TIDMMDO TIDMJDS TIDMJAR
RNS Number : 3449R
Mandarin Oriental International Ltd
28 February 2019
To: Business Editor 28th February 2019
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
2018 PRELIMINARY ANNOUNCEMENT OF RESULTS
Highlights
-- 19% increase in underlying profit
-- Group to redevelop The Excelsior, Hong Kong as a commercial building
-- Mandarin Oriental Hyde Park, London to fully re-open in April 2019
-- Seven new management contracts signed
"The outlook for 2019 remains positive. The planned closure of
The Excelsior for redevelopment in March 2019, however, will
substantially reduce the Group's underlying profit. Results will
benefit from the full opening in the spring of the newly renovated
London hotel, partially offset by the impact of the renovations in
Bangkok and Madrid. These major investments, together with the
Group's pipeline of new hotels under development, will position the
Group for long-term growth."
Ben Keswick
Chairman
Results
Year ended 31st December
2018 2017 Change
US$m US$m %
Combined total revenue of hotels under
management(1) 1,397.6 1,380.4 +1
Underlying EBITDA (Earnings before interest,
tax,
depreciation and amortization)(2) 179.1 157.9 +13
Underlying profit attributable to shareholders(3) 65.1 54.9 +19
Profit attributable to shareholders 43.6 54.9 -21
USc USc %
------- -------
Underlying earnings per share(3) 5.16 4.37 +18
Earnings per share 3.46 4.37 -21
Dividends per share 3.00 3.00 -
US$ US$ %
------- -------
Net asset value per share 0.98 1.01 -3
Adjusted net asset value per share(4) 4.62 4.57 +1
Net debt/shareholders' funds 23% 26%
Net debt/adjusted shareholders' funds(4) 5% 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 31 to
the 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) 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 amortised cost.
The final dividend of USc1.50 per share will be payable on 15th
May 2019, subject to approval at the Annual General Meeting to be
held on 8th May 2019, to shareholders on the register of members at
the close of business on 15th March 2019.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEARED 31ST DECEMBER 2018
OVERVIEW
Underlying profit for the year was 19% higher than the prior
year due to generally improved trading across the portfolio, with
particularly strong performances from the Group's owned properties
in Hong Kong and its Singapore hotel. Results also benefited from
the receipt of one-off fees in respect of Las Vegas and Atlanta.
The impact of the fire in London in June 2018 was mitigated by
insurance proceeds.
During the year, the Group completed its review of strategic
options for The Excelsior, Hong Kong and announced that the site
will be redeveloped as a commercial building, with the project
expected to complete in 2025. The hotel will close on 31st March
2019.
PERFORMANCE
Underlying earnings before interest, tax, depreciation and
amortisation were higher at US$179 million, compared to US$158
million in 2017. The Group's underlying profit increased to US$65
million, from US$55 million in 2017 with underlying earnings per
share at USc5.16, compared with USc4.37 in 2017. After taking into
account a net non-trading loss primarily relating to accelerated
asset write-downs due to the planned closure of The Excelsior,
profit attributable to shareholders was US$44 million. This
compares with US$55 million in 2017, which included no non-trading
items.
Following an independent valuation of the Group's owned
properties, the adjusted net asset value per share was US$4.62 at
31st December 2018, compared with US$4.57 per share at the end of
2017.
The Directors recommend a final dividend of USc1.50 per share.
This, together with the interim dividend of USc1.50 per share, will
make a total annual dividend of USc3.00 per share, unchanged from
2017.
At 31st December 2018, the Group's net debt was US$285 million,
compared to US$327 million at the end of 2017. Gearing as a
percentage of adjusted shareholders' funds at 31st December 2018,
after taking into account the market value of the Group's property
interests, was 5% compared to 6% at the end of 2017.
THE YEAR IN REVIEW
In Asia, results across the region were generally higher. The
Group's two wholly-owned hotels in Hong Kong performed well, with a
record year for Mandarin Oriental, Hong Kong. The Singapore hotel
also had a very strong year while Jakarta showed notable
improvement.
In Europe, the Paris hotel delivered a better performance,
although results during the final quarter of the year were affected
by demonstrations in the city. Following the fire in June 2018
repairs at Mandarin Oriental Hyde Park, London are progressing
well, and the hotel re-opened its public areas and facilities on
4th December 2018. All guestrooms are scheduled to re-open in April
2019. The hotel's 2018 results include interim cash payments
received during 2018 from insurers, which have financed the
replacement of fixed assets and provided some compensation for the
loss of profits, as the hotel was originally due to fully open in
mid-2018, following the completion of its 22-month renovation
programme. Discussions on both property damage and business
interruption claims with the Group's insurers are expected to be
concluded in 2019. Elsewhere, results in Munich and Geneva were
weaker while Hotel Ritz, Madrid closed in February 2018 for
restoration. It is expected to re-open in 2020.
In America, the performance of the Washington D.C. hotel was
slightly lower than the prior year, when it benefited from the
Presidential Inauguration, but overall results for the region were
broadly in-line with 2017. Termination fees were received in
respect of the hotels in Las Vegas and Atlanta which the Group
ceased to manage following a change in the ownership of each
property.
STRATEGIC REVIEW OF THE EXCELSIOR, HONG KONG
On 9th October 2018, the Group announced that The Excelsior,
Hong Kong will close on 31st March 2019 in order for the site to be
redeveloped as a commercial building. The decision to close the
hotel follows a review of the strategic options for the site. While
the Group's underlying profit will be adversely affected until the
site re-opens as a commercial building (The Excelsior contributed
US$24 million to underlying profit in 2018), the decision to close
the hotel reflects strong commercial property values in Hong Kong
and the expected higher yield associated with a commercial building
at a time when the hotel requires significant investment. The
redevelopment is expected to take up to six years to complete and
to cost some US$650 million.
Upon closure, the Group will be required to recognise a one-time
accounting valuation gain associated with reclassifying the asset
as a commercial investment property on its balance sheet. Based on
current market conditions, this gain is estimated to be some US$2.9
billion and will be reflected in the Group's 2019 results. In 2019,
the Group will also recognise estimated non-trading costs of some
US$30 million, primarily relating to the balance of accelerated
asset write-downs.
BUSINESS DEVELOPMENTS
Seven new management contracts were signed and announced in 2018
while the Group's management of two hotels ceased. New Mandarin
Oriental hotels are scheduled to open in Ho Chi Minh City, Grand
Cayman, Moscow, Muscat and Phuket over the next five years. In
Barcelona, a standalone branded Residences by Mandarin Oriental is
scheduled to open in 2020. During the course of 2018, the Group
also took over the management of a luxury resort on Lake Como in
northern Italy. In 2019, the Group recently opened its first two
hotels in the Middle East, in Dubai and Doha, and also announced an
agreement to brand and manage Mandarin Oriental Residences at 685
Fifth Avenue in New York, scheduled to open in 2021.
The Group expects to open its first property in Beijing,
Mandarin Oriental Wangfujing, in the coming weeks as well as
potentially a second in Beijing in the next 12 months. Mandarin
Oriental, Bangkok, in which the Group has a 48% interest, will
partially close in March 2019 for a ten-month US$60 million
renovation.
PEOPLE
On behalf of the Directors, I would like to thank colleagues
throughout the Group for their contribution during the year which
has made the exceptional experiences we provide to our guests
possible.
Dr Richard Lee and Lord Powell stepped down as Directors on 9th
May 2018, and Sir Henry Keswick retired from the Board on 31st
December 2018. We would like to record our gratitude to all of them
for their significant contributions to the Group over many years.
We were pleased to welcome Jack Yilun Chen to the Board in May
2018.
Stuart Dickie stepped down as Chief Financial Officer on 31st
October 2018 and was succeeded by Craig Beattie. We would like to
thank Stuart for his contribution to the Company.
OUTLOOK
The outlook for 2019 remains positive. The planned closure of
The Excelsior for redevelopment in March 2019, however, will
substantially reduce the Group's underlying profit. Results will
benefit from the full opening in the spring of the newly renovated
London hotel, partially offset by the impact of the renovations in
Bangkok and Madrid. These major investments, together with the
Group's pipeline of new hotels under development, will position the
Group for long-term growth.
Ben Keswick
Chairman
GROUP CHIEF EXECUTIVE'S REVIEW
The Group's overall performance in 2018 was pleasing and
stronger financial performance was accompanied by significant
progress in a number of areas. Almost all of the Group's hotels had
a better year in terms of Revenue Per Available Room ('RevPAR') and
RevPAR for the Group increased by 9% in US dollar terms on a
like-for-like basis(1) . Similarly, underlying EBITDA(2) improved
by 13% over the prior year, led by better performances in our
wholly-owned Hong Kong properties, Singapore and Paris. Spirits
were temporarily dampened by the fire at the Group's London
property and our London colleagues deserve special mention for
their response to the crisis. The hotel is on schedule to re-open
fully in April 2019. The restoration of Madrid, though delayed, is
progressing and the Group has also announced a major renovation in
Bangkok for 2019.
During the year the Group completed its review of long-term
strategic options for The Excelsior hotel in Hong Kong. The hotel
will close on 31st March 2019 to enable the Group to redevelop the
site as a commercial building. We were also excited to launch our
unique guest recognition programme, Fans of M.O., which is designed
to elevate guests' experience and recognition. The growth of our
development pipeline continued, with seven new projects announced
during the year.
There are promising long-term prospects for growth in the luxury
travel industry. In particular, experiential luxury is expected to
account for an increasing portion of the luxury travel market and
the Group will benefit from this evolution. Competition is,
however, ever-present and growing more intense as global high net
worth luxury travellers look for unique and memorable experiences.
Luxury travellers continue to have a wealth of options to choose
from, provided by both traditional luxury hotel operators and
alternative accommodation facilities. We also expect to see a
growing competitive threat from non-traditional competitors, such
as large multi-brand hotel conglomerates and broader luxury brand
companies. As in other industries, technology will be an ongoing
area of focus, particularly as hotel operators look to identify
which technologies will last and truly make a material difference
for guests. We are also ever alert to the economic and political
developments which are creating uncertainty in a number of the
markets in which the Group operates.
(1) The like-for-like comparison includes all hotels that were
operational for the entire year of both 2017 and 2018. Mandarin
Oriental Hyde Park, London is included up until the hotel closed
following the fire on 6th June 2018. All references to RevPAR
are in US dollar terms, unless stated otherwise.
((2) () The Group uses earnings before interest, tax, depreciation
and amortisation ('EBITDA') to analyse operating performance.
STRATEGY
In the context of the evolving market environment, Mandarin
Oriental's consistent vision - to be recognised as the world's best
luxury hotel group - remains paramount. Throughout the
organisation, this vision is passionately embraced by all of our
12,000 colleagues and keeps us focused on what we do best. This
consistency, I believe, also positions the Group well for growth.
Having expanded from our Asian roots into a global brand, we
currently operate 32 hotels and six residences in 23 countries and
territories. The Group holds equity interests in many of its hotels
and also manages hotels on behalf of third party owners.
Expanding the Mandarin Oriental portfolio is a key priority over
the coming years. Since its establishment, the Group has carefully
and consistently invested in the brand so that today it is
recognised around the world. The modest size of our portfolio
belies the global reputation the brand enjoys and the continuing
strong interest in the brand from owners and developers. This
provides the Group with a broad platform for growth, in both
existing and new markets. While for various reasons properties may
from time to time fall out of the portfolio or pipeline, our target
is consistently to grow the overall Mandarin Oriental portfolio by
three properties each year. The starting point for growth is to
build a stronger pipeline of openings and we have successfully
executed this over the past two years by announcing 13 new
management agreements. Growth through management agreements is an
important part of the Group's strategy and the management business
is therefore likely to account for an increasing proportion of the
Mandarin Oriental portfolio.
Nonetheless, owned assets remain at the heart of the Group's
portfolio and if we are to sustain our market position, it is
crucial that we re-invest appropriately in these owned properties.
Recent and ongoing renovations include Tokyo, Kuala Lumpur, London,
Madrid and, in 2019, Bangkok. Mandarin Oriental's strong balance
sheet makes it well placed to fund these renovations, while
providing the means to consider selective investment opportunities
in strategic destinations that have long-term asset value growth
potential.
With many of its properties located at the heart of business
districts, corporate business remains significant for us. However,
leisure travel is an increasingly important segment and our hotels
are adapting to offer a broader range of luxury leisure
experiences. We would also like to build on our reputation as an
operator of resort properties and new development announcements in
locations such as Phuket and Lake Como will help.
At the same time, new trends in luxury travel are constantly
emerging and our guests are increasingly multi-generational, so we
must ensure that we are in a position to benefit from these new
opportunities. Fans of M.O., our unique guest recognition programme
launched in 2018, will allow us to forge deeper and more meaningful
relationships with all our guests and help us ensure that we
continue to delight during each and every stay.
A significant component of the luxury hospitality business today
is the branding and management of residential developments. The
majority of the Group's recently announced developments incorporate
a residential component.
The Group remains focused on ensuring that its hotels are
positioned amongst the leaders in their individual markets. These
leadership positions are developed by our differentiated approach
to curating the very best luxury hospitality experiences: we
continually invest and innovate in the core brand attributes of
exceptional design and architecture, restaurant and bar concepts
and spa and wellness facilities, all of which are underpinned by
intuitive personalised service. I believe this will help us
maintain a 'luxury edge' over our competitors.
The Group's global reputation continues to be reflected in
numerous awards from respected associations - Group restaurant
outlets across the portfolio currently hold 23 Michelin stars, more
than any other hotel brand in the world.
As the Group's global reach grows, so too does its
responsibility towards the communities in which it is present and
its need to drive sustainability in how it operates. Corporate
responsibility values are deeply engrained in Mandarin Oriental's
heritage. The Group focuses its sustainability efforts around the
United Nations Sustainable Development Goals and our 2020 vision
clearly sets out the measurable near-term priorities.
2018 PERFORMANCE
Underlying EBITDA was US$179 million in 2018, compared to US$158
million in 2017, as the majority of the Group's owned properties
delivered better results. Underlying profit was US$65 million in
2018, compared to US$55 million in 2017.
Turning to the RevPAR performance for the portfolio,
highlighting the Group's owned hotels in particular:
In Asia, RevPAR was up 9% overall in 2018 on a like-for-like
basis, as demand trends improved generally across the region.
Several properties delivered double-digit RevPAR growth.
Mandarin Oriental, Hong Kong achieved a 12% increase in RevPAR
over the previous year. This was one of the best RevPAR results the
hotel has achieved in recent years, spurred by continued
improvement in the overall demand conditions in Hong Kong. With
corporate demand broadly stable, higher leisure demand was a major
contributing factor to the improved performance. However, it is
worth noting that the hotel's competitors are likely to have
experienced similarly positive trends through 2018.
The Excelsior, Hong Kong also benefited from improved city-wide
demand, with increased occupancy and Average Daily Rates ('ADR')
leading to an 11% uplift in RevPAR. On 9th October 2018, the Group
announced that The Excelsior, Hong Kong will close on 31st March
2019 in order for the site to be redeveloped as a commercial
building. The Excelsior has always been an important and much-loved
hotel in the Group's portfolio and the extraordinary service
provided by our loyal colleagues through the years will always be
remembered. While this was not an easy decision, it was the right
one and reflects the ageing of the current building, the
opportunity to realise unutilised gross floor area and the strong
commercial property values in Hong Kong, with their higher
commensurate yield. The Group is committed to ensuring that all
Excelsior colleagues are treated fairly.
In Jakarta, the Group's hotel had a much improved year, with
RevPAR growth of 9%. This was driven by substantially better
occupancy levels, although there continues to be pressure on
average rates in the city. In Tokyo, higher average rates helped
increase RevPAR by 4%.
Singapore had one of its best performances in recent years,
while Bangkok and Kuala Lumpur also performed well. Singapore and
Kuala Lumpur both delivered double-digit growth in RevPAR. A major
renovation is scheduled to begin at Mandarin Oriental, Bangkok in
March 2019 and will complete in December 2019. While the River Wing
building will be closed during the renovation period, the Authors'
and Garden Wings will remain open. The renovation will ensure that
Mandarin Oriental, Bangkok retains its long-standing reputation as
the leading hotel in the city.
In Europe, while there were mixed performances at individual
hotels, a substantial improvement in a handful of hotels led to an
overall RevPAR increase of 14% on a like-for-like basis.
Prior to the fire on 6th June 2018, results for the year in
London benefited from the completion of the new Knightsbridge wing
rooms in September 2017, leading to RevPAR growth of 28%. I have
been extremely proud of the response from all of our colleagues in
London - during the closure, the FANtastic London community
initiative has contributed over 40,000 hours of our colleagues'
time and passion to community work in London. We are also grateful
to the emergency services for their part in ensuring the safety of
guests and staff during the incident. In December 2018, the hotel
re-opened its dining, entertaining and spa facilities and the
guestrooms and suites will follow in the spring of 2019. We are all
looking forward to the full re-opening of this iconic hotel in
London and I am confident that the hotel will soon re-establish its
position as a leader in luxury hospitality in the city.
The Group's properties in Munich and Geneva both had a
relatively flat year in terms of RevPAR, affected by a decline in
Middle East business and generally softer demand from the group
segment. These challenging market conditions are expected to
persist in 2019. Meanwhile, Hotel Ritz, Madrid remains closed for
restoration. Due to a construction accident, the work has been
delayed by some months and the hotel is now expected to re-open in
2020.
The Group's hotels in America performed better than 2017, with
RevPAR for the region up 4% on a like-for-like basis. New York and
Miami both performed well, increasing RevPAR by 6%, primarily
driven by improved ADR. Washington D.C. had a tougher year as its
performance in 2017 had benefited from the Presidential
Inauguration, while Boston's performance was slightly better
compared to the previous year.
BUSINESS DEVELOPMENTS
The Group has 15 hotels and 12 residences under development
which are likely to become operational within five years. All are
management contracts with no equity participation, but we continue
to look at investing in properties on an exceptional basis where
they are felt to be strategic to our long-term positioning. The
Group is focused on building its portfolio in major global city
centre locations where the brand is currently absent, on developing
a strong resort portfolio and on reinforcing the Group's position
in existing markets by expanding its presence with new
properties.
Seven new management contracts were announced in 2018 as
follows:
- Standalone residences in Barcelona, Spain
- Resort and residences in Muscat, Oman
- A hotel in Ho Chi Minh City, Vietnam
- Resort and residences in Grand Cayman, Cayman Islands
- A re-branding in Lake Como, Italy
- Hotel and residences in Moscow, Russia
- A resort in Phuket, Thailand
These announcements exemplify both the growth opportunities and
the strategy that I have outlined with regards to development. Six
of the developments are in cities that are new to Mandarin Oriental
while four - Grand Cayman, Ho Chi Minh City, Muscat and Moscow -
will be the first Mandarin Oriental hotels in their respective
territories. Four of the developments - Grand Cayman, Lake Como,
Muscat and Phuket - are resorts, reflecting our aim to build our
reputation as operators of world-class luxury resorts. Several of
the developments also include a Residences component.
In the second half of 2018, we were disappointed to cease
management of the Group's properties in Las Vegas and Atlanta
following a change in ownership of both properties. In addition,
our previously announced project in Melbourne is now on hold. The
cessation of property management arrangements and setbacks to
announced new developments can sometimes happen - that is why it is
so critical that we build a strong and purposeful pipeline of new
developments.
In 2019, we have already announced a new Mandarin Oriental
Residences at 685 Fifth Avenue in New York and I expect the
momentum in making additions to the Group's development pipeline to
continue. I also look forward to the opening of new hotels within
the portfolio. We recently opened our first two properties in the
Middle East, in Dubai and Doha. We also will open at least one
property in Beijing.
STRUCTURE
2018 was a year of transition for the Group's structure. We
appointed a Chief Operating Officer, responsible for all operating
hotels, and a Chief Relationship Officer, responsible for key owner
relationships as well as the development of new properties. We have
strengthened the Group's management structure further through the
promotion of several General Managers to Area Vice Presidents, who
will take on responsibility for a group of hotels and report to the
Chief Operating Officer. Through the Chief Relationship Officer,
our pre-opening teams have been reorganised and streamlined, which
I believe has prepared us better than ever for the many upcoming
new hotel openings. In addition, we combined the roles of Chief
Marketing Officer and Group Director of Brand Communications to
drive a more unified approach to sales, marketing, branding and
communications.
CULTURE
At the heart of Mandarin Oriental's reputation as a luxury hotel
group is its culture, derived from its oriental heritage and an
unwavering focus on exceptional service that delivers personal
experiences and moments of delight. Our vision - to be recognised
as the world's best luxury hotel group - is something that can only
be achieved through our people. I am consistently impressed by the
commitment of our colleagues to delivering exemplary service and
the growing culture of innovation as our people seek to provide
points of differentiation and exceptional experiences. I would like
to thank each and every one of my 12,000 colleagues for their
dedication, ambition and loyalty as we all strive to achieve this
vision.
THE YEAR AHEAD
2019 is set to be another very busy year for the Group. We
expect to open at least four new properties, re-open the London
hotel, progress the major renovation in Madrid and complete a
renovation in Bangkok, and begin the redevelopment of the site
occupied by The Excelsior in Hong Kong. Our development pipeline
remains a priority and I am confident that we will maintain the
recent momentum and announce several new projects. Many of the
Group's properties had a good operating performance in 2018 and we
will look to sustain that in 2019, albeit in the context of
continuing economic and political uncertainties which will create
challenging conditions in many of our markets. Earnings will be
substantially impacted by the closure of The Excelsior, Hong Kong.
The renovations in Madrid and Bangkok will also have an impact,
although results will benefit from the re-opening of London. With
all of this I feel that we are building a very strong platform from
which to deliver meaningful growth over the long-term.
James Riley
Group Chief Executive
Mandarin Oriental International Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2018
2018 2017
Underlying Non-trading Underlying Non-trading
business items business items
performance (note 7) Total performance (note 7) Total
US$m US$m US$m US$m US$m US$m
Revenue (note 2) 613.7 - 613.7 610.8 - 610.8
Cost of sales (389.1) - (389.1) (389.7) - (389.7)
------- -------
Gross profit 224.6 - 224.6 221.1 - 221.1
Selling and
distribution
costs (42.4) - (42.4) (38.2) - (38.2)
Administration
expenses (122.2) - (122.2) (113.9) - (113.9)
Other operating
income/(expense) 30.6 (21.0) 9.6 - - -
------- ----------- ------- ----------- ----------- -------
Operating profit
(note
3) 90.6 (21.0) 69.6 69.0 - 69.0
Financing charges (15.1) - (15.1) (12.3) - (12.3)
Interest income 2.2 - 2.2 1.3 - 1.3
Net financing
charges (12.9) - (12.9) (11.0) - (11.0)
Share of results
of
associates
and joint
ventures
(note 4) 5.8 - 5.8 11.5 - 11.5
Profit before tax 83.5 (21.0) 62.5 69.5 - 69.5
Tax (note 5) (18.6) (0.5) (19.1) (15.0) - (15.0)
------- ----------- ------- ----------- ----------- -------
Profit after tax 64.9 (21.5) 43.4 54.5 - 54.5
------- ----------- ------- ----------- ----------- -------
Attributable to:
Shareholders of
the
Company 65.1 (21.5) 43.6 54.9 - 54.9
Non-controlling
interests (0.2) - (0.2) (0.4) - (0.4)
------- ----------- ------- ----------- ----------- -------
64.9 (21.5) 43.4 54.5 - 54.5
------- ----------- ------- ----------- ----------- -------
USc USc USc USc
Earnings per
share (note
6)
- basic 5.16 3.46 4.37 4.37
- diluted 5.15 3.45 4.35 4.35
------- ------- ----------- -------
Mandarin Oriental International Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2018
2018 US$m 2017
US$m
Profit for the year 43.4 54.5
Other comprehensive (expense)/income
Items that will not be reclassified to profit
or loss:
--------- -----
Remeasurements of defined benefit plans (3.0) 7.7
Tax on items that will not be reclassified 0.5 (1.2)
(2.5) 6.5
Items that may be reclassified subsequently
to profit or loss:
--------- -----
Net exchange translation differences
* net (losses)/gains arising during the year (39.7) 87.1
Cash flow hedges
- net gains arising during the year 0.6 0.8
Tax relating to items that may be reclassified (0.1) (0.2)
Share of other comprehensive (expense)/income
of associates
and joint ventures (1.8) 8.4
(41.0) 96.1
Other comprehensive (expense)/income for
the year, net of tax (43.5) 102.6
--------- -----
Total comprehensive (expense)/income for
the year (0.1) 157.1
--------- -----
Attributable to:
Shareholders of the Company 0.2 157.3
Non-controlling interests (0.3) (0.2)
--------- -----
(0.1) 157.1
--------- -----
Mandarin Oriental International Limited
Consolidated Balance Sheet
at 31st December 2018
2018 2017
US$m US$m
Net assets
Intangible assets 53.0 47.7
Tangible assets (note 8) 1,386.5 1,453.2
Associates and joint ventures 197.1 196.6
Other investments 15.2 11.0
Deferred tax assets 11.4 11.0
Pension assets 0.2 4.9
Non-current debtors 5.1 0.5
------- -------
Non-current assets 1,668.5 1,724.9
Stocks 6.6 6.4
Current debtors 95.9 100.2
Current tax assets 3.5 4.0
Bank and cash balances 246.8 183.9
------- -------
Current assets 352.8 294.5
------- -------
Current creditors (170.8) (151.4)
Current borrowings (note 9) (524.2) (2.6)
Current tax liabilities (14.0) (17.8)
------- -------
Current liabilities (709.0) (171.8)
------- -------
Net current (liabilities)/assets (356.2) 122.7
Long-term borrowings (note 9) (7.3) (508.1)
Deferred tax liabilities (61.6) (58.6)
Pension liabilities (0.4) (0.6)
Non-current creditors - (0.2)
------- -------
1,243.0 1,280.1
------- -------
Total equity
Share capital 63.1 62.9
Share premium 497.8 493.9
Revenue and other reserves 678.3 717.2
------- -------
Shareholders' funds 1,239.2 1,274.0
Non-controlling interests 3.8 6.1
------- -------
1,243.0 1,280.1
------- -------
Mandarin Oriental International Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2018
Attributable
to Attributable
shareholders to non-
Share Share Capital Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
2018
At 1st January 62.9 493.9 265.9 526.5 0.1 (75.3) 1,274.0 6.1 1,280.1
Total
comprehensive
income - - - 41.0 0.5 (41.3) 0.2 (0.3) (0.1)
Dividends paid
by the Company - - - (37.8) - - (37.8) - (37.8)
Issue of shares 0.2 0.1 - - - - 0.3 - 0.3
Share-based
long-term
incentive
plans - - 0.5 - - - 0.5 - 0.5
Change in
interest in a
subsidiary - - - 2.0 - - 2.0 (2.0) -
Transfer - 3.8 (3.9) 0.1 - - - - -
------- ------- -------- -------- -------- -------- ------------ ------------- -------
At 31st
December 63.1 497.8 262.5 531.8 0.6 (116.6) 1,239.2 3.8 1,243.0
2017
At 1st January 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 62.9 493.9 265.9 526.5 0.1 (75.3) 1,274.0 6.1 1,280.1
------- ------- -------- -------- -------- -------- ------------ ------------- -------
Total comprehensive income included in revenue reserves
comprises profit attributable to shareholders of the Company of
US$43.6 million (2017: US$54.9 million) and net actuarial loss on
employee defined benefit plans of US$2.6 million (2017: net
actuarial gain of US$6.4 million).
Mandarin Oriental International Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2018
2018 2017
US$m US$m
Operating activities
------ -------
Operating profit (note 3) 69.6 69.0
Depreciation 81.6 56.7
Amortisation of intangible assets 4.9 2.1
Other non-cash items (4.0) 0.2
Movements in working capital 17.5 9.6
Interest received 1.9 1.3
Interest and other financing charges paid (14.4) (12.3)
Tax paid (18.8) (13.3)
------ -------
138.3 113.3
Dividends and interest from associates and
joint ventures 7.8 6.6
Cash flows from operating activities 146.1 119.9
Investing activities
------ -------
Purchase of tangible assets (61.2) (82.6)
Purchase of intangible assets (7.4) (5.7)
Payment on Munich expansion - (3.1)
Purchase of other investments (1.1) (0.9)
Advance to associates and joint ventures (9.1) (11.4)
Repayment of loans to associates and joint
ventures 1.2 1.3
Repayment of intangible assets 0.8 -
Sale of other investments - 0.4
Insurance recovery received for purchase
of tangible assets (note 11) 7.8 -
Cash flows from investing activities (69.0) (102.0)
Financing activities
------ -------
Issue of shares 0.1 0.6
Drawdown of borrowings 27.6 30.8
Repayment of borrowings (0.2) (2.5)
Dividends paid by the Company (note 12) (37.8) (50.3)
Cash flows from financing activities (10.3) (21.4)
------ -------
Net increase/(decrease) in cash and cash
equivalents 66.8 (3.5)
Cash and cash equivalents at 1st January 183.9 182.5
Effect of exchange rate changes (3.9) 4.9
------ -------
Cash and cash equivalents at 31st December 246.8 183.9
------ -------
Mandarin Oriental International Limited
Notes
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information contained in this announcement has
been based on the audited results for the year ended 31st December
2018 which have been prepared in conformity with International
Financial Reporting Standards ('IFRS'), including International
Accounting Standards ('IAS') and Interpretations adopted by the
International Accounting Standards Board.
The Group has adopted the following new accounting standards
from 1st January 2018. Other amendments relating to existing
accounting standards, 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, previously classified as
available-for-sale, have been 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, has not resulted in a
change to 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 sale of
food and beverages and goods.
Changes to accounting policies on adoption of IFRS 9 and 15 have
been applied retrospectively although the comparative financial
statements have not been restated, other than certain comparative
disclosures.
Changes in principal accounting policies on adoption of IFRS 9
and 15
Investments
The Group classifies its investments into the following
measurement categories:
i) those to be measured subsequently at fair value, either
through other comprehensive income or through profit and loss;
and
ii) those to be measured at amortised cost.
The classification is based on the management's business model
and their contractual cash flows characteristics.
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 investments measured at fair value
through other comprehensive income, gains or losses realised upon
disposal are not reclassified to profit and loss.
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
Trade debtors are recognised initially at the amount of
consideration that is unconditional and measured subsequently at
amortised costs using the effective interest method. All other
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. For trade debtors,
the Group applied the simplified approach permitted by IFRS 9,
which requires expected lifetime losses to be recognised from
initial recognition of the debtors. Provision for impairment is
established by considering potential financial difficulties of the
debtor, probability that the debtor will enter bankruptcy for
financial reorganisation, and default or delinquency in payments.
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 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, sales related taxes and other revenue reducing
factors.
i) Revenue from hotel ownership comprises amounts earned in
respect of rental of rooms, food and beverage sales, and other
ancillary services and goods supplied by the subsidiary hotels.
Revenue is recognised over the period when rooms are occupied or
services are performed.
Revenue from the sale of food and beverages and goods is
recognised at the point of sale when the food and beverages and
goods are delivered to customers.
Payment is due immediately when the hotel guest occupies the
room and receives the services and goods.
ii) Revenue from hotel and residences branding and management
comprises gross fees earned from the branding and management of all
the hotels and residences operated by the Group.
Branding and management fees are recognised over time as
determined by the relevant contract, taking into account the
performance of the hotels, and the sales and operating expenses of
the residences. Fees charged to the subsidiary hotels are
eliminated upon consolidation.
Hotels and residences are invoiced in accordance with the terms
of contract and fees are payable when invoiced.
iii) Receipts under operating leases are accounted for on an accrual basis over the lease terms.
2. REVENUE
2018 2017
US$m US$m
By geographical area:
Hong Kong 245.5 235.8
Other Asia 111.5 107.9
Europe 143.7 163.8
America 113.0 103.3
613.7 610.8
----- -----
3. EBITDA (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND
AMORTISATION) AND OPERATING PROFIT FROM SUBSIDIARIES
2018 2017
US$m US$m
By geographical area:
Hong Kong 75.3 74.0
Other Asia 32.6 29.6
Europe 33.2 17.0
America 12.4 7.2
------ ------
Underlying EBITDA from subsidiaries 153.5 127.8
Non-trading items (note 7)
------ ------
Fire at Mandarin Oriental Hyde Park, London
* repair expenses and write-off of tangible assets
and other incidental expenses (28.6) -
* insurance recovery for replacement of tangible assets
and other incidental expenses 29.6 -
Closure of The Excelsior, Hong Kong - other costs (2.8) -
Change in fair value of other investments 4.4 -
2.6 -
------ ------
EBITDA from subsidiaries 156.1 127.8
Underlying depreciation and amortisation from
subsidiaries (62.9) (58.8)
Non-trading items (note 7)
Closure of The Excelsior, Hong Kong
- accelerated depreciation and amortisation (23.6) -
------ ------
Operating profit 69.6 69.0
------ ------
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Depreciation Operating Net Net
and profit/ financing profit/
EBITDA amortisation (loss) charges Tax (loss)
US$m US$m US$m US$m US$m US$m
2018
By geographical
area:
Other Asia 25.7 (8.5) 17.2 (1.3) (3.0) 12.9
Europe (4.2) (1.9) (6.1) - - (6.1)
America 4.1 (2.9) 1.2 (2.2) - (1.0)
------ ------------ --------- --------- ----- -------
25.6 (13.3) 12.3 (3.5) (3.0) 5.8
------ ------------ --------- --------- ----- -------
2017
By geographical
area:
Other Asia 23.5 (8.3) 15.2 (1.4) (2.3) 11.5
Europe 2.7 (0.8) 1.9 - (0.1) 1.8
America 3.9 (3.0) 0.9 (2.4) (0.3) (1.8)
------ ------------ --------- --------- ----- -------
30.1 (12.1) 18.0 (3.8) (2.7) 11.5
------ ------------ --------- --------- ----- -------
5. TAX
2018 2017
US$m US$m
Tax (charged)/credited to profit and loss is
analysed as follows:
Current tax (15.4) (23.6)
Deferred tax (3.7) 8.6
------ ------
(19.1) (15.0)
------ ------
By geographical area:
Hong Kong (11.7) (10.3)
Other Asia (3.3) 3.9
Europe (2.3) (7.2)
America (1.8) (1.4)
------ ------
(19.1) (15.0)
------ ------
Tax relating to components of other comprehensive income is
analysed as follows:
Remeasurements of defined benefit plans 0.5 (1.2)
Cash flow hedges (0.1) (0.2)
----- -----
0.4 (1.4)
----- -----
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$3.0 million
(2017: US$2.7 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 profit attributable
to shareholders of US$43.6 million (2017: US$54.9 million) and on
the weighted average number of 1,260.6 million (2017: 1,257.7
million) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$43.6 million (2017: US$54.9 million) and on
the weighted average number of 1,263.3 million (2017: 1,262.0
million) shares in issue after adjusting for the number of shares
which are deemed to be issued for no consideration under the
share-based long-term incentive plans based on the average share
price during the year.
The weighted average number of shares is arrived at as
follows:
Ordinary shares in millions
2018 2017
Weighted average number of shares for basic
earnings
per share calculation 1,260.6 1,257.7
Adjustment for shares deemed to be issued
for no consideration under the share-based
long-term incentive plans 2.7 4.3
------- -------
Weighted average number of shares for diluted
earnings
per share calculation 1,263.3 1,262.0
------- -------
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
2018 2017
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 43.6 3.46 3.45 54.9 4.37 4.35
Non-trading items
(note 7) 21.5 -
Underlying profit
attributable
to shareholders 65.1 5.16 5.15 54.9 4.37 4.35
---- ----
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investments which are measured at fair value
through profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of
non-depreciable intangible assets and other investments; provisions
for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a
non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
2018 2017
US$m US$m
Fire at Mandarin Oriental Hyde Park, London*
* repair expenses and write-off of tangible assets
and other incidental expenses (28.6) -
* insurance recovery for replacement of tangible assets
and other incidental expenses 29.6 -
Closure of The Excelsior, Hong Kong
* accelerated depreciation and amortisation (24.3) -
* other costs (2.6) -
Change in fair value of other investments 4.4 -
------ -----
(21.5) -
------ -----
*Following the fire on 6th June 2018, Mandarin Oriental Hyde
Park, London has closed for the necessary repairs in order to
restore the property. The hotel re-opened its public areas and
facilities on 4th December 2018. All guestrooms are scheduled to
re-open in April 2019. The repair expenses and write-off of damaged
tangible assets, and other incidental expenses of US$28.6 million
as a result of the fire have been recognised as non-trading
expenses. The Group received interim cash payments during 2018 from
insurers. The insurance compensation of US$29.6 million for the
replacement of tangible assets and other incidental expenses has
been recognised as non-trading income. The insurance compensation
for the reimbursement of operating expenditures and loss of profits
of US$31.1 million has been recorded as underlying business
performance. The total property damage and business interruption
claims with the Group's insurers are expected to be concluded in
2019.
On 9th October 2018, the Group announced that The Excelsior,
Hong Kong will close on 31st March 2019 in order for the site to be
redeveloped as a commercial building. An accelerated depreciation
and amortisation charge as a result of the revision of the
estimated useful lives of the non-leasehold land assets of the
hotel, together with additional costs in respect of the hotel
closure, have been recognised as non-trading expenses during the
year. At the date of change in use, the site will be revalued and
transferred from an owner occupied property held at historical
depreciated cost to an investment property under development
subject to regular valuation review. The initial revaluation gain
will be recognised to the property revaluation reserve through
other comprehensive income. Subsequent fair value changes of the
investment property will be recognised as a non-trading item in the
profit and loss.
8. TANGIBLE ASSETS
2018 2017
US$m US$m
Opening net book value 1,453.2 1,352.1
Exchange differences (38.8) 75.2
Additions 62.1 82.5
Disposals and write-off (7.0) (0.1)
Transfer (to)/from intangible assets (1.4) 0.2
Depreciation charge (81.6) (56.7)
------- -------
Closing net book value 1,386.5 1,453.2
------- -------
Freehold properties include a property of US$105.0 million
(2017: US$108.5 million), which is stated net of tax increment
financing of US$20.5 million (2017: US$21.3 million) (note 10).
9. BORROWINGS
2018 2017
US$m US$m
Bank loans 527.4 506.5
Other borrowings 4.1 4.2
531.5 510.7
----- -----
Current 524.2 2.6
Long-term 7.3 508.1
----- -----
531.5 510.7
----- -----
The Group is in advanced discussions with its key relationship
banks regarding the refinancing of US$549 million of committed
facilities due to mature within 2019, comprising a US$102 million
facility in London, and a US$447 million facility in Hong Kong.
Based on the Group's consistent track record of securing external
financing in a timely manner, its operating performance and strong
balance sheet, the Group is confident that it will complete the
refinancing of these bank facilities before their expiry.
10. TAX INCREMENT FINANCING
2018 2017
US$m US$m
Netted off against the net book value of
property (note 8) 20.5 21.3
----- -----
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% which was repaid on maturity on 10th April
2017.
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.
11. INSURANCE RECOVERY RECEIVED FOR PURCHASE OF TANGIBLE
ASSETS
The Group received US$66.3 million interim insurance payments in
2018, covering both property damage and business interruption
caused by the fire at Mandarin Oriental Hyde Park, London on 6th
June 2018. Of this US$66.3 million, US$7.8 million was to cover the
remedial capital expenditure of the tangible assets which was
recorded under investing activities. The remaining balance was
recorded under operating activities.
12. DIVIDS
2018 2017
US$m US$m
Final dividend in respect of 2017 of USc1.50
(2016: USc2.50) per share 18.9 31.4
Interim dividend in respect of 2018 of USc1.50
(2017: USc1.50) per share 18.9 18.9
----- -----
37.8 50.3
----- -----
A final 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) is proposed by the Board. The dividend proposed will not
be accounted for until it has been approved at the 2019 Annual
General Meeting. The amount will be accounted for as an
appropriation of revenue reserves in the year ending 31st December
2019.
13. CAPITAL COMMITMENTS
At 31st December 2018, total capital commitments of the Group
amounted to US$816.5 million (2017: US$254.3 million). The increase
in capital commitments was primarily attributable to the planned
redevelopment of The Excelsior, Hong Kong as a commercial building
following the hotel closure on 31st March 2019. The redevelopment
is expected to take up to six years to complete.
14. 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$14.8 million (2017: US$13.6 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 year.
Amount of outstanding balances with associates and joint
ventures are included in debtors as appropriate.
Mandarin Oriental International Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and
internal control. The 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 2018 Annual Report (the
'Report'). The following are the principal risks and uncertainties
facing the Company as required to be disclosed pursuant to the
Disclosure Guidance 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 Review and in a note to 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. This may also include failure to adapt to
rapidly evolving customer preferences and expectations. Significant
competitive pressure or the oversupply of hotel rooms in a specific
market can lead to reduced margins. Advances in technology creating
new or disruptive competitive pressures might also negatively
affect the trading environment.
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
and undertaking major renovations at hotels in which it has an
ownership interest. 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. Reputational Risk and Value of the Brand
The Group's brand equity and global reputation is fundamental in
supporting its ability to offer premium products and services and
to achieving acceptable revenues and profit margins. Any damage to
the Group's brand equity or reputation, including as a result of
negative effects relating to health and safety, acts or omissions
by Group personnel, information system and cybersecurity breaches,
loss or misuse of personal data, and any allegations of socially
irresponsible policies and practices, might adversely impact the
attractiveness of the Group's properties or the loyalty of the
Group's guests.
6. Regulatory and Political Risk
The nature of the Group's global operations mean that it is
subject to numerous laws and regulations, including but not limited
to those covering employment, competition, taxation, data privacy,
foreign ownership, town planning, anti-bribery, money laundering
and exchange controls. Changes to laws and regulations 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 2018 Annual Report, including
the Chairman's Statement, Group Chief Executive's Review and the
Principal Risks and Uncertainties, which constitute the management
report, include a fair review of all information required to be
disclosed by the Disclosure Guidance 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
James Riley
Craig Beattie
Directors
The final dividend of USc1.50 per share will be payable on
15th May 2019, subject to approval at the Annual General Meeting
to be held on 8th May 2019, to shareholders on the register
of members at the close of business on 15th March 2019. The
shares will be quoted ex-dividend on 14th March 2019, and
the share registers will be closed from 18th to 22nd March
2019, 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 final dividend by notifying
the United Kingdom transfer agent in writing by 18th April
2019. The Sterling equivalent of dividends declared in United
States Dollars will be calculated by reference to a rate prevailing
on 2nd May 2019.
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 15th March 2019, 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 14th March 2019.
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 32 hotels and six residences in 23 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$5.8 billion as at 31st December
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 / Craig Beattie (852) 2895 9288
Sally de Souza (852) 2895 9167
Brunswick Group Limited
Karin Wong (852) 3512 5077
Full text of the Preliminary Announcement of Results and the
Preliminary Financial Statements for the year ended 31st December
2018 can be accessed through the internet at
'www.mandarinoriental.com'.
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.
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