Group's
ongoing cost containment measures continued to benefit results.
FINANCIAL PERFORMANCE
Underlying losses before interest, tax, depreciation and
amortisation ('EBITDA') for the first half of 2021 were US$17
million, a 66% improvement compared to EBITDA losses o f US$50
million in the first half of 2020. Results benefited from an
increase in business levels in certain markets, continued cost
control measures and government financial support.
The Group's losses were entirely attributable to its portfolio
of owned hotels. The management business was broadly breakeven in
the period, due to increased management fees and lower operating
costs.
Underlying losses for the period were US$67 million, compared to
US$102 million for the first half of 2020.
Non-trading items comprised a 3%, or US$89 million, decrease in
the valuation of the Causeway Bay site under development as a
result of market reductions in property values. Total losses
attributable to shareholders were US$156 million in the first half,
compared to US$436 million in the same period in 2020.
At 30th June 2021, net debt was US$590 million compared to
US$506 million at the end of 2020, with the increase primarily due
to investments made to develop the Causeway Bay site and increase
the size of the Munich hotel. The Group remains well funded, with
headroom of US$441 million in its available cash and committed
facilities. The average tenor of the Group's debt facilities at
30th June 2021 was 2.6 years and gearing as a percentage of
adjusted shareholders' funds was 12%, taking into account the
market value of the Group's properties.
No interim dividend will be paid in respect of 2021 first half
results.
HOTEL PERFORMANCE
Occupancy levels varied significantly between hotels. In Asia,
Mandarin Oriental, Hong Kong delivered positive EBITDA in the first
half of 2021, albeit still well below 2019 levels, compared to a
loss in the first half of 2020. Demand in the Chinese mainland
remained strong. Trading conditions in Southeast Asia were
exceedingly difficult, with borders remaining effectively closed
and tight lockdown restrictions in some cities preventing food and
beverage and spa facilities from operating. In much of Europe, the
Middle East and America, COVID-19 restrictions slowly eased,
allowing occupancy levels to start to recover.
NEW DEVELOPMENTS
Mandarin Oriental Ritz, Madrid opened in April after an
extensive restoration and is expected to become a flagship property
for the brand.
The Group also assumed management of the Al Faisaliah hotel in
Riyadh with effect from March and this property will be rebranded
as Mandarin Oriental Al Faisaliah, Riyadh in 2022 following its
renovation. Two new management contracts were announced in the
first half of the year: a resort on the beach in Da Nang, Vietnam
and a city property in Hangzhou, China. Mandarin Oriental
Bosphorus, Istanbul will open in August 2021 and Mandarin Oriental,
Shenzhen is expected to open towards the end of the year.
PEOPLE
The last six months have continued to be a difficult period for
the hospitality industry and I would like to thank all Mandarin
Oriental colleagues for their continued dedication and loyalty.
James Watkins retired from the Board following today's Board
meeting. On 20th May 2021, it was announced that Craig Beattie
would step down from the Board on 31st August 2021. The Board would
like to record its gratitude to both of them for their significant
contribution to the Group. As announced on 20th May 2021, Matthew
Bishop will be appointed as a Director and Chief Financial Officer
of the Company with effect from 1st September 2021.
OUTLOOK
While trading conditions remain difficult, business volumes have
begun to improve in markets where vaccination programmes are being
implemented effectively, particularly in the second quarter,
leading to a reduction in underlying losses. The Group's
development pipeline remains robust, and the restored Mandarin
Oriental Ritz, Madrid, opened to critical acclaim. A return to
profitability by the Group will be dependent on the removal of
barriers to international travel, particularly in Asia.
Ben Keswick
Chairman
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2021 2020 2020
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) 101.8 - 101.8 95.5 - 95.5 183.7 - 183.7
Cost of sales (114.7) - (114.7) (122.1) - (122.1) (233.0) - (233.0)
------- ----------- ------- -------
Gross loss (12.9) - (12.9) (26.6) - (26.6) (49.3) - (49.3)
Selling and
distribution
costs (9.8) - (9.8) (16.2) - (16.2) (31.4) - (31.4)
Administration
expenses (44.8) - (44.8) (52.7) - (52.7) (97.5) - (97.5)
Other operating
income/(expense) 22.1 - 22.1 14.4 - 14.4 (7.6) 0.7 (6.9)
Change in fair
value
of investment
property
under development - (89.1) (89.1) - (333.7) (333.7) - (474.9) (474.9)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Operating loss
(note
3) (45.4) (89.1) (134.5) (81.1) (333.7) (414.8) (185.8) (474.2) (660.0)
Financing charges (6.9) - (6.9) (8.0) - (8.0) (14.2) - (14.2)
Interest income 0.5 - 0.5 1.1 - 1.1 1.6 - 1.6
Net financing
charges (6.4) - (6.4) (6.9) - (6.9) (12.6) - (12.6)
Share of results
of
associates and
joint
ventures (note 4) (15.0) - (15.0) (13.5) - (13.5) (26.8) - (26.8)
----------- -----------
Loss before tax (66.8) (89.1) (155.9) (101.5) (333.7) (435.2) (225.2) (474.2) (699.4)
Tax (note 5) - - - (0.3) - (0.3) 19.4 - 19.4
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Loss after tax (66.8) (89.1) (155.9) (101.8) (333.7) (435.5) (205.8) (474.2) (680.0)
----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Attributable to:
Shareholders of
the
Company (note 6 &
7) (66.8) (89.1) (155.9) (101.8) (333.7) (435.5) (205.9) (474.2) (680.1)
Non-controlling
interests - - - - - - 0.1 - 0.1
----------- ----------- ------- ----------- ----------- ----------- ----------- -------
(66.8) (89.1) (155.9) (101.8) (333.7) (435.5) (205.8) (474.2) (680.0)
----------- ----------- ------- ----------- ----------- ----------- ----------- -------
USc USc USc USc USc USc
Loss per share
(note
6)
- basic (5.29) (12.34) (8.06) (34.48) (16.30) (53.84)
- diluted (5.29) (12.34) (8.06) (34.48) (16.30) (53.84)
----------- ------- ----------- ------- ----------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
(unaudited) Year ended
Six months ended 31st
30th June December
2021 2020 2020
US$m US$m US$m
Loss for the period (155.9) (435.5) (680.0)
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss:
--------- --------- ----------
Remeasurements of defined benefit
plans - - 5.2
Tax on items that will not be reclassified - - (0.9)
--------- --------- ----------
- - 4.3
Items that may be reclassified subsequently
to profit or loss:
--------- --------- ----------
Net exchange translation differences
- net (losses)/gains arising during
the period (25.7) 1.3 80.0
Cash flow hedges
- net gains/(losses) arising during
the period 2.7 (9.9) (11.4)
Tax relating to items that may be
reclassified (0.5) 1.6 1.9
Share of other comprehensive (expense)/income
of associates and joint ventures (1.9) (4.1) 1.8
--------- --------- ----------
(25.4) (11.1) 72.3
Other comprehensive (expense)/income
for the period, net of tax (25.4) (11.1) 76.6
--------- --------- ----------
Total comprehensive expense for
the period (181.3) (446.6) (603.4)
--------- --------- ----------
Attributable to:
Shareholders of the Company (181.1) (446.5) (603.9)
Non-controlling interests (0.2) (0.1) 0.5
--------- --------- ----------
(181.3) (446.6) (603.4)
--------- --------- ----------
Mandarin Oriental International Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2021 2020 2020
US$m US$m US$m
Net assets
Intangible assets 44.0 49.5 45.4
Tangible assets 1,147.2 1,147.3 1,181.5
Right-of-use assets 283.6 297.9 297.4
Investment property under development
(note 8) 2,447.1 2,657.9 2,528.3
Associates and joint ventures 216.3 208.9 231.6
Other investments 15.5 15.3 16.1
Deferred tax assets 17.7 11.5 17.8
Pension assets 5.0 0.8 5.5
Non-current debtors 4.8 4.8 5.1
------- ------- --------
Non-current assets 4,181.2 4,393.9 4,328.7
Stocks 5.5 5.9 6.0
Current debtors 99.2 62.3 71.7
Current tax assets 3.0 2.2 3.1
Bank and cash balances 137.7 187.1 164.6
------- ------- --------
Current assets 245.4 257.5 245.4
------- ------- --------
Current creditors (138.7) (130.1) (144.6)
Current borrowings (2.6) (41.9) (64.2)
Current lease liabilities (6.7) (7.0) (7.0)
Current tax liabilities (9.5) (11.7) (10.1)
------- ------- --------
Current liabilities (157.5) (190.7) (225.9)
------- ------- --------
Net current assets 87.9 66.8 19.5
Long-term borrowings (725.1) (557.2) (606.6)
Non-current lease liabilities (156.7) (166.2) (170.1)
Deferred tax liabilities (47.7) (58.0) (47.1)
Pension liabilities (0.3) - (0.3)
Non-current creditors (7.4) (9.3) (10.9)
------- ------- --------
3,331.9 3,670.0 3,513.2
------- ------- --------
Total equity
Share capital 63.2 63.2 63.2
Share premium 499.9 499.7 499.7
Revenue and other reserves 2,765.3 3,103.9 2,946.6
------- ------- --------
Shareholders' funds 3,328.4 3,666.8 3,509.5
Non-controlling interests 3.5 3.2 3.7
------- ------- --------
3,331.9 3,670.0 3,513.2
------- ------- --------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
Attributable
to Attributable
Asset shareholders to non-
Share Share Capital Revenue revaluation Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June
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
-----------
Six months ended
30th June
2020 (unaudited)
At 1st January
2020 63.2 499.7 260.3 434.8 2,943.4 - (88.4) 4,113.0 3.6 4,116.6
Total
comprehensive
income - - - (435.5) - (8.7) (2.3) (446.5) (0.1) (446.6)
Change in
interest in a
subsidiary - - - 0.3 - - - 0.3 (0.3) -
At 30th June
2020 63.2 499.7 260.3 (0.4) 2,943.4 (8.7) (90.7) 3,666.8 3.2 3,670.0
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
Year ended 31st
December 2020
At 1st January
2020 63.2 499.7 260.3 434.8 2,943.4 - (88.4) 4,113.0 3.6 4,116.6
Total
comprehensive
income - - - (675.5) - (9.7) 81.3 (603.9) 0.5 (603.4)
Change in
interest in a
subsidiary - - - 0.4 - - - 0.4 (0.4) -
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
At 31st December
2020 63.2 499.7 260.3 (240.3) 2,943.4 (9.7) (7.1) 3,509.5 3.7 3,513.2
------- ------- -------- -------- ----------- -------- -------- ------------ ------------ -------
Revenue reserves as at 30th June 2021 included cumulative fair
value loss on the investment property under development of US$631.3
million (US$401.0 million as a t
30th June 2020 and US$542.2 million as at 31st December
2020).
_______________________________________________________________________________________________________________________________
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
(unaudited) Year ended
Six months ended 31st
30th June December
2021 2020 2020
US$m US$m US$m
Operating activities
----------------- ------- ----------
Operating loss (134.5) (414.8) (660.0)
Depreciation, amortisation and impairment 35.4 37.4 124.2
Other non-cash items 88.1 335.6 472.8
Movements in working capital (4.3) (0.9) 1.4
Interest received 0.3 1.3 1.8
Interest and other financing charges
paid (6.9) (8.1) (14.1)
Tax paid (0.6) (8.3) (9.6)
Cash flows from operating activities (22.5) (57.8) (83.5)
Investing activities
----------------- ------- ----------
Purchase of tangible assets (10.0) (14.3) (38.9)
Additions to investment property
under development (11.8) (11.1) (21.6)
Purchase of intangible assets (0.8) (3.2) (5.3)
Payment on Munich expansion (28.6) - -
Purchase of other investments (0.2) (0.4) (0.6)
Purchase of an associate - - (2.0)
Advance to associates and joint ventures (7.0) (23.1) (40.5)
Repayment of loans to associates
and joint ventures 0.5 0.4 0.4
Cash flows from investing activities (57.9) (51.7) (108.5)
Financing activities
----------------- ------- ----------
Drawdown of borrowings 117.8 32.4 88.4
Repayment of borrowings (61.3) - (0.1)
Principal elements of lease payments (1.3) (3.6) (6.0)
Cash flows from financing activities 55.2 28.8 82.3
----------------- ------- ----------
Net decrease in cash and cash equivalents (25.2) (80.7) (109.7)
Cash and cash equivalents at beginning
of period 164.6 270.7 270.7
Effect of exchange rate changes (1.7) (2.9) 3.6
----------------- ------- ----------
Cash and cash equivalents at end
of period 137.7 187.1 164.6
----------------- ------- ----------
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 were 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,
which was increased with new debt facilities in February 2021.
Operating conditions generally improved towards the end of the
first half of 2021, with all 34 hotels open in the second quarter.
In the first half of 2021, the Group incurred total cash outflow
from operating activities of US$23 million, a significant
improvement from the same period in 2020.
A return of profitability by the Group will be dependent on the
continued successful roll-out of vaccination programmes and removal
of barriers to travel.
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$5.0 billion at 30th June
2021.
At 30th June 2021, the Group had total liquidity of US$441
million, comprising US$303 million of undrawn committed facilities
and US$138 million of cash balances. The Group's facilities are not
subject to any cash flow covenants and had an average remaining
tenor of 2.6 years. This robust liquidity position enables the
Group to sustain a prolonged downturn in the hospitality industry
should that eventuate as well as meet its capital commitments.
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 stress-test
cash flow forecast which assumes the majority of the Group's hotels
are closed as a consequence of government restrictions for a period
of 12 months from the date of approval of the condensed financial
statements.
Having considered the outcome of the stress-test 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 2020 annual financial statements and the Group has not early
adopted any standard or amendments that have been issued but not
yet effective, except as mentioned below:
Interest Rate Benchmark Reform - Phase 2: Amendment to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16 (effective 1st January 2021)
The amendments provide practical expedient from certain
requirements under the IFRSs as a result of the reform which affect
the measurement of financial assets, financial liabilities and
lease liabilities, and a number of reliefs for hedging
relationships. The Group applied the amendments from 1st January
2021 and there is no significant impact on the Group's consolidated
financial statements.
COVID-19 Related Rent Concessions beyond 30th June 2021:
Amendment to IFRS 16 Leases (effective 1st April 2021)
The Group adopted and applied the practical expedient of the
COVID-19 Related Rent Concessions: Amendment to IFRS 16 Leases,
published in June 2020 ('2020 amendment'), in the 2020 annual
financial statements. The 2021 amendment extends the practical
expedient in the 2020 amendment to eligible lease payments due on
or before 30th June 2022. By using the 2021 amendment, the Group
continues to apply the practical expedient consistently to all
lease contracts with similar characteristics and in similar
circumstances, and does not assess these concessions as lease
modifications.
2. REVENUE
Six months ended 30th June
2021 2020
US$m US$m
By geographical area:
Asia 54.1 43.7
Europe, Middle East and Africa ('EMEA') 33.9 37.2
America 13.8 14.6
101.8 95.5
----- -----
Revenue from contracts with customers:
Recognised at a point in time 37.4 37.8
Recognised over time 54.6 49.7
----- -----
92.0 87.5
Revenue from other sources:
Rental income 9.8 8.0
----- -----
101.8 95.5
----- -----
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION)
Six months ended 30th June
2021 2020
US$m US$m
By geographical area:
Asia (7.0) (15.5)
EMEA 5.9 (10.0)
America (8.9) (18.2)
Underlying EBITDA from subsidiaries (10.0) (43.7)
Non-trading items (note 7)
Change in fair value of investment property
under development (89.1) (333.7)
------- -------
EBITDA from subsidiaries (99.1) (377.4)
Underlying depreciation and amortisation
from
subsidiaries (35.4) (37.4)
Operating loss (134.5) (414.8)
------- -------
For the six months ended 30th June 2021, the Group had received
government grants of US$18.1 million (2020: US$10.1 million). In
addition, there were rent concessions of US$2.1 million (2020:
US$0.8 million). Both amounts were in relation to the COVID-19
pandemic. These subsidies were accounted for as other operating
income .
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Net
and Operating financing Net
EBITDA amortisation loss charges Tax loss
US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2021
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)
Six months ended
30th June 2020
By geographical area:
Asia (0.5) (4.5) (5.0) (1.0) 0.9 (5.1)
EMEA (2.4) (0.2) (2.6) - - (2.6)
America (3.5) (1.4) (4.9) (0.9) - (5.8)
------ ------------- --------- ---------- ----- ------
(6.4) (6.1) (12.5) (1.9) 0.9 (13.5)
For the six months ended 30th June 2021, the results of
associates and joint ventures included the Group's share of
government grants of US$0.7 million (2020: US$1.6 million). In
addition, there were rent concessions of US$0.1 million (2020:
US$0.1 million). Both amounts were in relation to the COVID-19
pandemic.
5. TAX
Six months ended 30th June
2021 2020
US$m US$m
Tax (charged)/credited to profit and loss is
analysed as follows:
Current tax (0.1) (0.6)
Deferred tax 0.1 0.3
----- -----
- (0.3)
----- -----
By geographical area:
Asia (0.3) (0.6)
EMEA 0.3 0.3
- (0.3)
----- -----
Tax charge relating to cash flow hedges of US$0.5 million (2020:
tax credit of US$1.6 million) is included in other comprehensive
income or expense.
Tax on profits has been calculated at rates of taxation
prevailing in the territories in which the Group operates.
Share of tax credit of associates and joint ventures of US$1.5
million (2020: US$0.9 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$155.9 million (2020: US$435.5 million) and on
the weighted average number of 1,263.2 million (2020: 1,263.2
million) shares in issue during the period.
Diluted loss per share is calculated on loss attributable to
shareholders of US$155.9 million (2020: US$435.5 million) and on
the weighted average number of 1,263.6 million (2020: 1,263.2
million) shares after adjusting for the number of shares which are
deemed to be issued for no consideration under the share-based
long-term incentive plans based on the average share price during
the period.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2021 2020
Weighted average number of shares for basic
earnings per share calculation 1,263.2 1,263.2
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans 0.4 -
------- -------
Weighted average number of shares for diluted
earnings per share calculation 1,263.6 1,263.2
------- -------
Additional basic and diluted loss per share are also calculated
based on underlying loss attributable to shareholders. A
reconciliation of losses is set out below:
Six months ended 30th June
2021 2020
Basic Diluted Basic Diluted
loss loss loss loss
per share per share per share per share
US$m USc USc US$m USc USc
Loss attributable
to shareholders (155.9) (12.34) (12.34) (435.5) (34.48) (34.48)
Non-trading items
(note 7) 89.1 333.7
Underlying loss
attributable to
shareholders (66.8) (5.29) (5.29) (101.8) (8.06) (8.06)
------- -------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investments property under development and
investments which are measured at fair value through profit and
loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable
intangible assets and other investments; provisions for the closure
of businesses; acquisition-related costs in business combinations;
and other credits and charges of a non-recurring nature that
require inclusion in order to provide additional insight into
underlying business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2021 2020
US$m US$m
Change in fair value of investment property
under development (note 8) (89.1) (333.7)
------ -------
8. INVESTMENT PROPERTY UNDER DEVELOPMENT
Six months ended Year ended
30th June 31st December
2021 2020 2020
US$m US$m US$m
Fair value at beginning of period 2,528.3 2,967.7 2,967.7
Exchange differences (3.9) 12.8 12.1
Additions 11.8 11.1 23.4
Decrease in fair value (89.1) (333.7) (474.9)
-------- -------- --------------
Fair value at end of period 2,447.1 2,657.9 2,528.3
-------- -------- --------------
9. DIVIDS
No interim dividend in respect of the six months ended 30th June
2021 has been declared by the Board (2020: nil).
10. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2021 and 31st December
2020 amounted to US$700.0 million and US$728.7 million,
respectively.
11. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2021 and 31st December
2020 are as follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
30th June 2021
Financial assets
measured at fair
value
Other investments - 15.5 - - 15.5 15.5
------------ ------------ ------------- ------------ ---------- ---------
Financial assets
not measured
at fair value
Debtors - - 89.9 - 89.9 89.9
Bank and cash
balances - - 137.7 - 137.7 137.7
------------ ------------
- - 227.6 - 227.6 227.6
------------ ------------ ------------- ------------ ---------- ---------
Financial liabilities
measured at fair
value
Derivative financial
instruments (8.2) - - - (8.2) (8.2)
------------ ------------ ------------- ------------ ---------- ---------
Financial liabilities
not measured
at fair value
Borrowings - - - (727.7) (727.7) (727.7)
Lease liabilities - - - (163.4) (163.4) (163.4)
Trade and other
payable excluding
non-financial
liabilities - - - (115.5) (115.5) (115.5)
------------ ------------
- - - (1,006.6) (1,006.6) (1,006.6)
------------ ------------ ------------- ------------ ---------- ---------
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying Fair
instruments and loss cost liabilities amount value
US$m US$m US$m US$m US$m US$m
31st December
2020
Financial assets
measured at fair
value
Other investments - 16.1 - - 16.1 16.1
------------ ------------ ------------- ------------ ---------- -------
Financial assets
not measured at
fair value
Debtors - - 60.5 - 60.5 60.5
Bank and cash
balances - - 164.6 - 164.6 164.6
------------ ------------
- - 225.1 - 225.1 225.1
------------ ------------ ------------- ------------ ---------- -------
Financial liabilities
measured at fair
value
Derivative financial
instruments (10.9) - - - (10.9) (10.9)
------------
Financial liabilities
not measured at fair
value
Borrowings - - - (670.8) (670.8) (670.8)
Lease liabilities - - - (177.1) (177.1) (177.1)
Trade and other
payable excluding
non-financial
liabilities - - - (107.7) (107.7) (107.7)
------------ ------------
- - - (955.6) (955.6) (955.6)
------------ ------------ ------------- ------------ ---------- -------
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 2021 and the year ended 31st December
2020.
The table below analyses financial instruments carried at fair
value at 30th June 2021 and 31st December 2020, by the levels in
the fair value measurement hierarchy:
Observable
market current Unobservable
transactions inputs Total
US$m US$m US$m
30th June 2021
Assets
Other investments 5.4 10.1 15.5
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income (8.2) - (8.2)
--------------- ------------ ------
31st December 2020
Assets
Other investments 5.4 10.7 16.1
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income (10.9) - (10.9)
--------------- ------------ ------
There were no transfers among the two categories during the six
months ended 30th June 2021 and the year ended 31st December
2020.
Movement of financial instruments which are valued based on
unobservable inputs during the six months ended 30th June 2021 and
the year ended 31st December 2020 are as follows:
Unlisted
investments
US$m
At 1st January 2021 10.7
Additions 0.2
Disposals (0.8)
------------
At 30th June 2021 10.1
------------
At 1st January 2020 11.3
Additions 0.6
Disposals (1.2)
------------
At 31st December 2020 10.7
------------
(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
Jardine Strategic Limited ('JSL') became the parent company of
the Group following the completion of the simplification of the
Group's parent company structure in April 2021. Jardine Strategic
Holdings Limited and JMH Bermuda Limited, a wholly-owned subsidiary
of the Group's ultimate parent company, Jardine Matheson Holdings
Limited ('JMH'), amalgamated under the Bermuda Companies Act to
form JSL, a wholly-owned subsidiary of 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 2021 are described below:
The Group managed six (2020: six) associate and joint venture
hotels and received management fees of US$2.6 million (2020: US$2.7
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 (2020: US$0.5 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$0.4 million (2020: US$0.6 million) to
HKL in consideration for project management consultancy services.
In addition, Gammon Construction Limited ('GCL'), an associate of
JMH, completed value of works of US$9.8 million (2020: US$11.1
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.
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and
internal control. The following have been identified previously as
the areas of principal risk and uncertainty facing the Company, and
they remain relevant in the second half of the year. The risk of a
global pandemic, such as COVID-19, had been highlighted as a key
risk.
-- Economic and Financial Risk
-- Commercial and Market Risk
-- Pandemic, Terrorism and Natural Disasters
-- Key Agreements
-- Reputational Risk and Value of the Brand
-- Regulatory and Political Risk
-- Cybersecurity Risk
For greater detail, please refer to pages 123 and 124 of the
Company's 2020 Annual Report, a copy of which is available on the
Company's website www.mandarinoriental.com .
Responsibility Statement
The Directors of the Company confirm to the best of their
knowledge that:
(a) the condensed financial statements have been prepared in accordance with IAS 34; and
(b) the interim management report includes a fair review of all
information required to be disclosed by the Disclosure Guidance and
Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct
Authority in the United Kingdom.
For and on behalf of the Board
James Riley
Craig Beattie
Directors
Dividend Information for Shareholders
In light of the substantially reduced levels of business, no
interim dividend will be paid in respect of the six months ended
30th June 2021.
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 34 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$5.0 billion as at 30th June 2021 .
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 standard listing on the London
Stock Exchange, with secondary listings in Bermuda and Singapore .
Mandarin Oriental Hotel Group International Limited, which operates
from Hong Kong, manages the activities of the Group's hotels.
Mandarin Oriental is a member of the Jardine Matheson Group.
- end -
For further information, please contact:
Mandarin Oriental Hotel Group International
Limited
James Riley / Craig Beattie (852) 2895 9288
Shevaun Leach (852) 2895 9167
Brunswick Group Limited
Sunitha Chalam (852) 3512 5050
As permitted by the Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority in the United Kingdom, the
Company will not be posting a printed version of the Half-Yearly
Results announcement to shareholders. The Half-Yearly Results
announcement will remain available on the Company ' s website,
https://www.mandarinoriental.com , together with other Group
announcements.
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