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Mandarin IN.Ber LSE:MDOB London Ordinary Share BMG578481068 ORD US$0.05(BERMUDA REGD)
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  +$0.00 +0.00% $2.16 $0.00 $0.00 - - - 0 05:00:01
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
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Mandarin Oriental International Ltd Half-year Report

26/07/2018 10:06am

UK Regulatory (RNS & others)


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RNS Number : 7129V

Mandarin Oriental International Ltd

26 July 2018

To: Business Editor 26th July 2018

For immediate release

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 2018

Highlights

   --    Underlying profit 49% higher due to improved performances across portfolio 
   --    Five new management contracts signed 
   --    Strategic review of The Excelsior, Hong Kong ongoing 

"Underlying profit was higher during the first half of the year due to generally improved performances across the portfolio, notably in Hong Kong. This positive trend is expected to continue in the second half of the year. The Group is working towards an anticipated partial reopening of Mandarin Oriental Hyde Park, London in the fourth quarter of this year."

Ben Keswick

Chairman

Results

 
                                                            (unaudited) 
                                              Six months ended 30th June 
                                                             2018   2017  Change 
                                                             US$m   US$m       % 
---------------------------------------------------------  ------  -----  ------ 
 Combined total revenue of hotels under 
  management(1)                                             700.2  644.8      +9 
  Underlying EBITDA (Earnings before interest, 
   tax, depreciation and amortisation)(2)                    79.6   61.5     +29 
 Underlying profit attributable to shareholders(3)           22.3   15.0     +49 
 Profit attributable to shareholders                         22.3   15.0     +49 
                                                              USc    USc       % 
---------------------------------------------------------  ------  -----  ------ 
 Underlying earnings per share(3)                            1.77   1.19     +49 
 Earnings per share                                          1.77   1.19     +49 
 Interim dividend per share                                  1.50   1.50       - 
                                                              US$    US$       % 
---------------------------------------------------------  ------  -----  ------ 
 Net asset value per share(4)                                0.99   1.01      -2 
 Adjusted net asset value per share(4)(5)                    4.54   4.57      -1 
 Net debt/shareholders' funds(4)                              26%    26% 
 Net debt/adjusted shareholders' funds(4)(5)                   6%     6% 
---------------------------------------------------------  ------  -----  ------ 
  (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 2018 and 31st December 2017, respectively. 
   (5) The Group's freehold and leasehold interests are carried 
   in the consolidated balance sheet at amortised cost. Both the 
   adjusted net asset value per share and net debt/adjusted shareholders' 
   funds for 30th June 2018 and 31st December 2017 have been adjusted 
   to include the market value of the Group's freehold and leasehold 
   interests which were appraised as at 31st December 2017. 
-------------------------------------------------------------------------------- 
 

The interim dividend of USc1.50 per share will be payable on 10th October 2018 to shareholders on the register of members at the close of business on 17th August 2018.

MANDARIN ORIENTAL INTERNATIONAL LIMITED

HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018

OVERVIEW

Underlying profit was higher during the first half of the year due to generally improved performances across the Group's portfolio, notably in Hong Kong. Results were, however, impacted by the commencement of the restoration of Hotel Ritz, Madrid.

The Group is working with its insurers to assess the impact of the fire at Mandarin Oriental Hyde Park, London in June.

Strategic options for The Excelsior, Hong Kong, including the possible redevelopment of the site into a commercial building, remain under consideration.

FINANCIAL PERFORMANCE

Underlying earnings before interest, tax, depreciation and amortisation for the first six months of 2018 were US$80 million, up from US$62 million in the first half of 2017. These results include an early termination fee in respect of the cessation of the Group's management of the Las Vegas hotel from the end of August 2018.

Underlying profit for the period was US$22 million, compared with US$15 million in the equivalent period in 2017. Underlying earnings per share were USc1.77, up from USc1.19 in 2017. The Group's US$20 million estimate of a write-off of tangible assets in relation to the London fire has been offset by insurance claims recoverable.

In light of the ongoing programme of renovations, an interim dividend of USc1.50 per share has been declared, unchanged from last year.

At 30th June 2018, the Group's net debt was US$325 million, compared to US$327 million at the end of 2017. Gearing as a percentage of adjusted shareholders' funds at 30th June 2018 was 6%, in line with that reported at the end of 2017.

HOTEL PERFORMANCE

Results were higher during the first half of the year due to improved performances across most of the portfolio, particularly from Hong Kong, Singapore, Bangkok and Tokyo. There were also signs of recovery in Paris after several years of weak demand. In The Americas, there were weaker performances in Boston and in Washington D.C. compared with the same period last year, with the latter having benefited from the Presidential Inauguration in 2017. Overall results were impacted by the closure of Hotel Ritz, Madrid in February 2018 for a comprehensive 19-month restoration.

Mandarin Oriental Hyde Park, London has closed for the necessary repairs but it is anticipated that the hotel will be able to partially reopen in the fourth quarter of this year. The impact of the fire is being assessed by insurers with the estimate of a write-off of tangible assets offset by insurance claims recoverable. Given the coverage under the Group's insurance arrangements, the impact on the Group's profitability is expected to be modest. We would like to express our appreciation for the efforts of all our colleagues in dealing with what were very difficult circumstances.

STRATEGIC REVIEW OF THE EXCELSIOR, HONG KONG

In June 2017, the Group announced that consideration was being given to potential strategic options for The Excelsior, Hong Kong. The Group is still considering all options for the site, including possible redevelopment as a commercial property.

NEW DEVELOPMENTS

In addition to the hotel in Viña del Mar, Chile and residences in Barcelona mentioned at the time of the Group's preliminary results, three other new management contracts have been signed in the first six months of the year. A new hotel in Ho Chi Minh City, the Group's first property in Vietnam, is scheduled to open in 2020. Two new properties, both with branded residences, in Muscat, Oman and Grand Cayman, will follow in 2021.

In the next 12 months, the Group expects to open its first hotels in Beijing, Doha and Dubai, as well as The Residences at Mandarin Oriental in Bangkok.

PEOPLE

Dr Richard Lee and Lord Powell of Bayswater stepped down as Directors on 9th May 2018. We would like to thank them both for their significant contributions to the Company over many years. We would also like to welcome Jack Yilun Chen, who has joined the Board.

As announced earlier this week, Stuart Dickie is to step down as Chief Financial Officer on 31st October 2018 and will be succeeded by Craig Beattie. We would like to thank Stuart for his major contribution to the Group's development.

OUTLOOK

Underlying profit was higher during the first half of the year due to generally improved performances across the portfolio, notably in Hong Kong. This positive trend is expected to continue in the second half of the year. The Group is working towards an anticipated partial reopening of Mandarin Oriental Hyde Park, London in the fourth quarter of this year.

Ben Keswick

Chairman

 
 
Mandarin Oriental International Limited 
 Consolidated Profit and Loss Account 
 
 
                                               (unaudited) 
                                        Six months ended 30th June                              Year ended 31st December 
                                 2018                               2017                               2017 
 
                    Underlying  Non-trading            Underlying  Non-trading            Underlying  Non-trading 
                      business        Items              business        Items              business        Items 
                   performance     (note 7)    Total  performance     (note 7)    Total  performance     (note 7)    Total 
                          US$m         US$m     US$m         US$m         US$m     US$m         US$m         US$m     US$m 
 
 
Revenue (note 2)         307.9            -    307.9        286.7            -    286.7        610.8            -    610.8 
Cost of sales          (195.8)            -  (195.8)      (189.1)            -  (189.1)      (389.7)            -  (389.7) 
                                             -------  -----------  -----------  -------                            ------- 
 
Gross profit             112.1            -    112.1         97.6            -     97.6        221.1            -    221.1 
Selling and 
 distribution 
 costs                  (19.9)            -   (19.9)       (19.8)            -   (19.8)       (38.2)            -   (38.2) 
Administration 
 expenses               (60.2)            -   (60.2)       (55.3)            -   (55.3)      (113.9)            -  (113.9) 
Other operating 
 income                    3.3            -      3.3            -            -        -            -            -        - 
                   -----------  -----------  -------  -----------  -----------  -------  -----------  -----------  ------- 
 
Operating profit 
 (note 
 3)                       35.3            -     35.3         22.5            -     22.5         69.0            -     69.0 
 
 
Financing charges        (6.7)            -    (6.7)        (6.2)            -    (6.2)       (12.3)            -   (12.3) 
Interest income            0.8            -      0.8          0.6            -      0.6          1.3            -      1.3 
 
 
Net financing 
 charges                 (5.9)            -    (5.9)        (5.6)            -    (5.6)       (11.0)            -   (11.0) 
Share of results 
 of 
 associates and 
 joint 
 ventures (note 
 4)                        1.3            -      1.3          3.0            -      3.0         11.5            -     11.5 
                                                      -----------  -----------  ------- 
 
Profit before tax         30.7            -     30.7         19.9            -     19.9         69.5            -     69.5 
Tax (note 5)             (8.4)            -    (8.4)        (4.7)            -    (4.7)       (15.0)            -   (15.0) 
                   -----------  -----------  -------  -----------  -----------  -------  -----------  -----------  ------- 
 
Profit after tax          22.3            -     22.3         15.2            -     15.2         54.5            -     54.5 
                   -----------  -----------  -------  -----------  -----------  -------  -----------  -----------  ------- 
 
Attributable to: 
Shareholders of 
 the 
 Company                  22.3            -     22.3         15.0            -     15.0         54.9            -     54.9 
Non-controlling 
 interests                   -            -        -          0.2            -      0.2        (0.4)            -    (0.4) 
                   -----------  -----------  -------  -----------  -----------  -------  -----------  -----------  ------- 
 
                          22.3            -     22.3         15.2            -     15.2         54.5            -     54.5 
                   -----------  -----------  -------  -----------  -----------  -------  -----------  -----------  ------- 
 
 
                           USc                   USc          USc                   USc          USc                   USc 
 
 
Earnings per 
share 
(note 6) 
- basic                   1.77                  1.77         1.19                  1.19         4.37                  4.37 
- diluted                 1.77                  1.77         1.19                  1.19         4.35                  4.35 
                   -----------               -------  -----------               -------  -----------               ------- 
 
 
 
Mandarin Oriental International Limited 
 Consolidated Statement of Comprehensive Income 
 
 
                                                          (unaudited)  Year ended 
                                                     Six months ended        31st 
                                                            30th June    December 
                                                       2018      2017        2017 
                                                       US$m      US$m        US$m 
 
 
Profit for the period                                  22.3      15.2        54.5 
Other comprehensive (expense)/income 
                                                             -------- 
 
Items that will not be reclassified 
 to profit or loss: 
                                                 ----------  --------  ---------- 
Remeasurements of defined benefit 
 plans                                                  0.2         -         7.7 
Tax on items that will not be reclassified                -         -       (1.2) 
                                                 ----------  --------  ---------- 
 
                                                        0.2         -         6.5 
Items that may be reclassified subsequently 
 to profit or loss: 
                                                 ----------  --------  ---------- 
Net exchange translation differences 
- net (losses)/gains arising during 
 the period                                          (28.8)      61.6        87.1 
Cash flow hedges 
- net gains/(losses) arising during 
 the period                                             1.6     (0.5)         0.8 
Tax relating to items that may be 
 reclassified                                         (0.3)       0.1       (0.2) 
Share of other comprehensive (expense)/income 
 of associates and joint ventures                     (1.6)       4.6         8.4 
                                                 ----------  --------  ---------- 
 
                                                     (29.1)      65.8        96.1 
 
 
Other comprehensive (expense)/income 
 for the period, net of tax                          (28.9)      65.8       102.6 
                                                 ----------  --------  ---------- 
 
Total comprehensive (expense)/income 
 for the period                                       (6.6)      81.0       157.1 
                                                 ----------  --------  ---------- 
 
Attributable to: 
Shareholders of the Company                           (6.4)      80.6       157.3 
Non-controlling interests                             (0.2)       0.4       (0.2) 
                                                 ----------  --------  ---------- 
 
                                                      (6.6)      81.0       157.1 
                                                 ----------  --------  ---------- 
 
 
 
 
 
 
    Mandarin Oriental International Limited 
    Consolidated Balance Sheet 
 
 
                                            (unaudited)     At 31st 
                                           At 30th June    December 
                                        2018       2017        2017 
                                        US$m       US$m        US$m 
 
 
  Net assets 
  Intangible assets                     47.8       44.5        47.7 
  Tangible assets                    1,409.2    1,416.0     1,453.2 
  Associates and joint ventures        194.7      176.6       196.6 
  Other investments                     11.1       10.7        11.0 
  Deferred tax assets                   10.7        2.2        11.0 
  Pension assets                         4.2          -         4.9 
  Other non-current assets               1.7          -         0.5 
                                   ---------  ---------  ---------- 
 
  Non-current assets                 1,679.4    1,650.0     1,724.9 
 
 
  Stocks                                 6.2        6.1         6.4 
  Debtors and prepayments              112.8       84.6       100.2 
  Current tax assets                     3.2        4.4         4.0 
  Bank and cash balances               204.4      157.2       183.9 
                                   ---------  ---------  ---------- 
 
  Current assets                       326.6      252.3       294.5 
                                   ---------  ---------  ---------- 
 
  Creditors and accruals             (139.5)    (131.4)     (151.4) 
  Current borrowings                   (2.6)      (0.2)       (2.6) 
  Current tax liabilities             (23.6)      (9.2)      (17.8) 
                                   ---------  ---------  ---------- 
 
  Current liabilities                (165.7)    (140.8)     (171.8) 
                                   ---------  ---------  ---------- 
 
 
  Net current assets                   160.9      111.5       122.7 
  Long-term borrowings               (527.0)    (477.8)     (508.1) 
  Deferred tax liabilities            (57.7)     (55.7)      (58.6) 
  Pension liabilities                  (0.4)      (3.8)       (0.6) 
  Other non-current liabilities            -      (1.0)       (0.2) 
                                   ---------  ---------  ---------- 
 
                                     1,255.2    1,223.2     1,280.1 
                                   ---------  ---------  ---------- 
 
  Total equity 
  Share capital                         63.0       62.9        62.9 
  Share premium                        497.6      492.8       493.9 
  Revenue and other reserves           688.7      663.1       717.2 
                                   ---------  ---------  ---------- 
 
  Shareholders' funds                1,249.3    1,218.8     1,274.0 
  Non-controlling interests              5.9        4.4         6.1 
                                   ---------  ---------  ---------- 
 
                                     1,255.2    1,223.2     1,280.1 
                                   ---------  ---------  ---------- 
 
 
 
 
 
Mandarin Oriental International Limited 
 Consolidated Statement of Changes in Equity 
 
 
                                                                          Attributable 
                                                                                    to  Attributable 
                                                                          shareholders       to non- 
                  Share    Share   Capital   Revenue   Hedging  Exchange        of the   controlling    Total 
                capital  premium  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 
 
 
Six months 
ended 30th 
June 2018 
(unaudited) 
At 1st January 
 2018              62.9    493.9     265.9     526.5       0.1    (75.3)       1,274.0           6.1  1,280.1 
Total 
 comprehensive 
 income               -        -         -      22.5       1.4    (30.3)         (6.4)         (0.2)    (6.6) 
Dividends paid 
 by the 
 Company              -        -         -    (18.9)         -         -        (18.9)             -   (18.9) 
Issue of 
 shares             0.1      0.1         -         -         -         -           0.2             -      0.2 
Share-based 
 long-term 
 incentive 
 plans                -        -       0.4         -         -         -           0.4             -      0.4 
Transfer              -      3.6     (3.6)         -         -         -             -             -        - 
                -------  -------  --------  --------  --------  --------  ------------  ------------  ------- 
 
At 30th June 
 2018              63.0    497.6     262.7     530.1       1.5   (105.6)       1,249.3           5.9  1,255.2 
 
Six months 
ended 30th 
June 2017 
(unaudited) 
At 1st January 
 2017              62.8    490.4     286.2     501.2     (0.6)   (170.6)       1,169.4           4.0  1,173.4 
Total 
 comprehensive 
 income               -        -         -      15.0     (0.4)      66.0          80.6           0.4     81.0 
Dividends paid 
 by the 
 Company              -        -         -    (31.4)         -         -        (31.4)             -   (31.4) 
Issue of 
 shares             0.1        -         -         -         -         -           0.1             -      0.1 
Share-based 
 long-term 
 incentive 
 plans                -        -       0.1         -         -         -           0.1             -      0.1 
Transfer              -      2.4    (18.9)      16.5         -         -             -             -        - 
                -------  -------  --------  --------  --------  --------  ------------  ------------  ------- 
 
At 30th June 
 2017              62.9    492.8     267.4     501.3     (1.0)   (104.6)       1,218.8           4.4  1,223.2 
                -------  -------  --------  --------  --------  --------  ------------  ------------  ------- 
 

Total comprehensive income for the six months ended 30th June 2018 included in revenue reserves comprised profit attributable to shareholders of the Company of US$22.3 million (2017: US$15.0 million) and net actuarial gain on employee defined benefit plans of US$0.2 million (2017: nil).

 
 
Mandarin Oriental International Limited 
 Consolidated Statement of Changes in Equity (continued) 
 
 
                                                                          Attributable 
                                                                                    to  Attributable 
                                                                          shareholders       to non- 
                  Share    Share   Capital   Revenue   Hedging  Exchange        of the   controlling    Total 
                capital  premium  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 
 
 
Year ended 
31st December 
2017 
At 1st January 
 2017              62.8    490.4     286.2     501.2     (0.6)   (170.6)       1,169.4           4.0  1,173.4 
Total 
 comprehensive 
 income               -        -         -      61.3       0.7      95.3         157.3         (0.2)    157.1 
Dividends paid 
 by the 
 Company              -        -         -    (50.3)         -         -        (50.3)             -   (50.3) 
Issue of 
 shares             0.1      0.6         -         -         -         -           0.7             -      0.7 
Share-based 
 long-term 
 incentive 
 plans                -        -     (0.8)         -         -         -         (0.8)             -    (0.8) 
Change in 
 interest in a 
 subsidiary           -        -         -     (2.3)         -         -         (2.3)           2.3        - 
Transfer              -      2.9    (19.5)      16.6         -         -             -             -        - 
                -------  -------  --------  --------  --------  --------  ------------  ------------  ------- 
 
At 31st 
 December 2017     62.9    493.9     265.9     526.5       0.1    (75.3)       1,274.0           6.1  1,280.1 
                -------  -------  --------  --------  --------  --------  ------------  ------------  ------- 
 

Total comprehensive income for the year ended 31st December 2017 included in revenue reserves comprised profit attributable to shareholders of the Company of US$54.9 million and net actuarial gain on employee defined benefit plans of US$6.4 million.

Change in interest in a subsidiary included the Group's increase in attributable interest in Portals Hotel Site LLC, the owner of Mandarin Oriental, Washington D.C., from 80% to 83.6% as a result of a non-controlling member of the subsidiary failing to fund an additional capital contribution in 2017.

 
 
Mandarin Oriental International Limited 
 Consolidated Cash Flow Statement 
 
 
                                                             (unaudited)  Year ended 
                                                        Six months ended        31st 
                                                               30th June    December 
                                                            2018    2017        2017 
                                                            US$m    US$m        US$m 
 
 
Operating activities 
                                               -----------------  ------  ---------- 
 
Operating profit                                            35.3    22.5        69.0 
Depreciation                                                29.5    26.0        56.7 
Amortisation of intangible assets                            2.4     1.0         2.1 
Other non-cash items                                        20.5     0.3         0.2 
Movements in working capital                              (24.1)     5.7         9.6 
Interest received                                            0.7     0.7         1.3 
Interest and other financing charges 
 paid                                                      (6.5)   (7.0)      (12.3) 
Tax paid                                                   (1.9)   (4.5)      (13.3) 
                                               -----------------  ------  ---------- 
 
                                                            55.9    44.7       113.3 
Dividends and interest from associates 
 and 
   joint ventures                                            3.2     2.0         6.6 
 
 
Cash flows from operating activities                        59.1    46.7       119.9 
 
Investing activities 
                                               -----------------  ------  ---------- 
 
Purchase of tangible assets                               (34.0)  (36.2)      (82.6) 
Purchase of intangible assets                              (2.2)   (0.9)       (5.7) 
Payment on Munich expansion                                    -   (2.9)       (3.1) 
Purchase of other investments                              (0.8)   (0.7)       (0.9) 
Advance to associates and joint ventures                   (4.9)   (1.9)      (11.4) 
Repayment of loans to associates 
 and joint ventures                                          0.4     0.8         1.3 
Sale of other investments                                      -       -         0.4 
 
 
Cash flows from investing activities                      (41.5)  (41.8)     (102.0) 
 
Financing activities 
                                               -----------------  ------  ---------- 
 
Issue of shares                                              0.1       -         0.6 
Drawdown of borrowings                                      24.1       -        30.8 
Repayment of borrowings                                    (0.1)   (2.4)       (2.5) 
Dividends paid by the Company (note 
 8)                                                       (18.9)  (31.4)      (50.3) 
 
 
Cash flows from financing activities                         5.2  (33.8)      (21.4) 
                                               -----------------  ------  ---------- 
 
Net increase/(decrease) in cash and 
 cash equivalents                                           22.8  (28.9)       (3.5) 
Cash and cash equivalents at beginning 
 of period                                                 183.9   182.5       182.5 
Effect of exchange rate changes                            (2.3)     3.6         4.9 
                                               -----------------  ------  ---------- 
 
Cash and cash equivalents at end 
 of period                                                 204.4   157.2       183.9 
                                               -----------------  ------  ---------- 
 
 
 
 
 
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 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 2017 annual financial statements except for the adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' from 1st January 2018 as set out below.

The other amendments, which are effective in 2018 and relevant to the Group's operations, do not have a significant effect on the Group's accounting policies.

The Group has not early adopted any standard, interpretation or amendment that have been issued but not yet effective.

IFRS 9 'Financial Instruments'

Under IFRS 9, the gains and losses arising from changes in fair value of the Group's investments in equity securities, previously classified as available-for-sale, will be recognised in profit and loss, instead of through other comprehensive income. Such fair value gains or losses on revaluation of these investments are classified as non-trading items, and do not have any impact on the Group's underlying profit attributable to shareholders and shareholders' funds. The new forward-looking expected credit loss model, which replaces the incurred loss impairment model, does not affect the Group's impairment provisions and earnings. The new hedge accounting rules, which align the accounting for hedging instruments closely with the Group's risk management practices, has no significant impact to the Group.

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 establishes a comprehensive framework for the recognition of revenue. It replaces IAS 11 'Construction Contracts' and IAS 18 'Revenue' which covers contracts for goods and services. The core principle in the framework is that revenue is recognised when control of a good or service transfers to a customer. The new standard does not change the Group's revenue recognition from hotel ownership, hotel management, rendering of services and sales of goods.

Changes to accounting policies on adoption of IFRS 9 and 15 have been applied retrospectively but the adoption does not have impact to the comparative financial statements.

Changes in principal accounting policies on adoption of IFRS 9 and 15

Investments

The Group's investments are measured at fair value through profit and loss, fair value through other comprehensive income or at amortised cost. Their classification is based on the management's business model and their contractual cash flows characteristics.

Equity investments are measured at fair value with fair value gains and losses recognised in profit and loss, unless management has elected to recognise the fair value gains and losses through other comprehensive income. For equity investments fair value through other comprehensive income, there is no subsequent reclassification of the fair value gains and losses to profit and loss upon its derecognition.

All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments.

Debtors

Debtors, excluding derivative financial instruments, are measured at amortised cost except where the effect of discounting would be immaterial. The impairment measurement is subject to whether there has been a significant increase in credit risk. The Group applied the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the trade debtors. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in arriving at operating profit. When a debtor is uncollectible, it is written off against the allowance account. Subsequent recoveries of amount previously written off are credited to profit and loss.

Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.

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 equity investments which are 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.

Revenue recognition

Revenue is measured at the fair value of the consideration received and receivable and represents amounts receivable for goods and service provided in the normal course of business, net of discounts and sales related taxes.

i) Revenue from hotel ownership comprises amounts earned in respect of services, facilities and goods supplied by the subsidiary hotels. Revenue from the rendering of services is recognised when services are performed, provided that the amount can be measured reliably. Revenue from the sale of goods is recognised when or as the control of the assets is transferred to the customers, which generally coincides with the time when the goods are delivered to customers.

ii) Revenue from hotel management comprises gross fees earned from the management of all the hotels operated by the Group. Management fees are recognised when earned as determined by the management contract. Management fees charged to the subsidiary hotels are eliminated upon consolidation.

   iii)   Receipts under operating leases are accounted for on an accrual basis over the lease terms. 

iv) Interest income from a financial asset is recognised on a time proportion basis using the effective interest method.

   v)    Dividend income is recognised when the right to receive payment is established. 
   2.         REVENUE 
 
           Six months ended 30th June 
                          2018   2017 
                          US$m   US$m 
 
 
 By geographical area: 
 Hong Kong               118.5  109.8 
 Other Asia               55.5   51.5 
 Europe                   76.3   72.9 
 The Americas             57.6   52.5 
 
                         307.9  286.7 
                         -----  ----- 
 
   3.    EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION) 
 
                                          Six months ended 30th June 
                                                     2018     2017 
                                                     US$m     US$m 
 
 
 By geographical area: 
 Hong Kong                                           34.1     31.4 
 Other Asia                                          16.2     13.2 
 Europe                                               7.7      1.1 
 The Americas                                         9.2      3.8 
                                                  -------  ------- 
 
 Underlying EBITDA from subsidiaries                 67.2     49.5 
 Non-trading items 
                                                   ------  ------- 
 
 - Write-off of tangible assets (note 7)           (20.3)        - 
 - Insurance claim for material damage of 
 tangible assets (note 7)                            20.3        - 
 
                                                        -        - 
 
 EBITDA from subsidiaries                            67.2     49.5 
 Less: depreciation and amortisation               (31.9)   (27.0) 
                                                  -------  ------- 
 
 Operating profit                                    35.3     22.5 
                                                  -------  ------- 
 
 
   4.    SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES 
 
                             Depreciation  Operating         Net              Net 
                                      and    profit/   financing          profit/ 
                    EBITDA   amortisation     (loss)     charges    Tax    (loss) 
                      US$m           US$m       US$m        US$m   US$m      US$m 
 
 
 Six months ended 
  30th June 2018 
 By geographical area: 
 Other Asia           12.3          (4.4)        7.9       (0.6)  (1.5)       5.8 
 Europe              (1.5)          (2.1)      (3.6)           -      -     (3.6) 
 The Americas          1.6          (1.4)        0.2       (1.1)      -     (0.9) 
                    ------  -------------  ---------  ----------  -----  -------- 
 
                      12.4          (7.9)        4.5       (1.7)  (1.5)       1.3 
 
 Six months ended 
  30th June 2017 
 By geographical area: 
 Other Asia           10.2          (4.2)        6.0       (0.7)  (1.1)       4.2 
 Europe                0.9          (0.4)        0.5           -      -       0.5 
 The Americas          0.9          (1.5)      (0.6)       (1.1)      -     (1.7) 
                    ------  -------------  ---------  ----------  -----  -------- 
 
                      12.0          (6.1)        5.9       (1.8)  (1.1)       3.0 
                    ------  -------------  ---------  ----------  -----  -------- 
 
 
   5.    TAX 
 
                                  Six months ended 30th June 
                                                 2018   2017 
                                                 US$m   US$m 
 
 
 Tax (charged)/credited to profit and loss is 
  analysed as follows: 
 Current tax                                    (8.5)  (5.9) 
 Deferred tax                                     0.1    1.2 
                                                -----  ----- 
 
                                                (8.4)  (4.7) 
                                                -----  ----- 
 
 By geographical area: 
 Hong Kong                                      (5.7)  (4.0) 
 Other Asia                                     (1.1)  (0.1) 
 Europe                                         (1.5)  (0.6) 
 The Americas                                   (0.1)      - 
                                                -----  ----- 
 
                                                (8.4)  (4.7) 
                                                -----  ----- 
 

Tax charge relating to cash flow hedges of US$0.3 million (2017: tax credit of US$0.1 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 of associates and joint ventures of US$1.5 million (2017: US$1.1 million) is included in share of results of associates and joint ventures (note 4).

   6.    EARNINGS PER SHARE 

Basic earnings per share are calculated on the profit attributable to shareholders of US$22.3 million (2017: US$15.0 million) and on the weighted average number of 1,259.9 million (2017: 1,257.2 million) shares in issue during the period.

Diluted earnings per share are calculated on profit attributable to shareholders of US$22.3 million (2017: US$15.0 million) and on the weighted average number of 1,263.2 million (2017: 1,261.0 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 
                                                     2018     2017 
 
 
 Weighted average number of shares for basic 
  earnings per share calculation                  1,259.9  1,257.2 
 Adjustment for shares deemed to be issued 
  for no consideration under the share-based 
  long-term incentive plans                           3.3      3.8 
                                                  -------  ------- 
 
 Weighted average number of shares for diluted 
  earnings per share calculation                  1,263.2  1,261.0 
                                                  -------  ------- 
 

Additional basic and diluted earnings per share are also calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below:

 
                                       Six months ended 30th June 
                                   2018                          2017 
 
 
                                  Basic     Diluted             Basic     Diluted 
                               earnings    earnings          earnings    earnings 
                              per share   per share         per share   per share 
                       US$m         USc         USc  US$m         USc         USc 
 
 
 Profit attributable 
  to shareholders      22.3        1.77        1.77  15.0        1.19        1.19 
 Non-trading items 
  (note 7)                -                             - 
 
 Underlying profit 
  attributable to 
  shareholders         22.3        1.77        1.77  15.0        1.19        1.19 
                       ----                          ---- 
 
   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 equity investments which are 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.

Following the fire at Mandarin Oriental Hyde Park, London on 6th June 2018, the hotel has closed for the necessary repairs in order to restore the asset. The impact of the fire is being assessed by insurers, however, given the extent of the coverage under the Group's insurance arrangements, the impact on the Group's profitability is expected to be modest.

Based on the initial assessment by the Group, the estimated write-off of tangible assets and estimated insurance claim receivable for material damage of tangible assets caused by the fire recognised as non-trading items during the period are analysed as follows:

 
                                       Six months ended 30th June 
                                                      2018   2017 
                                                      US$m   US$m 
 
 
 Write-off of tangible assets (estimated at 
  GBP15 million)                                    (20.3)      - 
 Insurance claim for material damage of tangible 
  assets                                              20.3      - 
                                                    ------  ----- 
                                                         -      - 
                                                    ------  ----- 
 

On 18th July 2018, the insurers made an advance interim payment of GBP20 million (US$27 million) to the Group in respect of the cover available under the insurance policies.

The process of repairs is now underway and it is anticipated that the hotel will be able to partially reopen in the fourth quarter of this year.

   8.    DIVIDS 
 
                                   Six months ended 30th June 
                                                  2018   2017 
                                                  US$m   US$m 
 
 
 Final dividend in respect of 2017 of USc1.50 
  (2016: USc2.50) per share                       18.9   31.4 
                                                 -----  ----- 
 
 

An interim dividend in respect of 2018 of USc1.50 (2017: USc1.50) per share amounting to a total of US$18.9 million (2017: US$18.9 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 2018.

   9.    CAPITAL COMMITMENTS 

Total capital commitments at 30th June 2018 and 31st December 2017 amounted to US$221.9 million and US$254.3 million respectively.

10. FINANCIAL INSTRUMENTS

Financial instruments by category

The fair values of financial assets and financial liabilities, together with carrying amounts at 30th June 2018 and 31st December 2017 are as follows:

 
                                                            Financial 
                                              Fair value       assets 
                                Fair value       through           at         Other       Total 
                                of hedging        profit    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 2018 
 Financial assets 
  measured at fair 
  value 
 Other investments 
 
    *    equity investments              -          11.1            -             -        11.1     11.1 
 Derivative financial 
  instruments                          1.9             -            -             -         1.9      1.9 
                              ------------                             ------------ 
 
                                       1.9          11.1            -             -        13.0     13.0 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 Financial assets 
  not measured 
  at fair value 
 Debtors                                 -             -         80.0             -        80.0     80.0 
 Bank and cash 
  balances                               -             -        204.4             -       204.4    204.4 
                              ------------                             ------------ 
 
                                         -             -        284.4             -       284.4    284.4 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 Financial liabilities 
  not measured 
  at fair value 
 Borrowings                              -             -            -       (529.6)     (529.6)  (529.6) 
 Trade and other 
  payable excluding 
  non-financial 
  liabilities                            -             -            -       (133.5)     (133.5)  (133.5) 
                              ------------                             ------------ 
 
                                         -             -            -       (663.1)     (663.1)  (663.1) 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 
 
                                                            Financial 
                                              Fair value       assets 
                                Fair value       through           at         Other       Total 
                                of hedging        profit    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 
  2017 
 Financial assets 
  measured at fair 
  value 
 Other investments 
 
    *    equity investments              -          11.0            -             -        11.0     11.0 
 Derivative financial 
  instruments                          0.5             -            -             -         0.5      0.5 
                              ------------                             ------------ 
 
                                       0.5          11.0            -             -        11.5     11.5 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 Financial assets 
  not measured at 
  fair value 
 Debtors                                 -             -         65.5             -        65.5     65.5 
 Bank and cash 
  balances                               -             -        183.9             -       183.9    183.9 
                              ------------                             ------------ 
 
                                         -             -        249.4             -       249.4    249.4 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 Financial assets 
  not measured at 
  fair value 
 Derivative financial 
  instruments                        (0.2)             -            -             -       (0.2)    (0.2) 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 Financial liabilities 
  not measured at fair 
  value 
 Borrowings                              -             -            -       (510.7)     (510.7)  (510.7) 
 Trade and other 
  payable excluding 
  non-financial 
  liabilities                            -             -            -       (146.3)     (146.3)  (146.3) 
                              ------------                             ------------ 
 
                                         -             -            -       (657.0)     (657.0)  (657.0) 
                              ------------  ------------  -----------  ------------  ----------  ------- 
 
 

Fair value estimation

(i) Financial instruments that are measured at fair value

For financial instruments that are measured at fair value in the balance sheet, the corresponding fair value measurements are disclosed by level of the following fair value measurement hierarchy:

(a) Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly ('observable current market transactions')

The fair values of derivative financial instruments are determined using rates quoted by the Group's bankers at the balance sheet date. The rates for interest rate swaps and caps and forward foreign exchange contracts are calculated by reference to market interest rates and foreign exchange rates.

The fair values of unlisted investments mainly include club and school debentures, are determined using prices quoted by brokers at the balance sheet date.

(b) Inputs for assets or liabilities that are not based on observable market data ('unobservable inputs')

The fair values of other unlisted investments are determined using valuation techniques by reference to observable current market transactions (including price-to earnings and price-to book ratios of listed securities of entities engaged in similar industries), or the market prices of the underlying investments with certain degree of entity specific estimates, or determined with reference to the underlying cash flow from investments, discounted using a risk-adjusted discount rate.

There were no changes in valuation techniques during the six months ended 30th June 2018 and the year ended 31st December 2017.

The table below analyses financial instruments carried at fair value at 30th June 2018 and 31st December 2017, by the levels in the fair value measurement hierarchy:

 
                                                   Observable 
                                               market current  Unobservable 
                                                 transactions        inputs  Total 
                                                         US$m          US$m   US$m 
 
 
 30th June 2018 
 Assets 
 Other investments 
 - equity investments                                     1.7           9.4   11.1 
 Derivative financial instruments 
  at fair value 
 - through other comprehensive 
  income                                                  1.9             -    1.9 
                                              ---------------  ------------  ----- 
                                                          3.6           9.4   13.0 
                                              ---------------  ------------  ----- 
 
 31st December 2017 
 Assets 
 Other investments 
 - equity investments                                     1.7           9.3   11.0 
 Derivative financial instruments 
  at fair value 
 - through other comprehensive 
  income                                                  0.5             -    0.5 
                                              ---------------  ------------  ----- 
                                                          2.2           9.3   11.5 
                                              ---------------  ------------  ----- 
 Liabilities 
 Derivative financial instruments 
  at fair value 
 
   *    through other comprehensive income              (0.2)             -  (0.2) 
                                              ---------------  ------------  ----- 
 

There were no transfers among the two categories during the six months ended 30th June 2018 and the year ended 31st December 2017.

Movement of financial instruments which are valued based on unobservable inputs during the six months ended 30th June 2018 and the year ended 31st December 2017 are as follows:

 
                             Unlisted 
                               equity 
                          investments 
                                 US$m 
 
 
 At 1st January 2018              9.3 
 Additions                        0.1 
                         ------------ 
 
 At 30th June 2018                9.4 
                         ------------ 
 
 At 1st January 2017              8.6 
 Additions                        0.7 
                         ------------ 
 
 At 31st December 2017            9.3 
                         ------------ 
 

(i) Financial instruments that are not measured at fair value

The fair values of current debtors, bank and cash balances, current creditors and current borrowings 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.

11. RELATED PARTY TRANSACTIONS

In the normal course of business, the Group undertakes a variety of transactions with certain of its associates and joint ventures.

The most significant of such transactions are management fees of US$7.3 million (2017: US$6.2 million) received from the Group's six (2017: six) associate and joint venture hotels which are based on long-term management agreements 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 and prepayments, 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.

   --    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 

For greater detail, please refer to pages 95 and 96 of the Company's 2017 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

Stuart Dickie

Directors

 
 
  The interim dividend of USc1.50 per share will be payable 
   on 10th October 2018 to shareholders on the register of members 
   at the close of business on 17th August 2018. The shares 
   will be quoted ex-dividend on the Singapore Exchange and 
   the London Stock Exchange on 15th and 16th August 2018, respectively. 
   The share registers will be closed from 20th to 24th August 
   2018, inclusive. 
 
   Shareholders will receive their cash dividends in United 
   States Dollars, unless they are registered on the Jersey 
   branch register, in which case they will have the option 
   to elect for their dividends to be paid in Sterling. These 
   shareholders may make new currency elections for the 2018 
   interim dividend by notifying the United Kingdom transfer 
   agent in writing by 21st September 2018. The Sterling equivalent 
   of dividends declared in United States Dollars will be calculated 
   by reference to a rate prevailing on 26th September 2018. 
 
   Shareholders holding their shares through CREST in the United 
   Kingdom will receive their cash dividends in Sterling only 
   as calculated above. Shareholders holding their shares through 
   The Central Depository (Pte) Limited ('CDP') in Singapore 
   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 17th August 2018, must submit the relevant 
   documents to M & C Services Private Limited, the Singapore 
   branch registrar, by no later than 5.00 p.m. (local time) 
   on 16th August 2018. 
 
 

Mandarin Oriental Hotel Group

Mandarin Oriental Hotel Group is an international hotel investment and management group with deluxe and first class hotels, resorts and residences in sought-after destinations around the world. Having grown from its Asian roots into a global brand, the Group now operates 31 hotels and eight residences in 21 countries and territories, with each property reflecting the Group's oriental heritage and unique sense of place. Mandarin Oriental 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$5.7 billion as at 30th June 2018.

Mandarin Oriental's aim is to be recognised as the world's best luxury hotel group. This will be achieved by investing in the Group's exceptional facilities and its people, and seeking selective opportunities for expansion around the world, while maximising profitability and long-term shareholder value. The Group regularly receives recognition and awards for outstanding service and quality management. The Group is committed to exceeding its guests' expectations through exceptional levels of hospitality, while maintaining its position as an innovative leader in the hotel industry.

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 / Stuart Dickie                     (852) 2895 9288 
  Jill Kluge / Sally de Souza                     (852) 2895 9167 
 
  Brunswick Group Limited 
  Karin Wong                                      (852) 3512 5077 
 

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, www.mandarinoriental.com, together with other Group announcements.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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