Highlights:
· Acquisition of The Rafael Group completed
· Recovery in Hong Kong continues
· London hotel relaunched
Results
(unaudited) Six months ended 30th June
2000US$m 1999US$m Change%
Combined total revenue of hotels under management 187 163 +15
Profit before interest and tax
18 21 -16
Profit after tax and minority interests
3 9 -73
Cash flows from operating activities
10 12 -20
US¢ US¢ %
Earnings per share
0.32 1.28 -75
Interim dividend per share
0.50 0.50 -
"The reopening of the London hotel and the addition of the Rafael hotels will contribute positively to results, although this will be partially offset by higher finance costs. The Group's results in the second half of the year will also benefit from the continued recovery in Hong Kong."
The interim dividend of US¢0.50 per share will be payable on 18th October 2000 to shareholders on the register of members at the close of business on 25th August 2000. The ex-dividend date will be on
23rd August 2000, and the share registers will be closed from 28th August to 1st September 2000, inclusive.
Mandarin Oriental International Limited today announced that the first half of the year saw a significant step forward in the development of the Group with the acquisition of The Rafael Group, increasing its room portfolio from 5,800 to 7,000, and with the reopening of the London hotel following an extensive renovation programme.
PERFORMANCE
Mandarin Oriental's performance in the six months benefited from the continued recovery in its Hong Kong hotels. However, this was more than offset by operating costs associated with the closure of the London hotel. As a result, consolidated profit before interest and tax for the six months ended 30th June 2000 was US$18 million compared with
US$21 million in the first half of 1999. Higher interest and tax charges also contributed to the lower consolidated profit after tax and minority interests at US$3 million, compared with US$9 million in 1999.
Earnings per share for the half year were US¢0.32, a decrease of 75% from US¢1.28 in 1999.
The Board has declared an interim dividend of US¢0.50 per share which is unchanged from 1999. The dividend will be payable in cash.
GROUP REVIEW
Turning to the operations, the Chairman, Simon Keswick, said that improved performances from the Group's Hong Kong hotels were led by Mandarin Oriental, Hong Kong which increased its occupancy to 76% in the first six months of 2000 compared with 62% in 1999. Occupancy at The Excelsior continued to be strong at 86%. Average room rates at the two hotels improved but remained below levels achieved before the economic downturn.
In the rest of Asia, the hotels in Manila and Jakarta were affected by continuing economic uncertainty while the hotels in Singapore and Macau performed satisfactorily. The Oriental, Bangkok did well despite the commencement of a self-financed US$30 million rooms renovation programme in mid-May. The renovations will be carried out over a two-year period during the summer months.
In London, Mandarin Oriental Hyde Park reopened in late May and has shown encouraging results to date. The renovation programme, costing approximately
£50 million since acquisition, was more extensive than anticipated due to the degree of complexity in improving the structure of this heritage building. A state-of-the-art spa facility will open in the autumn to complete the repositioning of this property as one of London's finest hotels.
Results from the Group's North American hotels continued to improve. In particular, Kahala Mandarin Oriental, Hawaii increased its occupancy from 56% to 67% while maintaining its average room rate.
The results of the newly acquired Rafael hotels had no material effect on the half year as the results were consolidated only from late May when the acquisition was completed. June results were in line with expectations.
Corporate resources have been strengthened to support the Group's growth strategy. A US office has been established to provide management services to the Group's growing North American portfolio. The Group's new brand advertising campaign was launched and the sales force was increased significantly in major regional centres.
DEVELOPMENTS
The Group acquired The Rafael Group, an operator of six distinctive luxury hotels in North America and Europe. The consideration for the acquisition was US$143 million which was financed out of proceeds from a Rights Issue in early 2000 of approximately US$150 million.
Mandarin Oriental, Miami is on schedule to open in late 2000 and work is progressing on Mandarin Oriental, New York, scheduled to open in late 2003.
The Group's strategy remains focussed on positioning Mandarin Oriental as one of the world's leading luxury hotel brands with a growing presence in North America and Europe. The objective is to increase the number of rooms under operation to 10,000 and a number of opportunities are being pursued.
OUTLOOK
In conclusion, Simon Keswick said, "The reopening of the London hotel and the addition of the Rafael hotels will contribute positively to results, although this will be partially offset by higher finance costs. The Group's results in the second half of the year will also benefit from the continued recovery in Hong Kong."