Interim Results - Part 1
29 July 2003 - 8:05PM
UK Regulatory
RNS Number:0653O
Mandarin Oriental International Ld
29 July 2003
To: Business Editor 29th July 2003
For immediate release
The following announcement was today issued to the London Stock Exchange.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
INTERIM REPORT 2003
Highlights
> Travel in Asia badly affected by SARS
> European and US markets slowed by economic uncertainties
> Hotel developments in New York and Washington D.C. on schedule
> Group to manage new luxury hotel in Boston
"Occupancy levels in Asia have started to recover, and in
Europe and the United States there is an improving sentiment
among travellers. Nevertheless, the overall economic
environment remains uncertain making it difficult to predict
the timing and extent of any sustained recovery for the Group.
The results in the second half may, however, benefit from
further SARS related business interruption insurance."
Simon Keswick, Chairman
29th July 2003
Results
Prepared in accordance with IFRS as modified (unaudited)
by revaluation of leasehold properties* Six months ended 30th June
2003 2002
US$m US$m
----------------------------------------------------------------------------------
Combined total revenue of hotels under management 243 272
Profit before interest and tax 8 30
Net (loss)/profit (6) 12
----------------------------------------------------------------------------------
USc USc
----------------------------------------------------------------------------------
(Loss)/Earnings per share (0.75) 1.43
Interim dividend per share - -
----------------------------------------------------------------------------------
*The Group's financial statements are prepared under
International Financial Reporting Standards ('IFRS') which do
not permit leasehold interests in land to be carried at
valuation. This treatment does not reflect the generally
accepted accounting practice in the territories in which the
Group has significant leasehold interests, nor how management
measures the performance of the Group. Accordingly, the Group
has presented supplementary financial information prepared in
accordance with IFRS as modified by the revaluation of
leasehold properties in addition to the IFRS financial
statements. The figures included in the above summary and the
Chairman's Statement are based on this supplementary financial
information unless otherwise stated.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
INTERIM REPORT 2003
OVERVIEW
Mandarin Oriental's results suffered badly from the
unprecedented low occupancy levels in Asia from late March
onwards. While the year had begun well, there was a
significant reduction in travel to Asia, particularly Hong Kong
and Singapore, in response to the outbreaks of SARS in the
region. In the United States and Europe travel patterns were
disrupted by the hostilities in Iraq and overall economic
uncertainties. The Group responded by reducing costs, both at
the hotel and corporate levels, and by deferring capital
expenditure.
PERFORMANCE
Consolidated profit before interest and tax for the first six
months of 2003 was US$8 million, compared with US$30 million in
the same period last year which included a US$5 million write-
back of development costs. The current result includes a
business interruption insurance initial payment of US$2.5
million received in connection to losses suffered at the two
Hong Kong hotels due to the outbreak of SARS. It is too early
to assess the final outcome of claims under this insurance.
Despite an increase in borrowings to fund the Group's hotels
under development, the net financing charges for the period at
US$14 million were unchanged from last year. The net loss for
the period was US$6 million compared with a net profit of US$12
million in the first half of 2002.
Loss per share was USc0.75 compared with a profit of USc1.43
per share in the first six months of last year. No interim
dividend has been declared. Net debt was 49% of shareholders'
funds, compared with 46% at the year-end. Assuming conversion
of the convertible bonds, net debt would be 38% of
shareholders' funds.
GROUP REVIEW
The hotel market in Hong Kong suffered from the collapse in
visitor arrivals, and occupancy in the first six months at
Mandarin Oriental, Hong Kong was 39% compared with 68% in the
same period last year. At The Excelsior, occupancy rates fell
from 82% to 49%. Despite the poor conditions, average room rates
remained relatively stable. The drop in occupancy also adversely
affected Food & Beverage revenues, already impacted by the reduction
in local patronage. Lower results at the Group's hotel in Manila also
reflected the general disruption in travel patterns.
In London, Mandarin Oriental Hyde Park performed well against
its competitors, and while the poor market led to a fall in
overall occupancy from 69% to 65% for the period, the hotel is
now seeing an improvement. The Group's hotel in Munich also
maintained its competitive position with satisfactory results.
In the United States, The Mark, New York experienced lower
occupancy and average room rates consistent with the local
market.
Some of the Group's associate and managed hotels also suffered
a significant decrease in occupancy levels due to SARS,
particularly in Singapore and Bangkok. In Geneva, the hotel's
performance declined in line with the overall market. In the
United States, occupancy levels were generally down, except in
Miami where Mandarin Oriental achieved higher occupancy and
rate levels.
DEVELOPMENTS
The Group's development strategy remains on track with Mandarin
Oriental, New York on schedule to open in late 2003 and
Mandarin Oriental, Washington D.C. in spring 2004. Since March
this year, the Group has announced that it will manage a new
168-room luxury hotel in Boston, due to open in 2006. Design
and construction work continue on a new 118-room deluxe hotel
in Hong Kong, due to open in 2005, as well as on a 171-room
hotel in Tokyo, due to open in 2006. The Group will manage and
provide luxury services and facilities to the condominiums
adjacent to its new hotels in New York and Boston.
OUTLOOK
In conclusion, the Chairman, Simon Keswick said, "Occupancy
levels in Asia have started to recover, and in Europe and the
United States there is an improving sentiment among travellers.
Nevertheless, the overall economic environment remains
uncertain making it difficult to predict the timing and extent
of any sustained recovery for the Group. The results in the
second half may, however, benefit from further SARS related
business interruption insurance."
----------------------------------------------------------------------------------------------------------------
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
----------------------------------------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IFRS as modified by revaluation
with IFRS of leasehold properties*
Year ended (unaudited) (unaudited) Year ended
31st Six months ended Six months ended 31st
December 30th June 30th June December
2002 2002 2003 2003 2002 2002
US$m US$m US$m Note US$m US$m US$m
----------------------------------- ---------------------------------------
233.7 111.8 90.6 2 Revenue 90.6 111.8 233.7
(140.5) (67.6) (64.3) Cost of sales (64.2) (67.4) (140.1)
------------ ---------- --------- --------- ------------ ------------
93.2 44.2 26.3 Gross profit 26.4 44.4 93.6
(16.8) (8.0) (7.5) Selling and distribution costs (7.5) (8.0) (16.8)
(36.3) (15.4) (15.0) Administration expenses (14.9) (15.4) (36.3)
------------ ---------- --------- --------- ------------ ------------
40.1 20.8 3.8 3 Operating profit 4.0 21.0 40.5
Share of operating results of
14.4 8.6 4.0 4 associates and joint ventures 4.1 8.8 14.8
------------ ---------- --------- --------- ------------ ------------
54.5 29.4 7.8 Profit before interest and tax 8.1 29.8 55.3
(28.9) (14.2) (14.2) Net financing charges (14.2) (14.2) (28.9)
------------ ---------- --------- --------- ------------ ------------
25.6 15.2 (6.4) (Loss)/Profit before tax (6.1) 15.6 26.4
(7.2) (3.4) (0.5) 5 Tax (0.5) (3.4) (7.2)
------------ ---------- --------- --------- ------------ ------------
18.4 11.8 (6.9) (Loss)/Profit after tax (6.6) 12.2 19.2
0.1 - 0.2 Minority interests 0.2 - 0.1
------------ ---------- --------- --------- ------------ ------------
18.5 11.8 (6.7) Net (loss)/profit (6.4) 12.2 19.3
------------ ---------- --------- --------- ------------ ------------
----------------------------------- ---------------------------------------
USc USc USc USc USc USc
----------------------------------- ---------------------------------------
6 (Loss)/Earnings per share
2.17 1.38 (0.79) - basic (0.75) 1.43 2.27
2.17 1.38 (0.79) - diluted (0.75) 1.43 2.27
----------------------------------- ---------------------------------------
* The basis of preparation of this supplementary financial information is set out in note 1.
----------------------------------------------------------------------------------------------------------------
Mandarin Oriental International Limited
Consolidated Balance Sheet
----------------------------------------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IFRS as modified by revaluation
with IFRS of leasehold properties*
At 31st (unaudited) (unaudited) At 31st
December At 30th June At 30th June December
2002 2002 2003 2003 2002 2002
US$m US$m US$m Note US$m US$m US$m
----------------------------------- ---------------------------------------
Net operating assets
22.0 22.6 21.4 Goodwill 21.4 22.6 22.0
548.1 529.5 586.0 7 Tangible assets 1,085.5 1,029.2 1,046.9
187.6 187.5 187.4 Leasehold land payments - - -
278.1 246.8 271.7 Associates and joint ventures 290.6 265.8 297.0
26.3 24.7 27.7 Other investments 27.7 24.7 26.3
14.0 13.8 13.6 Pension assets 13.6 13.8 14.0
3.7 2.9 3.7 Deferred tax assets 3.7 2.9 3.7
----------- ---------- --------- --------- --------- ---------
1,079.8 1,027.8 1,111.5 Non-current assets 1,442.5 1,359.0 1,409.9
2.4 2.9 2.3 Stocks 2.3 2.9 2.4
36.8 32.7 32.9 Debtors and prepayments 32.9 32.7 36.8
65.9 75.2 61.2 Cash at bank 61.2 75.2 65.9
----------- ---------- --------- --------- --------- ---------
105.1 110.8 96.4 Current assets 96.4 110.8 105.1
----------- ---------- --------- --------- --------- ---------
(53.0) (38.6) (46.7) Creditors and accruals (46.7) (38.6) (53.0)
(8.0) (5.6) (4.9) 8 Borrowings (4.9) (5.6) (8.0)
(6.5) (4.8) (4.8) Current tax liabilities (4.8) (4.8) (6.5)
----------- ---------- --------- --------- --------- ---------
(67.5) (49.0) (56.4) Current liabilities (56.4) (49.0) (67.5)
----------- ---------- --------- --------- --------- ---------
37.6 61.8 40.0 Net current assets 40.0 61.8 37.6
(483.0) (468.3) (515.7) 8 Long-term borrowings (515.7) (468.3) (483.0)
(11.6) (10.9) (12.1) Deferred tax liabilities (14.3) (14.8) (14.1)
(0.8) (0.7) (0.8) Pension liabilities (0.8) (0.7) (0.8)
(5.4) (5.1) (5.8) Other non-current liabilities (5.8) (5.1) (5.4)
----------- ---------- --------- --------- --------- ---------
616.6 604.6 617.1 945.4 932.6 944.0
----------- ---------- --------- --------- --------- ---------
Capital employed
42.6 42.6 42.6 Share capital 42.6 42.6 42.6
88.7 88.7 88.7 Share premium 88.7 88.7 88.7
474.4 461.9 474.8 Revenue and other reserves 800.7 788.0 799.7
----------- ---------- --------- --------- --------- ---------
605.7 593.2 606.1 Shareholders' funds 932.0 919.3 931.0
10.9 11.4 11.0 Minority interests 13.4 13.3 13.0
----------- ---------- --------- --------- --------- ---------
616.6 604.6 617.1 945.4 932.6 944.0
----------- ---------- --------- --------- --------- ---------
----------------------------------- -------------------------------------
No interim valuations of the Group's properties have been undertaken. Stated values at 30th June 2003 and 2002 reflect
the values at the previous 31st December.
* The basis of preparation of this supplementary financial information is set out in note 1.
----------------------------------------------------------------------------------------------------------------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Shareholders' Funds
----------------------------------------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IFRS as modified by revaluation
with IFRS of leasehold properties*
Year ended (unaudited) (unaudited) Year ended
31st Six months ended Six months ended 31st
December 30th June 30th June December
2002 2002 2003 2003 2002 2002
US$m US$m US$m Note US$m US$m US$m
----------------------------------- ---------------------------------------
565.3 565.3 605.7 At beginning of period 931.0 890.0 890.0
Net exchange translation
differences
22.4 16.1 7.4 - amount arising in period 7.7 17.1 22.2
Fair value gains on financial
0.5 - 0.3 assets 0.3 - 0.5
Cash flow hedges
(1.0) - (0.6) - fair value losses (0.6) - (1.0)
Net gains not recognized in
consolidated profit and
21.9 16.1 7.1 loss account 7.4 17.1 21.7
18.5 11.8 (6.7) Net (loss)/profit (6.4) 12.2 19.3
----------- ---------- ---------- ---------- --------- ------------
605.7 593.2 606.1 At end of period 932.0 919.3 931.0
----------- ---------- ---------- ---------- --------- ------------
------------------------------------ ---------------------------------------
* The basis of preparation of this supplementary financial information is set out in note 1.
----------------------------------------------------------------------------------------------------------------
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
----------------------------------------------------------------------------------------------------------------
Prepared in accordance
Prepared in accordance with
Prepared in accordance IFRS as modified by revaluation
with IFRS of leasehold properties*
Year ended (unaudited) (unaudited) Year ended
31st Six months ended Six months ended 31st
December 30th June 30th June December
2002 2002 2003 2003 2002 2002
US$m US$m US$m Note US$m US$m US$m
----------------------------------- ---------------------------------------
Operating activities
40.1 20.8 3.8 Operating profit 4.0 21.0 40.5
15.3 7.6 8.0 Depreciation 8.0 7.6 15.3
Amortization of leasehold
0.4 0.2 0.2 land payments - - -
1.3 0.8 0.6 Amortization of goodwill 0.6 0.8 1.3
(5.0) (4.8) 0.3 Non-cash items 0.3 (4.8) (5.0)
(Increase)/Decrease in
2.8 0.8 (5.8) working capital 5.8 0.8 (2.8)
1.0 0.4 0.3 Interest received 0.3 0.4 1.0
Interest and other
(24.5) (12.1) (11.6) financing charges paid (11.6) (12.1) (24.5)
(3.1) (1.4) (1.7) Tax paid (1.7) (1.4) (3.1)
---------- ---------- --------- --------- ------------ ------------
28.3 12.3 (5.9) (5.9) 12.3 28.3
Dividends from associates
5.2 3.2 3.0 and joint ventures 3.0 3.2 5.2
Cash flows from operating
33.5 15.5 (2.9) activities (2.9) 15.5 33.5
Investing activities
(62.5) (34.2) (35.4) Purchase of tangible assets (35.4) (34.2) (62.5)
29.4 10.3 3.6 10 Tax increment financing 3.6 10.3 29.4
Investments in and loans to
(47.8) (15.6) (0.6) associates and joint ventures (0.6) (15.6) (47.8)
Repayment of loan to associates
4.0 1.3 6.5 and joint ventures 6.5 1.3 4.0
Sale proceeds on disposal of
2.1 - - tangible assets - - 2.1
(0.3) - - Leasehold land premium payments - - (0.3)
(0.5) (0.3) - Purchase of other investments - (0.3) (0.5)
(0.5) (0.5) - Purchase of minority interests - (0.5) (0.5)
Cash flows from investing
(76.1) (39.0) (25.9) activities (25.9) (39.0) (76.1)
Financing activities
32.6 14.7 27.5 Drawdown of borrowings 27.5 14.7 32.6
(8.7) (0.3) (3.6) Repayment of borrowings (3.6) (0.3) (8.7)
Capital contribution from
5.0 4.7 - minority interests - 4.7 5.0
Cash flows from financing
28.9 19.1 23.9 activities 23.9 19.1 28.9
0.9 0.7 0.2 Effect of exchange rate changes 0.2 0.7 0.9
---------- ---------- --------- --------- ------------ ------------
Net decrease in cash and cash
(12.8) (3.7) (4.7) equivalents (4.7) (3.7) (12.8)
Cash and cash equivalents
78.6 78.6 65.8 at beginning of period 65.8 78.6 78.6
---------- ---------- --------- --------- ------------ ------------
Cash and cash equivalents at
65.8 74.9 61.1 end of period 61.1 74.9 65.8
---------- ---------- --------- --------- ------------ ------------
--------------------------------- ---------------------------------------
* The basis of preparation of this supplementary financial information is set out in note 1
This information is provided by RNS
The company news service from the London Stock Exchange
END
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