TIDMMDO TIDMJAR TIDMJDS
RNS Number : 4050G
Mandarin Oriental International Ltd
05 March 2015
To: Business Editor 5th March 2015
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
2014 PRELIMINARY ANNOUNCEMENT OF RESULTS (Unaudited)
Highlights
Record underlying profit of US$97 million
New hotels opened in Taipei and Bodrum
Four new management contracts, including Bangkok Residences
Major renovation of London hotel announced
1 for 4 rights issue to raise US$316 million
"While trading conditions in a number of markets are expected to
remain challenging, the Group is in a strong competitive position.
Over the longer term, Mandarin Oriental will benefit from the
strength of its brand, the increasing number of travellers from
emerging markets, particularly mainland China, the limited new
supply of luxury hotels in its key mature markets, and the phased
opening of new hotels and Residences under development."
Ben Keswick
Chairman
Results
Year ended 31st
December
2014 2013 Change
US$m US$m %
(unaudited)
Combined total revenue of hotels
under management(1) 1,389.9 1,360.8 +2
Underlying EBITDA (Earnings before
interest, tax, depreciation and
amortization)(2) 217.3 208.7 +4
Underlying profit attributable
to shareholders(3) 97.0 93.2 +4
Profit attributable to shareholders 97.0 96.3 +1
USc USc %
--------------------------------------- ------- ------- ------
Underlying earnings per share(3) 9.67 9.30 +4
Earnings per share 9.67 9.61 +1
Dividends per share 7.00 7.00 _
US$ US$ %
--------------------------------------- ------- ------- ------
Net asset value per share 0.95 0.99 _4
Adjusted net asset value per
share(4) 3.14 3.05 +3
Net debt/shareholders' funds 42% 48%
Net debt/adjusted shareholders'
funds(4) 13% 16%
--------------------------------------- ------- ------- ------
(1) Combined revenue includes turnover of the
Group's subsidiary hotels in addition to 100%
of revenue from associate and managed hotels.
(2) EBITDA of subsidiaries plus the Group's share
of EBITDA of associates.
(3) Underlying profit attributable to shareholders
and underlying earnings per share exclude non-trading
items such as gains on disposals, provisions
against asset impairment and writeback thereof.
(4) The adjusted net asset value per share and
net debt/adjusted shareholders' funds have been
adjusted to include the market value of the Group's
freehold and leasehold interests which are carried
in the consolidated balance sheet at amortized
cost.
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The final dividend of USc5.00 per share will be payable on 13th
May 2015, subject to approval at the Annual General Meeting to be
held on 6th May 2015, to shareholders on the register of members at
the close of business on 20th March 2015.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 2014
(UNAUDITED)
OVERVIEW
Against the background of challenging conditions in some
markets, Mandarin Oriental did well to achieve an improvement in
underlying profit in 2014. The Group benefited from resilient
demand from the leisure sector, the geographic diversification of
its portfolio and the receipt of US$15 million of branding fees in
relation to the ongoing sales of The Residences at Mandarin
Oriental in Bodrum.
PERFORMANCE
Underlying earnings before interest, tax, depreciation and
amortization for 2014 were US$217 million, an increase of US$8
million from 2013. Underlying profit of US$97 million was US$4
million higher than the prior year, which benefited from a US$7
million profit recognized on acquisition of the freehold rights of
the Paris hotel, while underlying earnings per share were USc9.67
compared with USc9.30 in 2013.
Profit attributable to shareholders was US$97 million in 2014,
compared to US$96 million in the prior year, with the 2013 results
including the writeback of a US$3 million asset impairment
provision.
Following an independent valuation of the Group's hotel
properties, the net asset value per share was US$3.14 at 31st
December 2014, compared with US$3.05 per share at the end of
2013.
The Directors recommend a final dividend of USc5.00 per share.
This, together with the interim dividend of USc2.00 per share, will
make a total annual dividend of USc7.00 per share, unchanged from
2013.
GROUP REVIEW
In Hong Kong, the Group's two wholly-owned hotels performed well
compared to last year, although their results were impacted by
demonstrations in the city during the final quarter. Mandarin
Oriental, Tokyo benefited from improved visitor arrivals to the
city, while occupancy at the Bangkok property continued to be
affected by the ongoing political uncertainty in the country. The
performances of the Group's other Asian hotels were broadly
stable.
The results in Europe benefited from further stabilization of
the Paris hotel and an improvement in Geneva, which more than
offset weaker demand in London.
In The Americas, while the majority of the Group's hotels
reported higher revenue per available room, the overall result was
impacted by lower demand in Washington D.C. when compared to the
prior year, which included the 2013 Presidential Inauguration.
BUSINESS DEVELOPMENTS
The Group's development projects remained active during the year
with hotels opening in Taipei, Taiwan and Bodrum, Turkey, while
management contracts were announced for new hotels under
development in Bali, Manila and Dubai.
In October, the Group also announced it is to brand and manage
146 Residences at Mandarin Oriental in Bangkok. The Residences will
be developed as part of a large mixed-use project located
diagonally across the Chao Phraya River from Mandarin Oriental,
Bangkok, and are expected to complete in 2018.
In the first quarter of 2014, the Group ceased management of two
unbranded hotels, the Grand Lapa in Macau and the Elbow Beach in
Bermuda. Following the announcement of a management contract for a
new luxury hotel in Manila scheduled to open in 2020, the Group's
existing hotel in the city was closed in September. The hotel
project in Moscow will also no longer proceed.
The Group is to expand its Munich property with 51 additional
guest rooms, hotel facilities and 19 branded Residences in a
mixed-use complex being developed opposite the hotel, which is due
to open in 2021. The Group will own the freehold of the hotel
component. The Group's total investment is estimated to be EUR124
million (US$150 million) in today's terms, which includes a
refurbishment of the hotel's existing rooms. The Group is to
undertake a major renovation of Mandarin Oriental, Hyde Park in
London, scheduled to commence in 2016 which will take 18 months to
complete at an estimated cost of GBP85 million (US$130 million).
The hotel will stay open throughout the renovation period with
reduced facilities and room inventory.
Mandarin Oriental now operates 27 hotels, and has a further 17
under development. Together these represent close to 11,000 rooms
in 24 countries. In addition, the Group operates eight Residences
at Mandarin Oriental connected to its properties, with a further
seven under development.
Within the next 18 months, four new hotels are scheduled to
open, in Marrakech, Milan, Beijing and Doha.
CORPORATE DEVELOPMENTS
Following shareholder approval at a Special General Meeting held
in April, the transfer of the Company's listing on the Main Market
of the London Stock Exchange to the standard listing category was
completed on 27th May 2014.
The Group has announced its intention to raise US$316 million
through a 1 for 4 rights issue of new ordinary shares. The proceeds
of the rights issue will be used to pay down debt, thereby
providing the Group with the capacity to finance the GBP85 million
(US$130 million) renovation of Mandarin Oriental Hyde Park, London
and make further investments in line with its development strategy.
Jardine Strategic, the Company's principal shareholder, has
committed to take up its entitlement and fully underwrite the
offer.
PEOPLE
On behalf of the Directors, I would like to acknowledge the
contribution of all employees throughout the Group for continuing
to provide the exceptional service for which the brand is
renowned.
Giles White will be retiring as a Director on 31st July 2015 and
we would like to thank him for his contribution.
OUTLOOK
While trading conditions in a number of markets are expected to
remain challenging, the Group is in a strong competitive position.
Over the longer term, Mandarin Oriental will benefit from the
strength of its brand, the increasing number of travellers from
emerging markets, particularly mainland China, the limited new
supply of luxury hotels in its key mature markets, and the phased
opening of new hotels and Residences under development.
Ben Keswick
Chairman
GROUP CHIEF EXECUTIVE'S REVIEW - 2014
STRATEGY
Mandarin Oriental Hotel Group is an award-winning international
hotel investment and management group with deluxe and first class
hotels, resorts and residences in sought-after destinations around
the world. The Group operates, or has under development, 44 hotels
representing almost 11,000 rooms in 24 countries, with 20 hotels in
Asia, ten in The Americas and 14 in Europe, Middle East and North
Africa. In addition, the Group operates, or has under development,
15 Residences at Mandarin Oriental connected to its properties.
The Group holds equity interests in a number of its hotels, and
had adjusted net assets of approximately US$3.2 billion as at 31st
December 2014. Capitalizing on the strength of its brand, Mandarin
Oriental also operates properties on behalf of third party owners
that require no equity investment by the Group.
The Group aims to be recognized widely as the world's best
luxury hotel group, which it will achieve by investing in its
exceptional facilities and its people while continuing to seek
further selective opportunities for expansion around the world.
This approach, combined with a strong balance sheet, is designed to
achieve long-term growth in both earnings and net asset value.
PROGRESS ACHIEVED
The Group benefited from the growing recognition of the Mandarin
Oriental brand internationally, which attracted an increasing
number of high net worth travellers, allowing most of our hotels to
raise their rates in local currency terms during 2014. While there
was a softening of corporate demand in some markets, the Group
experienced improved demand from the leisure sector and from its
successful development of new markets, predominantly China.
Overall, the Group benefited from the resilience that comes with a
broad portfolio of hotels and residences across many
destinations.
In Asia, our hotels performed well against their competition,
although ongoing political uncertainty in Bangkok and the
demonstrations in Hong Kong during the last quarter of the year
affected overall results. In Europe, the Group benefited from
further progress in Paris and an improved performance in Geneva,
which more than offset softer demand in London. In The Americas
most of our hotels experienced strong demand. The exception was in
Washington D.C. where visitor arrivals were down compared to the
previous year, which included the 2013 Presidential
Inauguration.
Mandarin Oriental's growing presence in top tier destinations
was enhanced further in 2014 with the successful launch of two new
luxury hotels in Taipei, Taiwan and Bodrum, Turkey in May and July,
respectively. During the year, three hotel management contracts
were announced for new properties in Bali, Manila and Dubai, while
the Group also entered an agreement to expand its wholly-owned
property in Munich. Finally, in October, the Group signed a
contract to brand and manage new luxury Residences at Mandarin
Oriental in Bangkok.
The recognition of the Mandarin Oriental brand internationally,
together with our financial strength, places the Group in a strong
position to take advantage of further growth opportunities.
PERFORMANCE IN 2014
Set out below is a review of the Group's performance in 2014,
with reference to the following strategic objectives:
-- Being recognized as the world's best luxury hotel group
-- Strengthening our competitive position
-- Increasing the number of rooms under operation to 10,000
-- Achieving a strong financial performance
1. Being recognized as the world's best luxury hotel group
Mandarin Oriental is consistently recognized for creating some
of the world's most sought-after properties, delivering 21st
century luxury with oriental charm. Each of our hotels ensures its
position as one of the best in its market through a combination of
tradition, quality and innovation. Throughout the portfolio, the
Group invests behind its core brand attributes of creative hotel
design, architecture and technology, excellent dining experiences
and holistic spa operations. Above all, the delivery of legendary
service to our guests remains at the core of everything we do.
The Group's increasing global recognition in 2014 is evidenced
by the achievement of many significant awards from respected travel
associations and publications worldwide. Highlights include a
record 14 hotels being recognized in the 2015 Forbes Travel Guide,
with 11 properties around the world gaining the top 'Five Star
Hotel' status, and five properties gaining the rare 'triple crown'
for hotel, spa and restaurant. Mandarin Oriental, Hong Kong is the
only city hotel in the world to achieve five 'Five Star' Awards,
for the hotel, spa, and three of its restaurants. Furthermore, four
of the Group's hotels in the United States achieved the coveted
'Five Diamond Lodging Award' for 2015 from the American Automobile
Association. These two listings are amongst the most prestigious
awards in the hotel industry, and are given to very few hotels in
recognition of service excellence.
Condé Nast Traveler, US 'Readers' Choice Awards' 2014 featured
13 Mandarin Oriental hotels, with three hotels being listed as one
of the top three in their respective cities. In addition, 'The
World's Best 2014' from Travel + Leisure included winning entries
for eight hotels. The Group was also well represented in
Institutional Investor 2014 'World's Best Hotels' with a record 12
hotels listed, four of which were voted 'Best in the City'. In
China, the well-respected Hurun Report's annual 'Best of the Best
Awards', voted Mandarin Oriental Hotel Group as the 'Best Luxury
Hotel Brand in China'.
The Group's reputation for excellent and innovative dining
experiences was again acknowledged in the most recent 2015 Michelin
guides with 11 restaurants being honoured and a total of 16 stars
being granted, including four at Mandarin Oriental, Hong Kong
alone. This is more than any other hotel group in the world. Once
again, both Amber at The Landmark Mandarin Oriental, Hong Kong and
Dinner at Mandarin Oriental Hyde Park, London were voted as two of
the 'Top 50 Restaurants' in the world in the prized San Pellegrino
listings.
The Group's spa operations were acknowledged as being among the
best, with a record 13 hotels gaining the prestigious Forbes 'Five
Star Spa' award. Again, this is more than any other hotel group in
the world. In addition, three of the Group's hotels in The Americas
were honoured in Condé Nast Traveler, US 'Readers' Poll' of 'Top US
Spas', and the Group was voted 'Most Trusted Global Spa Brand' by
SpaChina in the 2014 awards.
The Group's commitment to working with some of the best
architects and designers was also recognized in 2014. In
particular, the Group's latest hotel in China, Mandarin Oriental
Pudong, Shanghai was included in Condé Nast Traveler's US 'Hot List
2014 Best Design Hotels'. In London, Mandarin Oriental Hyde Park
received the 'Interior Design Award' for its new tea and champagne
lounge, The Rosebery, in the European Hotel Design Awards 2014.
The Group's global recognition is further enhanced by our
award-winning international advertising campaign which now features
28 celebrity 'fans', who regularly stay in our hotels. During the
last 12 months, the Group welcomed the Academy Award winning
American actor and director, Morgan Freeman and Hollywood actress,
Lucy Liu to the campaign. The Group's relationship with its
celebrity fans goes far beyond their appearance in the
advertisements alone. They frequent the Group's hotels regularly,
and further enhance brand recognition by attending events and
meeting with guests.
The Group also continues to invest in its award-winning website
and in digital marketing across all devices and in multiple
languages. Compared to the previous year, online revenues have
improved by 8% on a like-for-like basis and now represent 13% of
total transient room revenue. Furthermore, the Group actively
encourages a global conversation with consumers through its social
media strategy, and now has a larger and more connected global
digital network than ever before, reaching consumers in all corners
of the globe, including a growing following on China's most
important social media platforms.
Mandarin Oriental's goal, to be recognized as the world's best
luxury hotel group, will be further accomplished as we increase the
number of hotels we operate in new and exciting travel
destinations.
2. Strengthening our competitive position
Critical to the Group's success is the focus of every hotel on
maintaining or enhancing their leadership positions against primary
competitors in their individual markets. Strong brand recognition,
combined with the strength of our hotel management teams, plus the
added support provided by an established corporate structure,
allows our properties to compete effectively and to achieve premium
rates. In 2014, our position was further supported by limited new
supply in many of the key markets in which we operate.
The Group's strategy is to create quality services and
facilities which attract individuals who will pay a premium for
genuine luxury experiences. This creates demand, which allows the
hotels to increase average rates across the portfolio. Demographic
trends support this strategy, with higher spending leisure
customers now making up close to 50% of the Group's room nights.
These high net worth individuals continue to originate from the
Group's traditional markets, but increasingly, the Group is
attracting additional customers from emerging markets. This is
particularly true of China, which is now the second largest source
of business after the United States accounting for 15% of our total
visitor arrivals. The contribution from China will continue to grow
as the total number of hotels that the Group now operates, or has
under development in mainland China, has increased to seven.
The highlights of each region are as follows:
Asia
The Group's hotels in the region competed effectively in 2014,
while most achieved higher average rates in local currency terms.
Recognition of the Group was further enhanced with the
well-publicized hotel opening in Taipei. Overall, Revenue per
Available Room ('RevPAR') for Asia increased by 1% in local
currency terms over 2013, on a like-for-like basis.
Mandarin Oriental, Hong Kong performed well despite the impact
of the political demonstrations in the city in the last quarter,
achieving an overall revenue increase which was 3% above the
previous year.
The property received the 'Five Star' rating in the 2015 Forbes
Travel Guide for the hotel, the spa and three of its restaurants,
Pierre, The Krug Room and The Mandarin Grill. The Landmark Mandarin
Oriental, Hong Kong achieved the same accolade for the hotel, spa
and Amber restaurant.
The Excelsior, the Group's other wholly-owned hotel in Hong Kong
also performed well competitively, however, RevPAR was down 4%
mainly due to the impact of the political demonstrations in the
last quarter. Despite the RevPAR decrease, food and beverage
performance was robust, improving by 5% over 2013.
In Tokyo, our hotel's performance benefited from a further
increase in visitor arrivals, resulting in a 13% improvement in the
average rate which led to an overall uplift in RevPAR of 16% in
local currency terms and 7% in US dollar terms. The hotel was
listed as the 'Top Hotel in Japan' in the 2014 Condé Nast Traveler,
US 'Readers' Choice Awards', while three of its restaurants were
awarded Michelin stars in the 2015 guide, the only hotel in the
city to achieve this accolade.
Mandarin Oriental, Singapore was impacted by weaker city-wide
corporate demand which was partially offset by an increase in
leisure demand, resulting in a similar RevPAR to 2013. The hotel
also achieved Forbes 'Five Star' status in the annual 2014 Forbes
Travel Guide for both the hotel and its spa, and was voted one of
the top city hotels in Asia in Travel + Leisure's 'World's Best
Awards' 2014.
Mandarin Oriental, Bangkok was adversely affected by the ongoing
political uncertainty in Thailand, which continued to suppress
visitor arrivals. The hotel did well to increase its average rate,
however overall RevPAR was down 14% in local currency terms
compared to 2013. The hotel remains the market leader in the city
and was once again recognized in the most important travel awards,
including being voted 'The World's Number 1' in Condé Nast
Traveller, UK's 'Readers' Choice Awards' 2014. It was also listed
as an 'Enduring Classic' in Fodor's 'World's Best Hotels' 2014
listings. Moreover, the hotel also achieved Forbes 'Five Star'
status in the 2015 inaugural Forbes Travel Guide in Thailand for
both the hotel and its spa.
Mandarin Oriental, Jakarta maintained its market share and
benefited from the strong local economy, achieving an overall
increase in RevPAR of 5% in local currency terms. The weakening
Indonesian Rupiah, however, led to RevPAR decreasing 7%
year-on-year when translated into US dollars. The hotel was voted
one of the 'Top 25 Hotels in Indonesia' in TripAdvisor's 2015
'Traveler's Choice', and was one of the top five hotels in
Indonesia to receive the ASEAN 'Green Hotel Award' 2014 for its
corporate responsibility initiatives.
Performances of the Group's remaining hotels in the region were
resilient, and include the first full-year management fees from our
hotels in Guangzhou and Shanghai which opened in 2013. Both are
achieving recognition for their exceptional services and
facilities. Mandarin Oriental Pudong, Shanghai was named one of the
'Best New Hotels of The Year' in Condé Nast Traveller UK's 'Hot
List', as well as Travel + Leisure's 'It List'. Mandarin Oriental,
Guangzhou was voted one of the most 'Glamorous Hotels in China' in
the China Hotel Starlight Awards, which is one of the most
prominent award listings in mainland China. Finally, the new
Mandarin Oriental hotel in Taipei, which opened to great acclaim in
May, is establishing itself as one of the best hotels in the city
and is achieving high average rates.
Europe
In Europe, the Group's hotels were successful in maintaining
their positions at the top end of their markets, and most continued
to benefit from resilient demand in the leisure sector. Across the
region, RevPAR increased by 3% in local currency terms, on a
like-for-like basis with 2013.
Mandarin Oriental Hyde Park, London was impacted by weaker
demand, which reduced RevPAR by 5% in local currency terms,
although RevPAR was flat in US dollar terms. Food and beverage
performed well, with the hotel's award-winning restaurants, Dinner
and Bar Boulud, being nominated as two of the UK's 'Top 100
Restaurants' in the 2014 National Restaurant Awards. During the
year, the hotel introduced its new swimming pool and fitness
centre, and launched The Rosebery, a luxurious afternoon tea and
champagne lounge which has achieved a strong following.
The Group has also announced that it will invest GBP85 million
(US$130 million) to renovate the London hotel. The project, which
will commence in 2016 and take approximately 18 months to complete,
will comprise a full renovation of the existing guestrooms,
restaurants, bars, meeting facilities and lobby. In addition, two
new penthouse suites overlooking Hyde Park will be created as well
as an expansion of the spa facilities and improvements to core
buildings services. The hotel will remain open during the
renovation period with reduced facilities and room inventory.
Mandarin Oriental, Munich continued to perform well as a result
of strong demand in the high-end leisure market, and maintained
2013 RevPAR levels in local currency terms. The hotel remains the
undisputed market leader and was one of the 'Top Twenty Hotels in
North Europe' in Condé Nast Traveler's, US 'Readers' Choice Awards'
2014. In 2015, the property will be introducing a new lobby lounge,
bar and restaurant concept to further extend its appeal as the best
hotel in the city.
In Geneva, the hotel's performance improved as a result of
stronger corporate and leisure demand. Occupancy was up 16% leading
to an overall RevPAR increase of 14% in local currency terms. The
hotel was singled out as 'Switzerland's Leading Business Hotel' in
the World Travel Awards 2014, as well as being voted one of the
'Top 10 City Hotels in Switzerland' in the well regarded Swiss
business publication, Bilanz.
Mandarin Oriental, Paris has been further recognized as one of
the best luxury hotels in the city and continues to improve its
performance. The property increased both occupancy and average
rate, leading to a RevPAR uplift of 5% in local currency terms. The
hotel's food and beverage operations, led by renowned chef Thierry
Marx, have attained many accolades, and the signature restaurant,
Sur Mesure, was once again awarded two Michelin stars in the 2015
listing. Importantly, the hotel was also granted an official
'Palace Distinction' in 2014 - one of only eight hotels in the city
to receive this honour.
Elsewhere in the region, our hotels in Barcelona and Prague
successfully maintained their top competitive positions. Both
properties received further global recognition for excellence, and
were featured in Condé Nast Traveler's, US 'Readers' Choice Awards'
2014 as two of the top hotels in their respective cities. In
addition, Mandarin Oriental, Barcelona was voted 'Best Urban Hotel'
in Condé Nast Traveler's 2014 Spanish edition, and also gained top
honours in the SpaFinder 'Country Wellness Awards' 2014. The
Group's recognition was further enhanced with the arrival of its
first European resort in Bodrum which has achieved high average
rates and was listed as one of the 'World's Best Hotels' in the
2015 Tatler UK 'Travel Guide'.
The Americas
The trading environment in The Americas continued to strengthen
in 2014, leading to increased demand for most of the Group's hotels
in the region with an overall RevPAR increase of 5% on a
like-for-like basis over the previous year. Four Mandarin Oriental
hotels in the US were voted 'Top Ten' properties in their
respective cities in the Condé Nast Traveler US 'Readers' Choice
Awards' 2014, with three hotels attaining the number one spot for
'Best Business Hotel' in Travel + Leisure's 'World's Best Business
Hotels' 2014.
Mandarin Oriental, Washington D.C. largely maintained its
competitive position in the market, but as a result of a drop in
overall visitor arrivals to the city, RevPAR was down 5% over the
prior year. The hotel appeared in numerous reader surveys in
prestigious publications and was voted 'Best Business Hotel' in the
city in the Travel + Leisure 'World's Best Business Hotels'
2014.
Mandarin Oriental, New York successfully maintained its
competitive position as the market leader during the year,
achieving a 3% increase in RevPAR. The hotel's international
recognition as one of the world's most luxurious properties was
further reinforced by the retention of both the prestigious Forbes
'Five Star' rating and the American Automobile Association's 'Five
Diamond Lodging Award'.
At Mandarin Oriental, Miami, stable market conditions led to an
uplift in RevPAR of 3%. The hotel continues to receive positive
media attention, and achieved a triple Forbes 'Five Star' rating in
2015 for the hotel, the spa and its restaurant Azul - the only
hotel in Florida to so do. In 2014, the hotel introduced a new
restaurant and bar, La Mar, by celebrity Peruvian chef Gaston
Acurio, which was voted one of the 'Fifteen Hottest Restaurant
Openings Around the US' in the latest Zagat dining guide.
Mandarin Oriental, Boston maintained its position as market
leader, improving its RevPAR by 7%, while the Group's hotels in
Atlanta and Las Vegas increased their RevPAR by 14% and 15%
respectively. All three hotels were recognized with the Forbes
'Five Star' rating in 2015 for hotel and spa, with the hotel in Las
Vegas being awarded a further 'Five Star' rating for its restaurant
Twist, operated by Pierre Gagnaire.
3. Increasing the number of rooms under operation to 10,000
Mandarin Oriental has achieved strong geographic diversification
with a well-balanced portfolio across the globe and is on track to
meet its mid-term goal of operating 10,000 rooms in key global
locations within the next few years. Today, the Group operates
close to 8,000 rooms in 27 hotels around the world, and by
including the hotels under development, the total portfolio now
extends to almost 11,000 rooms in 44 hotels located in 24
countries.
Three new hotel management contracts, a hotel expansion and one
new residential project were announced in 2014:
-- In January, the Group announced a new management contract for
a luxury resort in Bali, Indonesia, scheduled to open in 2018.
Located southwest of Nusa Dua, this 114-room hotel includes 88
expansive pool villas, and is situated on a cliffside with
panoramic views and direct access to a secluded beach.
-- In March, the Group entered into an agreement with a local
development partner to expand its wholly owned property in Munich
through the construction of a new mixed-use complex opposite the
hotel, scheduled to open in 2021. The new development will comprise
two buildings that will jointly house 51 new hotel rooms, 19 luxury
branded Residences at Mandarin Oriental, a restaurant and bar, a
spa, a swimming pool and fitness centre and hotel back of house
facilities, as well as retail units, commercial offices and
underground car parking. Mandarin Oriental will own 100% of the
freehold interest in the land and buildings of the hotel component.
The Group's total investment in the project, which will also
include a refurbishment of the existing hotel's 73 rooms, is
estimated at EUR124 million (US$150 million) in today's terms.
-- In June, the Group announced a new management contract for a
275-room hotel in the heart of Metro Manila, which is scheduled to
open in 2020. It will replace the Group's original property on
Makati Avenue, which closed in September 2014.
-- In September, a new management contract for a luxury 255-room
urban resort in Dubai was announced. The hotel will feature
exclusive over-water villas with direct access to the Arabian Gulf,
and is scheduled to open in 2017.
-- Finally in October, the Group announced an agreement to brand
and manage 146 Residences at Mandarin Oriental that will be
developed as part of a mixed-use project located on the Chao Phraya
River diagonally opposite Mandarin Oriental, Bangkok.
During 2014, the Group ceased management of the Grand Lapa hotel
in Macau and the Elbow Beach hotel in Bermuda. Also, the project in
Moscow will no longer proceed.
In total, Mandarin Oriental has 17 new hotels currently under
development, all of which are long-term management contracts
requiring no capital investment by the Group. Four of these
properties will be operational within the next 18 months, including
a 104-room luxury hotel in Milan and an exclusive resort comprising
63 private villas in Marrakech, both of which are due to open in
the second quarter of 2015. Mandarin Oriental, Beijing, located
within the iconic CCTV development in the heart of the city, and
Mandarin Oriental, Doha, the Group's first hotel in the Middle
East, are both scheduled to open in 2016.
In addition to the Group's portfolio of hotels, a total of 15
Residences at Mandarin Oriental projects are open or under
development. Since the first Residences launched in 2004 in New
York, the associated branding of these projects has, on average,
resulted in fees of approximately US$5 million per annum over the
decade. These fees, as well as ongoing revenues from management
fees and the use of hotel facilities by the home owners, should
provide a growing return for the Group in future years.
The Group's strategy of operating both owned and managed hotels
remains in place. Mandarin Oriental is well positioned to take
advantage of selective investment opportunities in strategic
locations that offer attractive returns, while at the same time our
strong brand continues to be sought after by developers of luxury
hotels. The long-term potential for growth is significant, and the
Group has in the pipeline many opportunities for additional
luxurious hotels and residences in important or unique locations
around the world.
4. Achieving a strong financial performance
The Group's overall financial performance improved in 2014, as
strong competitive performances were maintained across the majority
of the portfolio. Underlying profit in 2014 was US$97 million, a
record level for the Group, compared to the previous record
underlying profit of US$93 million reported in 2013.
The Group's financial well-being remains fundamental to its
success. At 31st December 2014, gearing was 13% of adjusted
shareholder funds.
The Board has recommended a final dividend of USc5.00 per share,
which, when combined with the interim dividend of USc2.00 per
share, makes a full year dividend of USc7.00 per share.
The Group has announced its intention to raise US$316 million
through a 1 for 4 rights issue of new ordinary shares. The proceeds
of the rights issue will be used to pay down debt, thereby
providing the Group with the capacity to finance the GBP85 million
(US$130 million) renovation of Mandarin Oriental Hyde Park, London
and make further investments in line with its development
strategy.
THE FUTURE
While challenging conditions are expected to continue in some
markets, demand for the Mandarin Oriental brand remains strong.
Moreover, the Group's results will benefit from the further
stabilization of its recently opened hotels, as well as from the
continued growth of its global portfolio as new properties open in
diverse locations. In addition, the Group will be supported by the
increasing number of high net worth travellers from both
traditional and emerging markets, as well as the limited supply of
competitive luxury hotels in our key mature markets.
The geographical broadening of the Group's hotel portfolio and
the increasing opportunities for branded Residences projects
internationally, underlie the strength of the brand and the growing
recognition of Mandarin Oriental as one of the best luxury hotel
groups in the world.
Edouard Ettedgui
Group Chief Executive
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2014
(unaudited)
2014 2013
Non- Non-
trading trading
Underlying items Total Underlying items Total
US$m US$m US$m US$m US$m US$m
Revenue (note 2) 679.9 - 679.9 668.6 - 668.6
Cost of sales (410.0) - (410.0) (408.4) - (408.4)
------- -------
Gross profit 269.9 - 269.9 260.2 - 260.2
Selling and distribution
costs (44.7) - (44.7) (45.2) - (45.2)
Administration
expenses (104.4) - (104.4) (103.2) - (103.2)
------- -------- ------- ---------- -------- -------
Operating profit
(note 3) 120.8 - 120.8 111.8 - 111.8
Financing charges (19.9) - (19.9) (17.5) - (17.5)
Interest income 2.6 - 2.6 1.7 - 1.7
Net financing charges (17.3) - (17.3) (15.8) - (15.8)
Share of results
of associates (note
4) 12.3 - 12.3 17.5 3.1 20.6
Profit before tax 115.8 - 115.8 113.5 3.1 116.6
Tax (note 5) (19.0) - (19.0) (19.8) - (19.8)
------- -------- ------- ---------- -------- -------
Profit after tax 96.8 - 96.8 93.7 3.1 96.8
------- -------- ------- ---------- -------- -------
Attributable to:
Shareholders of
the Company 97.0 - 97.0 93.2 3.1 96.3
Non-controlling
interests (0.2) - (0.2) 0.5 - 0.5
------- -------- ------- ---------- -------- -------
96.8 - 96.8 93.7 3.1 96.8
------- -------- ------- ---------- -------- -------
USc USc USc USc
Earnings per share
(note 6)
- basic 9.67 9.67 9.30 9.61
- diluted 9.63 9.63 9.28 9.59
------- ------- ---------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2014
(unaudited)
2014 2013
US$m US$m
Profit for the year 96.8 96.8
Other comprehensive (expense)/income
Items that will not be reclassified
to profit or loss:
------------------------------ -----
Remeasurements of defined benefit
plans (5.6) 5.5
Tax on items that will not be
reclassified 0.9 (0.9)
(4.7) 4.6
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
------------------------------ -----
- net (loss)/gain arising during
the year (57.0) 4.9
Fair value (losses)/gains on other
investments (0.1) 0.4
Fair value gains on cash flow
hedges 4.0 8.5
Tax relating to items that may
be reclassified (0.7) (1.6)
Share of other comprehensive expense
of associates (4.0) (5.4)
(57.8) 6.8
Other comprehensive (expense)/income
for the year, net of tax (62.5) 11.4
------------------------------ -----
Total comprehensive income for
the year 34.3 108.2
------------------------------ -----
Attributable to:
Shareholders of the Company 35.0 107.8
Non-controlling interests (0.7) 0.4
------------------------------ -----
34.3 108.2
------------------------------ -----
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 31st December 2014
(unaudited)
2014 2013
US$m US$m
Net assets
Intangible assets 45.6 42.6
Tangible assets (note
8) 1,315.1 1,440.5
Associates 101.6 110.8
Other investments 10.5 9.3
Loans receivable - -
Pension assets 7.3 14.4
Deferred tax assets 2.2 3.1
----------- -------
Non-current assets 1,482.3 1,620.7
Stocks 5.9 6.5
Debtors and prepayments 94.5 73.7
Current tax assets 1.3 1.0
Cash at bank 324.6 316.4
----------- -------
Current assets 426.3 397.6
----------- -------
Creditors and accruals (144.6) (147.0)
Current borrowings (note
9) (217.0) (556.2)
Current tax liabilities (9.6) (12.1)
----------- -------
Current liabilities (371.2) (715.3)
----------- -------
Net current assets/(liabilities) 55.1 (317.7)
Long-term borrowings (note
9) (510.7) (238.7)
Deferred tax liabilities (62.3) (65.5)
Pension liabilities - (0.6)
Other non-current liabilities (3.0) (3.5)
----------- -------
961.4 994.7
----------- -------
Total equity
Share capital 50.2 50.2
Share premium 188.2 186.6
Revenue and other reserves 718.0 752.2
----------- -------
Shareholders' funds 956.4 989.0
Non-controlling interests 5.0 5.7
----------- -------
961.4 994.7
----------- -------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2014
Attributable
to Attributable
shareholders to non-
Share Share Capital Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
2014
(unaudited)
At 1st January 50.2 186.6 282.1 473.6 (6.0) 2.5 989.0 5.7 994.7
Total
comprehensive
income - - - 92.2 3.3 (60.5) 35.0 (0.7) 34.3
Dividends paid
by
the Company - - - (70.2) - - (70.2) - (70.2)
Issue of
shares - - - - - - - - -
Employee share
option
schemes - - 2.6 - - - 2.6 - 2.6
Transfer - 1.6 (1.6) - - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------ ------
At 31st
December 50.2 188.2 283.1 495.6 (2.7) (58.0) 956.4 5.0 961.4
2013
At 1st January 50.0 182.1 281.3 442.6 (12.9) 2.8 945.9 5.3 951.2
Total
comprehensive
income - - - 101.2 6.9 (0.3) 107.8 0.4 108.2
Dividends paid
by
the Company - - - (70.2) - - (70.2) - (70.2)
Issue of shares 0.2 2.7 - - - - 2.9 - 2.9
Employee share
option
schemes - - 2.6 - - - 2.6 - 2.6
Transfer - 1.8 (1.8) - - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------ ------
At 31st
December 50.2 186.6 282.1 473.6 (6.0) 2.5 989.0 5.7 994.7
------- ------- -------- -------- -------- -------- ------------ ------------ ------
Total comprehensive income included in revenue reserves
comprises profit attributable to shareholders of the Company of
US$97.0 million (2013: US$96.3 million) and net fair value loss on
other investments of US$0.1 million (2013: net fair value gain on
other investments of US$0.2 million).
________________________________________________________________________________________________________________________________
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2014
(unaudited)
2014 2013
US$m US$m
Operating activities
----------- -------
Operating profit (note 3) 120.8 111.8
Depreciation 62.4 57.4
Amortization of intangible assets 2.6 2.6
Other non-cash items 1.5 (2.7)
Movements in working capital 2.2 9.6
Interest received 2.6 1.7
Interest and other financing charges
paid (24.4) (17.9)
Tax paid (21.4) (18.6)
----------- -------
146.3 143.9
Dividends and interest from associates 13.2 13.0
Cash flows from operating activities 159.5 156.9
Investing activities
----------- -------
Purchase of tangible assets (29.4) (35.9)
Purchase of intangible assets (2.9) (2.9)
Payment on Munich expansion (note
14) (16.9) -
Acquisition of Paris freehold
interest (note 11) - (381.7)
Purchase of other investments (1.0) (1.8)
Repayment of loans to associates 4.3 -
Sale of tangible assets 0.3 -
Cash flows from investing activities (45.6) (422.3)
Financing activities
----------- -------
Issue of shares - 2.8
Drawdown of borrowings 512.5 202.5
Repayment of borrowings (540.8) (3.1)
Dividends paid by the Company
(note 12) (70.2) (70.2)
Cash flows from financing activities (98.5) 132.0
----------- -------
Net increase/(decrease) in cash
and cash equivalents 15.4 (133.4)
Cash and cash equivalents at 1st
January 315.7 453.4
Effect of exchange rate changes (6.8) (4.3)
----------- -------
Cash and cash equivalents at 31st
December 324.3 315.7
----------- -------
Mandarin Oriental International Limited
Notes
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information contained in this announcement has
been based on the preliminary results for the year ended 31st
December 2014 which have been prepared in conformity with
International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by
the International Accounting Standards Board.
The preliminary results for the year ended 31st December 2014
are unaudited.
Amendments and interpretation effective in 2014 which are
relevant to the Group's operations:
Amendments to Offsetting Financial Assets and
IAS 32 Financial Liabilities
Amendments to Recoverable Amount Disclosures
IAS 36 for Non-Financial Assets
Amendments to Novation of Derivatives and Continuation
IAS 39 of Hedge Accounting
IFRIC 21 Levies
The adoption of these amendments and interpretation does not
have a material impact on the Group's accounting policies and
disclosures.
Amendments to IAS 32 'Offsetting Financial Assets and Financial
Liabilities' are made to the application guidance in IAS 32 and
clarify some of the requirements for offsetting financial assets
and financial liabilities on the balance sheet. Specifically, the
amendments clarify the meaning of 'currently has a legally
enforceable right of offset' and 'simultaneous realization and
settlement'.
Amendments to IAS 36 'Recoverable Amount Disclosures for
Non-Financial Assets' set out the changes to the disclosures when
the recoverable amount is determined based on fair value less costs
of disposal. The key amendments are (a) to remove the requirement
to disclose the recoverable amount when a cash generating unit
(CGU) contains goodwill or indefinite lived intangible assets but
there has been no impairment, (b) to require disclosure of the
recoverable amount of an asset or CGU when an impairment loss has
been recognized or reversed, and (c) to require detailed disclosure
of how the fair value less costs of disposal has been measured when
an impairment loss has been recognized or reversed.
Amendments to IAS 39 'Novation of Derivatives and Continuation
of Hedge Accounting' provide relief from discontinuing hedge
accounting when novation of a hedging instrument to a central
counterparty meets specified criteria.
IFRIC 21 'Levies' sets out the accounting for an obligation to
pay a levy that is not income tax. The interpretation clarifies
that the obligating event that gives rise to a liability to pay a
levy is the activity described in the relevant legislation that
triggers the payment of the levy.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
2. REVENUE
2014 2013
US$m US$m
By geographical area:
Hong Kong 249.5 245.9
Other Asia 118.9 131.6
Europe 249.6 226.0
The Americas 61.9 65.1
679.9 668.6
----- -----
3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION)
2014 2013
US$m US$m
By geographical area:
Hong Kong 85.1 83.0
Other Asia 29.9 30.1
Europe 67.6 54.8
The Americas 3.2 3.9
------ ------
EBITDA from subsidiaries 185.8 171.8
Less depreciation and amortization (65.0) (60.0)
------ ------
Operating profit 120.8 111.8
------ ------
4. SHARE OF RESULTS OF ASSOCIATES
Depreciation Net Net
and Operating financing profit/
EBITDA amortization profit charges Tax (loss)
US$m US$m US$m US$m US$m US$m
2014
By geographical
area:
Other Asia 25.9 (9.2) 16.7 (1.4) (2.9) 12.4
The Americas 5.6 (2.9) 2.7 (2.1) (0.7) (0.1)
------ ------------ --------- --------- ----- -------
31.5 (12.1) 19.4 (3.5) (3.6) 12.3
Non-trading
items
* Writeback of provisions against asset impairment
(refer note 7) - - - - - -
------ ------------ --------- --------- ----- -------
31.5 (12.1) 19.4 (3.5) (3.6) 12.3
------ ------------ --------- --------- ----- -------
2013
By geographical
area:
Other Asia 31.3 (9.2) 22.1 (1.5) (3.6) 17.0
The Americas 5.6 (3.0) 2.6 (2.0) (0.1) 0.5
------ ------------ --------- --------- ----- -------
36.9 (12.2) 24.7 (3.5) (3.7) 17.5
Non-trading
items
* Writeback of provisions against asset impairment
(refer note 7) 3.1 - 3.1 - - 3.1
------ ------------ --------- --------- ----- -------
40.0 (12.2) 27.8 (3.5) (3.7) 20.6
------ ------------ --------- --------- ----- -------
5. TAX
2014 2013
US$m US$m
Tax charged to profit and loss
is analyzed as follows:
Current tax 18.8 19.7
Deferred tax 0.2 0.1
----- -----
19.0 19.8
----- -----
By geographical area:
Hong Kong 11.6 11.7
Other Asia 3.0 1.7
Europe 6.5 6.3
The Americas (2.1) 0.1
----- -----
19.0 19.8
----- -----
Tax relating to components of other comprehensive income is
analyzed as follows:
Remeasurements of defined benefit
plans 0.9 (0.9)
Revaluation of other investments - (0.1)
Cash flow hedges (0.7) (1.5)
----- -----
0.2 (2.5)
----- -----
Tax on profits has been calculated at rates of taxation
prevailing in the territories in which the Group operates. Share of
tax of associates of US$3.6 million (2013: US$3.7 million) is
included in share of results of associates (refer note 4).
6. EARNINGS PER SHARE
Basic earnings per share are calculated on the profit
attributable to shareholders of US$97.0 million (2013: US$96.3
million) and on the weighted average number of 1,003.4 million
(2013: 1,002.0 million) shares in issue during the year. The
weighted average number excludes shares held by the Trustee of the
Share-based Long-term Incentive Plans.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$97.0 million (2013: US$96.3 million) and on
the weighted average number of1,007.4 million (2013: 1,003.9
million) shares after adjusting for the number of shares which are
deemed to be issued for no consideration under the Share-based
Long-term Incentive Plans based on the average share price during
the year.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2014 2013
Weighted average number of shares
in issue 1,003.4 1,002.0
Adjustment for shares deemed to
be issued for no consideration
under the Share-based Long-term
Incentive Plans 4.0 1.9
------- -------
Weighted average number of shares
for diluted earnings per share 1,007.4 1,003.9
------- -------
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
2014 2013
Basic Diluted
Basic Diluted earnings earnings
earnings earnings per per
per share per share share share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 97.0 9.67 9.63 96.3 9.61 9.59
Non-trading
items (refer
note 7) - - - (3.1) (0.31) (0.31)
---------- ---------- --------- ---------
Underlying
profit attributable
to shareholders 97.0 9.67 9.63 93.2 9.30 9.28
---- ---------- ---------- ----- --------- ---------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading include items such as gains on disposals,
provisions against asset impairment and writeback thereof, as well
as material items which are non-recurring in nature.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
2014 2013
US$m US$m
Writeback of provisions against
asset impairment - 3.1
----- -----
8. TANGIBLE ASSETS AND CAPITAL COMMITMENTS
2014 2013
US$m US$m
Opening net book value 1,440.5 1,055.5
Exchange differences (91.8) 14.0
Additions 29.2 428.6
Disposals (0.4) (0.2)
Depreciation charge (62.4) (57.4)
------- -------
Closing net book value 1,315.1 1,440.5
------- -------
Capital commitments 166.5 21.1
------- -------
Freehold properties include a property of US$96.2 million (2013:
US$98.6 million), which is stated net of tax increment financing of
US$23.9 million (2013: US$24.7 million) (refer note 10).
9. BORROWINGS
2014 2013
US$m US$m
Bank loans 718.1 783.9
Other borrowings 7.9 9.3
Tax increment financing (refer
note 10) 1.7 1.7
----- -----
727.7 794.9
----- -----
Current 217.0 556.2
Long-term 510.7 238.7
----- -----
727.7 794.9
----- -----
10. TAX INCREMENT FINANCING
2014 2013
US$m US$m
Netted off against the net book
value of property (refer note 8) 23.9 24.7
Loan (refer note 9) 1.7 1.7
----- -----
25.6 26.4
----- -----
A development agreement was entered into between one of the
Group's subsidiaries and the District of Columbia ('District'),
pursuant to which the District agreed to provide certain funds to
the subsidiary out of the net proceeds obtained through the
issuance and sale of certain tax increment financing bonds ('TIF
Bonds') for the development and construction of Mandarin Oriental,
Washington D.C.
The District agreed to contribute to the subsidiary US$33.0
million through the issuance of TIF Bonds in addition to US$1.7
million issued in the form of a loan, bearing simple interest at an
annual rate of 6.0%. The US$1.7 million loan plus all accrued
interest will be due on the earlier of 10th April 2017 or the date
of the first sale of the hotel.
The receipt of the TIF Bonds has been treated as a government
grant and netted off against the net book value in respect of the
property (refer note 8). The loan of US$1.7 million (2013: US$1.7
million) is included in long-term borrowings (refer note 9).
11. Acquisition of Paris freehold interest
On 8th February 2013, the Group completed the acquisition of the
freehold interest in the building housing Mandarin Oriental, Paris
and two prime street-front retail units from Société Foncière
Lyonnaise for EUR290.0 million (US$388.9 million). The Group had
paid EUR10.0 million (US$13.1 million) advance deposit in late
2012; and the remaining balance together with transaction expenses
of US$5.9 million was paid in 2013.
The acquisition was partly funded by new five-year EUR150.0
million (US$201.1 million) debt facilities, with the balance from
the Group's cash reserves.
Pursuant to this acquisition, gains totalling US$7.5 million
were recognized in the profit and loss account in February 2013.
These included an exchange gain arising on acquisition (US$1.9
million), the capitalization of acquisition costs (US$1.5 million),
as well as the release of lease accrual of EUR3.1 million (US$4.1
million) as the hotel operation was previously a leasehold tenant
of the freehold interest acquired.
12. DIVIDENDS
2014 2013
US$m US$m
Final dividend in respect of 2013
of USc5.00
(2012: USc5.00) per share 50.1 50.1
Interim dividend in respect of
2014 of USc2.00
(2013: USc2.00) per share 20.1 20.1
----- -----
70.2 70.2
----- -----
A final dividend in respect of 2014 of USc5.00 (2013: USc5.00)
per share amounting to a total of US$50.2 million (2013: US$50.1
million) is proposed by the Board. The dividend proposed will not
be accounted for until it has been approved at the Annual General
Meeting. The amount will be accounted for as an appropriation of
revenue reserves in the year ending 31st December 2015.
13. 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$14.3 million (2013: US$15.2 million) received from the Group's
five (2013: five) associate 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 current financial year.
14. MUNICH EXPANSION
On 26th March 2014, the Group announced that it had entered into
an agreement with a developer for the expansion of Mandarin
Oriental, Munich. The expansion will include new hotel rooms and
facilities as part of a mixed-used complex estimated to open in
2021. The Group's total investment in the project, which will also
include a refurbishment of the existing hotel's 73 rooms, is
estimated at EUR124 million (US$150 million) in today's terms. As
at 31st December 2014, cumulative costs paid by the Group in
relation to the expansion project amounted to US$16.9 million, the
majority of which have been included within Other Debtors pending
transfer of title in the underlying land.
15. Post balance sheet events
Subsequent to the year end, the Group announced that it will
invest GBP85 million (US$130 million) to renovate Mandarin Oriental
Hyde Park, London. The project will commence in 2016 and take
approximately 18 months to complete. The hotel will remain open
during the renovation period with reduced facilities and room
inventory.
In addition, the Group has announced its intention to raise
US$316 million through a 1 for 4 rights issue of new ordinary
shares. The proceed of the rights issue will be used to pay down
debt, thereby providing the Group with the capacity to finance the
renovation of the London hotel and make further investments in line
with its development strategy. Jardine Strategic Holdings Limited,
the Company's principal shareholder, has committed to take up its
entitlement and fully underwrite the offer.
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and
internal control. The process by which the Group identifies and
manages risk will be set out in more detail in the Corporate
Governance section of the Company's 2014 Annual Report (the
'Report'). The following are the principal risks and uncertainties
facing the Company as required to be disclosed pursuant to the
Disclosure and Transparency Rules issued by the Financial Conduct
Authority in the United Kingdom and are in addition to the matters
referred to in the Chairman's Statement and Group Chief Executive's
Review.
1. Economic and Financial Risk
The Group's business is exposed to the risk of negative
developments in global and regional economies and financial
markets, either directly or through the impact on the Group's
investment partners, third-party hotel owners and developers,
bankers, suppliers or customers. These developments can result in
recession, inflation, deflation, currency fluctuations,
restrictions in the availability of credit, business failures, or
increases in financing costs. Such developments may increase
operating costs, reduce revenues, lower asset values or result in
the Group being unable to meet in full its strategic objectives.
These developments could also adversely affect travel patterns
which would impact demand for the Group's products and
services.
The steps taken by the Group to manage its exposure to financial
risk will be set out in the Financial Risk Management section in
the Financial Statements in the Report.
2. Commercial and Market Risk
Risks are an integral part of normal commercial practices, and
where practicable steps are taken to mitigate such risks.
The Group operates within the global hotel industry which is
highly competitive. Failure to compete effectively in terms of
quality of product, levels of service or price can have an adverse
effect on earnings. Significant pressure from competition or the
oversupply of hotel rooms in any given market may also lead to
reduced margins.
The Group competes with other luxury hotel operators for new
opportunities in the areas of hotel management, residences
management and residences branding. Failure to establish and
maintain relationships with hotel owners or developers could
adversely affect the Group's business. The Group also makes
investment decisions in respect of acquiring new hotel properties.
The success of these investments is measured over the longer term
and as a result is subject to market risk.
Mandarin Oriental's continued growth depends on the opening of
new hotels and branded residences. Most of the Group's new
developments are controlled by third party owners and developers
and can be subject to delays due to issues attributable to planning
and construction, sourcing of finance, and the sale of residential
units. In extreme circumstances, such factors might lead to the
cancellation of a project.
3. Pandemic, Terrorism and Natural Disasters
The Group's business would be impacted by a global or regional
pandemic as this would impact travel patterns, demand for the
Group's products and services and could also affect the Group's
ability to operate effectively. The Group's hotels are also
vulnerable to the effects of terrorism, either directly through the
impact of an act of terrorism or indirectly through the impact of
generally reduced economic activity in response to the threat of or
an actual act of terrorism. In addition, a number of the
territories in which the Group operates can experience from time to
time natural disasters such as typhoons, floods, earthquakes and
tsunamis.
4. Key Agreements
The Group's business is reliant upon joint venture and
partnership agreements, property leasehold arrangements,
management, license, branding and services agreements or other key
contracts. Cancellation, expiry or termination, or the
renegotiation of any of these key agreements and contracts, could
have an adverse effect on the financial performance of individual
hotels as well as the wider Group.
5. Intellectual Property and Value of the Brand
Brand recognition is important to the success of the Group and
significant resources have been invested in protecting its
intellectual property in the form of trade marks, logos and domain
names. Any material act or omission by any person working for or
representing the Group's operations which is contrary to its
standards could impair Mandarin Oriental's reputation and the
equity value of the brand, as could any negative publicity
regarding the Group's product or services.
6. Regulatory and Political Risk
The Group's business is subject to a number of regulatory
environments in the territories in which it operates. Changes in
the regulatory approach to such matters as employment legislation,
tax rules, foreign ownership of assets, planning controls and
exchange controls have the potential to impact the operations and
profitability of the Group's business. Changes in the political
environment, including prolonged civil unrest, could also affect
the Group's business.
Mandarin Oriental International Limited
Responsibility Statement
The Directors of the Company confirm to the best of their
knowledge that:
(a) the consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations
adopted by the International Accounting Standards Board; and
(b) the sections of the Company's 2014 Annual Report, including
the Chairman's Statement, Group Chief Executive's Review and
Principal Risks and Uncertainties, which constitute the management
report include a fair review of all information required to be
disclosed by the Disclosure and Transparency Rules 4.1.8 to 4.1.11
issued by the Financial Conduct Authority in the United
Kingdom.
For and on behalf of the Board
Edouard Ettedgui
Stuart Dickie
Directors
The final dividend of USc5.00 per share will
be payable on 13th May 2015, subject to approval
at the Annual General Meeting to be held on
6th May 2015, to shareholders on the register
of members at the close of business on 20th
March 2015. The shares will be quoted ex-dividend
on the Singapore Exchange and the London Stock
Exchange on 18th and 19th March 2015, respectively.
The share registers will be closed from 23rd
to 27th March 2015, inclusive.
Shareholders will receive their dividends in
United States dollars, unless they are registered
on the Jersey branch register where they will
have the option to elect for sterling. These
shareholders may make new currency elections
for the 2014 final dividend by notifying the
United Kingdom transfer agent in writing by
24th April 2015. The sterling equivalent of
dividends declared in United States dollars
will be calculated by reference to a rate prevailing
on 29th April 2015. Shareholders holding their
shares through The Central Depository (Pte)
Limited ('CDP') in Singapore will receive 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 20th
March 2015, must submit the relevant documents
to M & C Services Private Limited, the Singapore
branch registrar, no later than 5.00 p.m. (local
time) on 19th March 2015.
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 a well-respected Asian hotel company into
a global brand, the Group now operates, or has under development,
44 hotels representing almost 11,000 rooms in 24 countries, with 20
hotels in Asia, ten in The Americas and 14 in Europe, Middle East
and North Africa. In addition, the Group operates, or has under
development, 15 Residences at Mandarin Oriental connected to its
properties. The Group has equity interests in a number of its
properties and adjusted net assets worth approximately US$3.2
billion as at 31st December 2014.
Mandarin Oriental's aim is to be recognized widely as the best
global luxury hotel group, providing 21st century luxury with
oriental charm in each of its hotels. This will be achieved by
investing in the Group's exceptional facilities and its people,
while maximizing profitability and long-term shareholder value. The
Group regularly receives recognition and awards for outstanding
service and quality management. The strategy of the Group is to
open the hotels currently under development, while continuing to
seek further selective opportunities for expansion around the
world.
The parent company, Mandarin Oriental International Limited, is
incorporated in Bermuda and has a standard listing on the London
Stock Exchange as its primary listing, 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
Edouard Ettedgui / Stuart Dickie (852) 2895 9288
Jill Kluge / Sally de Souza (852) 2895 9167
Brunswick Group Limited
Vanessa Gourlay (852) 3512 5079
Full text of the Preliminary Announcement of Results and the
Preliminary Financial Statements for the year ended 31st December
2014 can be accessed through the internet at
'www.mandarinoriental.com'.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGGFZFLGKZM
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