REG - Mandarin Oriental Jardine Matheson Hdg - Half-year Report
24/07/2024 15:15
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RNS Number : 7067X Mandarin Oriental International Ltd 24 July 2024
Announcement
24th July 2024
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 2024
HIGHLIGHTS
· Group Revenue per Available Room ('RevPAR') up 5% from the prior year, with
positive growth in all regions
· Underlying profit in the first half of 2024 of US$23 million, compared to
US$28 million in the same period in 2023, which benefitted from a
non-recurring tax credit of US$5 million
· Successful openings of Mandarin Oriental Mayfair, London and Mandarin
Oriental, Muscat: the Group reached a milestone of 40 hotels in its portfolio
· New hotel in Qianmen, Beijing scheduled to open in the second half of the
year, and announcement of two new management contracts in Rome and Bali
· Interim dividend of US¢1.50 per share declared
"In the first half of 2024, the Group's RevPAR grew by 5%, driven by growth in
all regions. 12% growth in Asia was notable, as our hotels in the region
benefitted from returning travel demand. The majority of our hotels built on
their market-leading positions and increased revenue share in the period.
We added two beautiful and strategic hotels to our portfolio - in Mayfair and
Muscat, and successfully rebranded our first flag in Riyadh. We are very
confident in the fundamentals of our business and our prospects for continuing
our development into a brand-led, guest centric, global luxury hospitality
business."
Laurent Kleitman
Group Chief Executive
MANDARIN ORIENTAL INTERNATIONAL LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2024
RESULTS
(unaudited)
Six months ended 30th June
2024 2023 Change
US$m US$m %
Combined total revenue of hotels under management((1)) 979.5 881.5 +11
Revenue 250.9 260.7 -4
Underlying EBITDA (Earnings before interest, tax, depreciation and 70.7 76.7 -8
amortisation)((2))
Underlying profit attributable to shareholders((3)) 22.5 27.8 -19
Revaluation loss on investment properties (37.1) (140.2) +74
(Loss)/gain on sale of subsidiaries (36.9) 43.2 n/a
Loss attributable to shareholders (52.0) (69.2) +25
US¢ US¢
Underlying earnings per share((3)) 1.78 2.20 -19
Loss per share (4.11) (5.48) +25
Interim dividend per share 1.50 1.50 -
US$ US$
Net asset value per share((4)) 2.27 2.34 -3
Adjusted net asset value per share((4)(5)) 3.56 3.67 -3
Net debt/shareholders' funds((4)) 4% 8%
Net debt/adjusted shareholders' funds((4)(5)) 2% 5%
(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 2024 and 31st December 2023, 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 2024 and
31st December 2023. 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 2024
and 31st December 2023 have included the market value of the Group's freehold
and leasehold interests which were appraised as at 31st December 2023.
The interim dividend of US¢1.50 per share will be payable on 16th October
2024 to shareholders on the register of members at the close of business on
23rd August 2024.
2024 HALF-YEAR PERFORMANCE
The combined total revenue of hotels under management in the first half of
2024 was US$980 million, a 11% increase on the same period last year, boosted
by the re-opening of Mandarin Oriental, Singapore and the opening of four new
hotels: in Costa Navarino, Zurich, Mayfair and Muscat. Combined total revenue
growth (excluding new hotels and re-openings) was 5%. Consolidated revenue
reduced due to the disposals of our hotel properties in Jakarta and Paris.
The Group's RevPAR grew from last year by 5%, and all regions recorded an
improvement. Asia delivered growth of 12%, driven by both occupancy and rates.
Our hotels in Europe, the Middle East and Africa ('EMEA') achieved a modest
increase, due to continued strength in leisure demand and occupancy. In
America, our hotels were able to achieve a 3% improvement driven by growth in
corporate occupancy.
In the period, the majority of our hotels built on already market-leading
positions and improved their revenue share.
In June 2024, we released our 2023 Sustainability report, which tracked our
progress made in reducing energy intensity, reducing waste, pursuing
responsible sourcing and supporting communities.
In July 2024, we celebrated the topping-out of One Causeway Bay, our Grade A
office development, which is due to be completed by the second quarter of
2025. We have also announced the enhancement of the Landmark Mandarin
Oriental, Hong Kong, introducing new dining concepts and exquisite
craftsmanship to accommodation, to set a new benchmark for ultra-luxury
hospitality in the heart of Hong Kong.
FINANCIAL PERFORMANCE
The Group reported an underlying profit of US$23 million in the first half of
2024, compared to US$28 million in the same period in 2023. The 2023 results
benefitted from a non-recurring tax credit of US$5 million in Owned Hotels.
The underlying profit of the Management Business was US$14 million, reduced
from US$16 million in the equivalent period last year, as higher fee income
was offset by timing differences in marketing spend.
The underlying profit of Owned Hotels was US$11 million, compared with US$14
million in 2023. There were higher contributions in 2024 from Singapore after
its re-opening in September 2023, as well as from Tokyo and Madrid.
In April 2024, the Group completed the disposal of the hotel portion of its
Paris property for US$221 million, with a loss on disposal of US$37 million. A
new long-term hotel management contract has been agreed together with a
renovation plan to strengthen the positioning of Mandarin Oriental in Paris.
In June 2024, the Group signed a contract to sell the retail portion of its
Paris property for US$160 million. This transaction was completed in July
2024, and the Group has recognised a US$56 million gain on disposal. Proceeds
from both transactions have been applied to reduce debt.
The valuation of One Causeway Bay was broadly flat compared to 31st December
2023. As we continued to invest in construction, the project recorded a
non-trading loss of US$37 million.
Total losses attributable to shareholders were US$52 million in the first half
of 2024, compared to losses of US$69 million in the same period last year.
Net debt at 30th June 2024 was US$110 million, down from US$225 million at the
end of 2023, primarily due to the receipt of sale proceeds from the Paris
hotel property. The Group remains well funded, with more than US$619 million
in cash and undrawn committed facilities. Gearing as a percentage of adjusted
shareholders' funds was 2%, reduced from 5% at the end of last year.
An interim dividend of US¢1.50 per share has been declared.
DEVELOPMENT
In January 2024, the Group rebranded Mandarin Oriental Al Faisaliah, Riyadh -
its first flag in Saudi Arabia. In June 2024, we opened two new hotels -
Mandarin Oriental Mayfair, London, located in the heart of London's art and
fashion district, and Mandarin Oriental, Muscat, which offers unobstructed
views of the Gulf of Oman. These openings bring the number of Mandarin
Oriental hotels to 40 and mark a significant milestone in our growth journey.
Mandarin Oriental Qianmen, Beijing, our second property in Beijing, is
scheduled to open later this year, complementing our already market-leading
Mandarin Oriental Wangfujing, Beijing.
Since the start of the year, the Group has announced two new management
contracts: a unique hotel housed within meticulously restored 19th-century
villas in the centre of Rome, and a secluded beachfront resort and residences
on Bali's southern coast on the Bukit peninsula. These additions expand our
development pipeline to 30 hotels, resorts and standalone residences projects
globally. We remain focussed on accelerating our global expansion.
GOVERNANCE
As announced by the Company on 16th July 2024, a number of changes have been
made to the composition and operation of the Company's Board and Committees to
reflect our ongoing focus on evolving the governance framework for the Group
to support the effective operation of our business.
BOARD COMPOSITION
With effect from 22nd July 2024, John Witt stepped down as a Director of the
Company and as a member of the Company's Remuneration and Nominations
Committees.
Fabrice Megarbane will join the Board of the Company as an Independent
Non-Executive Director effective 1st August 2024.
BOARD COMMITTEES
With effect from 22nd July 2024, Adam Keswick stepped down from the
Nominations Committee, and Graham Baker stepped down from the Remuneration
Committee. Adam remains as a Director.
On 24th July 2024, the Company's Board approved updated terms of reference for
each of the Audit, Remuneration and Nominations Committees, to better align
them with the future needs of the business.
COMPANY SECRETARY
On 22nd July 2024, Sean Ward was appointed as Company Secretary of the
Company, succeeding Jonathan Lloyd.
OUTLOOK
While the global economic landscape remains uncertain, we continue to have
confidence in the outlook for luxury hospitality in the long term. The
strength of our Brand, the size of our pipeline and our Legendary Service
proposition are all meaningful competitive differentiators and provide
excellent foundations for growth. We will remain focussed on growth and
quality and will continue our development into a brand-led, guest-centric,
global luxury hospitality business.
Laurent Kleitman
Group Chief Executive
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2024
(unaudited)
Six months ended 30th June Year ended 31st December
2024 2023 2023
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 250.9 - 250.9 260.7 - 260.7 558.1 - 558.1
(note 2)
Cost of sales (142.0) - (142.0) (152.8) - (152.8) (308.7) - (308.7)
Gross profit 108.9 - 108.9 107.9 - 107.9 249.4 - 249.4
Selling and distribution costs (17.7) - (17.7) (13.7) - (13.7) (35.6) - (35.6)
Administration expenses (60.8) - (60.8) (57.8) - (57.8) (116.7) - (116.7)
Other operating income/ (expense) - - - - - - 5.2 (0.4) 4.8
Change in fair value of investment properties - (37.1) (37.1) - (140.2) (140.2) - (486.7) (486.7)
(Loss)/gain on sale of subsidiaries (note 7) - (31.5) (31.5) - 45.7 45.7 - 43.8 43.8
Operating (loss)/profit (note 3) 30.4 (68.6) (38.2) 36.4 (94.5) (58.1) 102.3 (443.3) (341.0)
Financing charges (6.5) - (6.5) (9.3) - (9.3) (17.6) - (17.6)
Interest income 1.7 - 1.7 2.4 - 2.4 7.7 - 7.7
Net financing charges (4.8) - (4.8) (6.9) - (6.9) (9.9) - (9.9)
Share of results of associates and joint ventures (note 4) 4.7 (0.5) 4.2 1.0 - 1.0 (0.3) (0.6) (0.9)
(Loss)/profit before tax 30.3 (69.1) (38.8) 30.5 (94.5) (64.0) 92.1 (443.9) (351.8)
Tax (note 5) (7.7) (5.4) (13.1) (2.6) (2.5) (5.1) (11.0) (2.5) (13.5)
(Loss)/profit after tax 22.6 (74.5) (51.9) 27.9 (97.0) (69.1) 81.1 (446.4) (365.3)
Attributable to:
Shareholders of the Company (notes 6 and 7) 22.5 (74.5) (52.0) 27.8 (97.0) (69.2) 81.0 (446.4) (365.4)
Non-controlling interests 0.1 - 0.1 0.1 - 0.1 0.1 - 0.1
22.6 (74.5) (51.9) 27.9 (97.0) (69.1) 81.1 (446.4) (365.3)
US¢ US¢ US¢ US¢ US¢ US¢
(Loss)/earnings per share
(basic and diluted) (note 6) 1.78 (4.11) 2.20 (5.48) 6.41 (28.91)
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2024
(unaudited) Year ended
Six months ended 31st
30th June December
2024 2023 2023
US$m US$m US$m
Loss for the period (51.9) (69.1) (365.3)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans - - (2.5)
Tax on items that will not be reclassified - - 0.4
- - (2.1)
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
- net (loss)/gain arising during the period (20.5) 14.7 34.0
- transfer to profit and loss 28.2 33.0 33.5
Cash flow hedges
- net loss arising during the period (2.9) (11.1) (15.1)
Tax relating to items that may be reclassified 0.6 0.5 1.3
Share of other comprehensive (expense)/income of associates and joint ventures (2.4) (1.9) 0.4
3.0 35.2 54.1
Other comprehensive income for the period, net of tax 3.0 35.2 52.0
Total comprehensive expense for the period (48.9) (33.9) (313.3)
Attributable to:
Shareholders of the Company (48.7) (34.1) (314.2)
Non-controlling interests (0.2) 0.2 0.9
(48.9) (33.9) (313.3)
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 30th June 2024
(unaudited) At 31st
At 30th June December
2024 2023 2023
US$m US$m US$m
Net assets
Intangible assets 45.7 40.2 43.7
Tangible assets 597.3 920.8 618.6
Right-of-use assets 216.1 229.6 229.1
Investment properties (note 8) 2,079.9 2,354.2 2,060.3
Associates and joint ventures 154.6 158.6 155.8
Other investments 13.8 13.8 14.0
Deferred tax assets 12.2 12.1 14.0
Pension assets 1.3 2.2 0.6
Non-current debtors 11.0 11.1 10.9
Non-current assets 3,131.9 3,742.6 3,147.0
Stocks 5.0 5.2 5.0
Current debtors 80.1 84.3 80.3
Current tax assets 1.3 1.7 1.7
Cash and bank balances 253.9 349.3 178.8
340.3 440.5 265.8
Assets classified as held for sale (note 9) 80.6 - 331.9
Current assets 420.9 440.5 597.7
Current creditors (147.4) (155.8) (158.0)
Current borrowings (note 10) - (581.4) (414.9)
Current lease liabilities (5.4) (4.4) (5.8)
Current tax liabilities (21.6) (16.9) (22.1)
(174.4) (758.5) (600.8)
Liabilities directly associated with assets classified as held for sale (note (0.9) - (24.1)
9)
Current liabilities (175.3) (758.5) (624.9)
Net current assets/(liabilities) 245.6 (318.0) (27.2)
Long-term borrowings (note 10) (364.2) (0.6) (0.6)
Non-current lease liabilities (97.1) (112.5) (110.6)
Deferred tax liabilities (42.2) (42.6) (42.0)
Non-current creditors (1.6) (4.7) (1.1)
Non-current liabilities (505.1) (160.4) (154.3)
2,872.4 3,264.2 2,965.5
Total equity
Share capital 63.2 63.2 63.2
Share premium 500.9 500.9 500.9
Revenue and other reserves 2,303.4 2,695.3 2,396.3
Shareholders' funds 2,867.5 3,259.4 2,960.4
Non-controlling interests 4.9 4.8 5.1
2,872.4 3,264.2 2,965.5
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2024
Attributable to shareholders of the Company US$m
Attributable to non-
Asset revaluation reserves controlling interests
Share Share Capital Revenue US$m Hedging Exchange US$m Total
capital premium reserves reserves reserves reserves equity
US$m US$m US$m US$m US$m US$m US$m
Six months ended 30th June 2024 (unaudited)
At 1st January 2024 63.2 500.9 258.9 (815.9) 3,023.2 1.7 (71.6) 2,960.4 5.1 2,965.5
Total comprehensive income - - - (51.9) - (2.3) 5.5 (48.7) (0.2) (48.9)
Dividends paid by the Company - - - (44.2) - - - (44.2) - (44.2)
At 30th June 2024 63.2 500.9 258.9 (912.0) 3,023.2 (0.6) (66.1) 2,867.5 4.9 2,872.4
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
Year ended 31st December 2023
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 - - - (367.6) - (13.7) 67.1 (314.2) 0.9 (313.3)
Dividends paid by the Company - - - (19.0) - - - (19.0) - (19.0)
Unclaimed dividend forfeited - - - 0.1 - - - 0.1 - 0.1
Subsidiary disposed of - - 0.2 (0.6) - - (0.2) (0.6) 0.7 0.1
Transfer - 0.2 (0.2) - - - - - - -
At 31st December 2023 63.2 500.9 258.9 (815.9) 3,023.2 1.7 (71.6) 2,960.4 5.1 2,965.5
Revenue reserves as at 30th June 2024 included cumulative fair value losses on
the investment property under development of US$1,244.9 million (US$861.3
million as at 30th June 2023 and US$1,207.8 million as at 31st December 2023).
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2024
(unaudited) Year ended
Six months ended 31st
30th June December
2024 2023 2023
US$m US$m US$m
Operating activities
Operating loss (38.2) (58.1) (341.0)
Depreciation, amortisation and impairment 21.7 27.3 51.1
Other non-cash items 69.0 94.4 440.3
Movements in working capital (11.3) (1.0) (2.8)
Interest received 1.3 3.0 8.5
Interest and other financing charges paid (8.6) (9.4) (17.6)
Tax (paid)/refund (10.5) 2.0 (2.6)
23.4 58.2 135.9
Dividends and interest from associates and joint ventures 0.3 1.5 5.3
Cash flows from operating activities 23.7 59.7 141.2
Investing activities
Purchase of tangible assets (4.0) (5.4) (13.7)
Additions to investment properties (65.4) (35.8) (71.0)
Purchase of intangible assets (4.0) (0.7) (6.4)
Purchase of other investments (0.1) (0.1) (0.1)
Advance to associates and joint ventures - (20.7) (20.7)
Repayment of loans to associates and joint ventures 0.1 66.4 67.2
Sale of subsidiaries (note 11) 215.5 76.6 75.6
Cash flows from investing activities 142.1 80.3 30.9
Financing activities
Drawdown of borrowings 535.7 38.9 58.1
Repayment of borrowings (586.8) (60.5) (247.9)
Principal elements of lease payments (3.0) (3.2) (6.2)
Dividends paid by the Company (note 12) (44.2) - (19.0)
Cash flows from financing activities (98.3) (24.8) (215.0)
Net increase/(decrease) in cash and cash equivalents 67.5 115.2 (42.9)
Cash and cash equivalents at beginning of period 190.3 226.2 226.2
Effect of exchange rate changes (3.9) 7.9 7.0
Cash and cash equivalents at end of period 253.9 349.3 190.3
At 31st December 2023, cash and cash equivalents of US$190.3 million included
cash and bank balances of US$11.5 million classified as assets held for sale
(note 9).
Mandarin Oriental International Limited
Notes to Condensed Financial Statements
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed financial statements have been prepared in accordance with IAS
34 'Interim Financial Reporting' and on a going concern basis. The condensed
financial statements have not been audited or reviewed by the Group's
auditors.
There are no changes to the accounting policies as described in the 2023
annual financial statements.
A number of amendments issued by the International Accounting Standards Board
were effective from 1st January 2024 and do not have significant impact on the
Group's results, financial position and accounting policies.
The Group has not early adopted any standards, interpretations or amendments
that have been issued but not yet effective.
2. REVENUE
Six months ended 30th June
2024 2023
US$m US$m
By business activity:
Hotel ownership 218.9 230.9
Hotel & Residences branding and management 42.5 40.2
Less: intra-segment revenue (10.5) (10.4)
250.9 260.7
By geographical area:
Asia 111.5 107.2
Europe, the Middle East and Africa ('EMEA') 117.0 130.4
America 22.4 23.1
250.9 260.7
Revenue from contracts with customers:
Recognised at a point in time 73.1 77.8
Recognised over time 168.8 173.7
241.9 251.5
Revenue from other sources:
Rental income 9.0 9.2
250.9 260.7
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION)
Six months ended 30th June
2024 2
0
US$m 2
3
U
S
$
m
By business activity:
Hotel ownership 35.2 40.5
Hotel & Residences branding and management 18.6 23.2
Property development (1.7) -
Underlying EBITDA from subsidiaries 52.1 63.7
Non-trading items (note 7)
- change in fair value of investment properties (37.1) (140.2)
- (loss)/gain on sale of subsidiaries (31.5) 45.7
(68.6) (94.5)
EBITDA from subsidiaries (16.5) (30.8)
Underlying depreciation and amortisation from
subsidiaries (21.7) (27.3)
Operating loss (38.2) (58.1)
By geographical area:
Asia 17.9 23.3
EMEA 36.0 39.8
America (1.8) 0.6
Underlying EBITDA from subsidiaries 52.1 63.7
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 2024
By business activity:
Hotel ownership 18.2 (7.9) 10.3 (4.8) (1.0) 4.5
Other 0.4 (0.3) 0.1 - 0.1 0.2
Underlying 18.6 (8.2) 10.4 (4.8) (0.9) 4.7
Non-trading items (note 7)
- closure costs (0.5) - (0.5) - - (0.5)
18.1 (8.2) 9.9 (4.8) (0.9) 4.2
By geographical area:
Asia 12.4 (5.8) 6.6 (1.8) (1.0) 3.8
EMEA 3.6 (1.7) 1.9 (1.9) 0.1 0.1
America 2.6 (0.7) 1.9 (1.1) - 0.8
Underlying 18.6 (8.2) 10.4 (4.8) (0.9) 4.7
Non-trading items (note 7)
- closure costs (0.5) - (0.5) - - (0.5)
18.1 (8.2) 9.9 (4.8) (0.9) 4.2
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
5. TAX
Six months ended 30th June
2024 2023
US$m US$m
Tax (charged)/credited to profit and loss is analysed as follows:
Current tax (10.6) (1.9)
Deferred tax (2.5) (3.2)
(13.1) (5.1)
By business activity:
Hotel ownership (10.2) (2.4)
Hotel & Residences branding and management (2.9) (2.7)
(13.1) (5.1)
By geographical area:
Asia (3.7) (5.4)
EMEA (8.8) 1.0
America (0.6) (0.7)
(13.1) (5.1)
In 2024, current tax included a non-trading capital gain tax charge of US$5.4
million in relation to the sale of 100% ownership stake in the owning
companies of Mandarin Oriental, Paris (note 9).
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 the owning company
of Mandarin Oriental, Jakarta (note 14).
Tax credit relating to cash flow hedges of US$0.6 million (2023: 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.
The Group is within the scope of the OECD Pillar Two model rules, and has
applied the exception to recognising and disclosing information about deferred
tax assets and liabilities relating to Pillar Two income taxes from 1st
January 2023. Pillar Two legislation has been enacted or substantially enacted
in certain jurisdictions in which the Group operates. The Group has assessed
that the income tax expense related to Pillar Two income taxes in the relevant
jurisdictions for the interim period is immaterial.
Share of tax charge of associates and joint ventures of US$0.9 million (2023:
tax credit of US$0.2 million) is included in share of results of associates
and joint ventures (note 4).
6. (LOSS)/EARNINGS PER SHARE
Loss per share is calculated using loss attributable to shareholders of
US$52.0 million (2023: US$69.2 million) and the weighted average number of
1,263.8 million (2023: 1,263.8 million) shares in issue during the period.
Additional earnings/loss per share are also calculated based on underlying
profit/loss attributable to shareholders. A reconciliation of loss/earnings is
set out below:
Six months ended 30th June
2024 2023
US$m (Loss)/ earnings per share US$m (Loss)/ earnings per share
US¢ US¢
Loss attributable to shareholders (52.0) (4.11) (69.2) (5.48)
Non-trading items (note 7) 74.5 97.0
Underlying profit attributable to shareholders 22.5 1.78 27.8 2.20
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment properties and investments which are measured at fair value through
profit and loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable intangible assets
and other investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other credits and
charges of a non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Six months ended 30th June
2024 2023
US$m US$m
Change in fair value of investment properties (note 8) (37.1) (140.2)
(Loss)/gain on sale of subsidiaries (notes 9 and 14) (36.9) 43.2
(74.0) (97.0)
Share of results of associates and joint ventures (0.5) -
- closure costs (note 4)
(74.5) (97.0)
8. INVESTMENT PROPERTIES
Six months ended Year ended 31st December
30th June
2024 2023 2023
US$m US$m US$m
Fair value at beginning of period 2,060.3 2,472.6 2,472.6
Exchange differences 1.7 (12.7) (5.5)
Additions 55.0 34.5 79.9
Decrease in fair value (37.1) (140.2) (486.7)
Fair value at end of period 2,079.9 2,354.2 2,060.3
At 30th June 2024, investment properties comprised a commercial investment
property under development of US$1,991.4 million (US$2,266.0 million as at
30th June 2023 and US$1,971.9 million as at 31st December 2023) and a
completed residential investment property of US$88.5 million (US$88.2 million
as at 30th June 2023 and US$88.4 million as at 31st December 2023).
9. ASSETS CLASSIFIED AS HELD FOR SALE
Six months ended Year ended 31st December
30th June
2024 2023 2023
US$m US$m US$m
Intangible assets - - 0.1
Tangible assets 78.1 - 305.1
Deferred tax assets - - 0.1
Currents assets(*) 2.5 - 26.6
Total assets 80.6 - 331.9
Current liabilities (0.9) - (24.1)
*Included cash and bank balances of US$11.5 million at 31st December 2023.
In December 2023, the Group signed an option to sell its interests in Mandarin
Oriental, Paris (the 'Paris Hotel') to SLH Hotels Srl ('Statuto Group'), the
owner of Mandarin Oriental, Milan. The Group has agreed a new long-term
management agreement to manage and brand the Paris Hotel. The two retail units
(the 'Retail Units') adjoining the Paris Hotel were not included in the sale
and were being actively marketed for sale at 31st December 2023. The Group
purchased the building containing the Paris Hotel and the Retail Units in 2013
and divided them into separate titles before the completion of disposal of the
Paris Hotel to Statuto Group in April 2024. The consideration of the disposal
was US$221.1 million. The Group has recognised a post-tax, non-trading loss of
US$36.9 million (including a tax charge of US$5.4 million) during the six
months ended 30th June 2024 (notes 7 and 11).
In June 2024, the Group signed a contract to sell the Retail Units to Lavender
Propco SNC, an entity controlled by Blackstone Europe LLP at a total
consideration of US$159.8 million. This transaction was completed in July, and
the Group has recognised a post-tax, non-trading gain of US$56.2 million (net
of tax charge of US$4.9 million) in the second half of 2024.
10. BORROWINGS
The Group had borrowing facilities of US$754.4 million due to mature in the
first half of 2024. In February 2024, the Group has refinanced bank facilities
of US$409.2 million for three to five years.
11. SALE OF SUBSIDIARIES
In April 2024, the Group completed the sale of 100% ownership stake in the
owning companies of the Paris Hotel to Statuto Group (note 9).
In June 2023, the Group completed the sale of 96.9% ownership stake in the
owning company of Mandarin Oriental, Jakarta, to P.T. Astra Land Indonesia, a
subsidiary of Jardine Matheson Holdings Limited, the Group's ultimate holding
company (note 14).
Net cash inflow for the sale of subsidiaries is summarised as follows:
Six months ended 30th June
2024 2023
US$m US$m
Non-current assets 218.8 3.7
Currents assets 5.7 5.3
Non-current liabilities - (0.4)
Current liabilities (5.7) (4.0)
Non-controlling interests - 0.4
Net assets 218.8 5.0
Cumulative exchange translation difference 28.2 33.1
(Loss)/profit on disposal before tax (31.5) 45.7
Sales proceeds (net of selling expenses) 215.5 83.8
Adjustment for deferred payments - (3.2)
Cash and cash equivalents of subsidiaries disposed of - (4.0)
Net cash inflow 215.5 76.6
12. DIVIDENDS
Six months ended 30th June
2024 2023
US$m US$m
Final dividend in respect of 2023 of US¢3.50
(2022: nil) per share 44.2 -
An interim dividend in respect of 2024 of US¢1.50 (2023: US¢1.50) per share
amounting to a total of US$19.0 million (2023: US$19.0 million) 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 2024.
13. CAPITAL COMMITMENTS
Total capital commitments at 30th June 2024 and 31st December 2023 amounted to
US$312.1 million and US$354.6 million, respectively.
14. 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 2024 are described below:
The Group managed six (2023: six) associate and joint venture hotels and
received management fees of US$8.4 million (2023: US$7.0 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$1.1
million (2023: US$1.2 million), based on long-term management agreements on
normal commercial terms.
In respect of the One Causeway Bay site under development, the Group paid
consultancy fees of US$1.0 million (2023: US$0.9 million) to HKL in
consideration for project management consultancy services. In addition, Gammon
Construction Limited and its group companies ('GCL'), a joint venture of JMH,
completed value of works of US$48.6 million (2023: US$22.5 million). The HKL
agreement and GCL contract were arranged 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 during the six months ended 30th June
2023, based on lease agreements on normal commercial terms. The lease was
terminated in the second half of 2023.
In June 2023, the Group completed the sale of 96.9% ownership stake in the
owning company of Mandarin Oriental, Jakarta, 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. The Group has recognised a post-tax,
non-trading gain of US$43.2 million (net of tax charge of US$2.5 million)
(notes 7 and 11). The Group has retained the hotel management contracts.
There were no other related party transactions that might be considered to
have a material effect on the financial position or performance of the Group
that were entered into or changed during the first six months of the current
financial year.
The outstanding balances with associates and joint ventures are included in
debtors as appropriate.
15. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities, together with
carrying amounts at 30th June 2024 and 31st December 2023 are as follows:
Fair value of hedging instruments Fair value through Financial assets at amortised cost Other Total
US$m profit and loss US$m financial liabilities carrying Fair
US$m US$m amount value
US$m US$m
30th June 2024
Financial assets measured at fair value
Other investments - 13.8 - - 13.8 13.8
Financial assets not measured at fair value
Amounts due from associates and joint ventures - - 116.8 - 116.8 116.8
Debtors - - 71.5 - 71.5 71.5
Bank and cash balances - - 253.9 - 253.9 253.9
- - 442.2 - 442.2 442.2
Financial liabilities measured at fair value
Derivative financial instruments (0.5) - - - (0.5) (0.5)
Financial liabilities not measured at fair value
Borrowings - - - (364.2) (364.2) (364.2)
Lease liabilities - - - (102.5) (102.5) (102.5)
Trade and other payable excluding non-financial liabilities - - - (134.3) (134.3) (134.3)
- - - (601.0) (601.0) (601.0)
Fair value of hedging instruments Financial assets at amortised cost Other
US$m Fair value through profit and loss US$m financial liabilities Total Fair
US$m US$m carrying amount value
US$m US$m
31st December 2023
Financial assets measured at fair value
Other investments - 14.0 - - 14.0 14.0
Derivative financial instruments 2.4 - - - 2.4 2.4
2.4 14.0 - - 16.4 16.4
Financial assets not measured at fair value
Amounts due from associates and joint ventures - - 122.3 - 122.3 122.3
Debtors - - 87.1 - 87.1 87.1
Bank and cash balances - - 190.3 - 190.3 190.3
- - 399.7 - 399.7 399.7
Financial liabilities not measured at fair value
Borrowings - - - (415.5) (415.5) (415.5)
Lease liabilities - - - (116.4) (116.4) (116.4)
Trade and other payable excluding non-financial liabilities - - - (157.0) (157.0) (157.0)
- - - (688.9) (688.9) (688.9)
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 2024 and the year ended 31st December 2023.
The table below analyses financial instruments carried at fair value at 30th
June 2024 and 31st December 2023, by the levels in the fair value measurement
hierarchy:
Observable Unobservable Total
market current transactions inputs US$m
US$m US$m
30th June 2024
Assets
Other investments 5.6 8.2 13.8
Liabilities
Derivative financial instruments at fair value (0.5) - (0.5)
- through other comprehensive income
31st December 2023
Assets
Other investments 5.6 8.4 14.0
Derivative financial instruments at fair value
- through other comprehensive income 2.4 - 2.4
8.0 8.4 16.4
There were no transfers among the two categories during the six months ended
30th June 2024 and the year ended 31st December 2023.
Movement of financial instruments which are valued based on unobservable
inputs during the six months ended 30th June 2024 and the year ended 31st
December 2023 are as follows:
Unlisted investments
US$m
At 1st January 2024 8.4
Disposals (0.2)
At 30th June 2024 8.2
At 1st January 2023 8.0
Additions 0.4
At 31st December 2023 8.4
(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.
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 134 to 140 of the Company's 2023
Annual Report, a copy of which is available on the Company's website
www.mandarinoriental.com (http://www.mandarinoriental.com) .
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
Laurent Kleitman
Matthew Bishop
Directors
Mandarin Oriental International Limited
Dividend Information for Shareholders
The interim dividend of US¢1.50 per share will be payable on 16th October
2024 to shareholders on the register of members at the close of business on
23rd August 2024. The shares will be quoted ex-dividend on 22nd August 2024,
and the share registers will be closed from 26th to 30th August 2024,
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 2024 interim dividend by notifying the United Kingdom
transfer agent in writing by 27th September 2024. The Sterling equivalent of
dividends declared in United States Dollars will be calculated by reference to
a rate prevailing on 2nd October 2024.
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 23rd August 2024, must
submit the relevant documents to Boardroom Corporate & Advisory Services
Pte. Ltd., the Singapore branch registrar, by no later than 5.00 p.m. (local
time) on 22nd August 2024.
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 40 Hotels, 12 Residences and
24 exclusive homes in 26 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$4.5
billion as at 30th June 2024.
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 of maximising profitability and long-term shareholder
value.
The Group's parent company, Mandarin Oriental International Limited, is
incorporated in Bermuda and has a primary listing in the standard segment of
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
Laurent Kleitman / Matthew Bishop (852) 2895 9288
Chris Orlikowski (44) 791 7280 210
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 2024 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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