| To: Business Editor | 16th September 1998 For immediate release |
The following announcement was today issued to the London Stock Exchange.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
INTERIM REPORT 1998 HIGHLIGHTS
Results
"Mandarin Oriental is maintaining a tight control over costs in the face of unusually weak markets in Asia, while ensuring that it does not compromise its commitment to exceptional customer service."
Simon Keswick, Chairman
16th September 1998
The interim dividend of US¢0.50 per share will be payable on 24th November 1998 to Shareholders on the register of members at the close of business on 2nd October 1998. The share registers will be closed from 5th to 9th October 1998, inclusive.
MANDARIN ORIENTAL INTERNATIONAL LIMITED
INTERIM REPORT 1998
PERFORMANCE
Mandarin Oriental International Limited today announced that the Group suffered from the effects of declining travel and tourism in Asia Pacific in the first half of 1998, with trading profit falling 52% to US$23 million. Net profit after tax and minority interests declined 72% to US$10 million, reflecting increased interest costs and a relatively larger tax charge.
Earnings per share for the half year were US¢1.36, also a decrease of 72%.
The Board has declared an interim dividend of US¢0.50 per share, a reduction of 70%, payable in cash. In view of the current low share price, the Board has decided not to offer a scrip dividend alternative.
GROUP REVIEW
Turning to the operations, the Chairman, Simon Keswick, said that the hotel market in Hong Kong has suffered from a significant reduction in visitor arrivals. Nevertheless, Mandarin Oriental and The Excelsior did well to increase their market share. Extensive renovations at Mandarin Oriental Hyde Park, London affected its occupancy and room rate. The Group's other subsidiary hotels in the Philippines and Indonesia were affected by depreciating currencies and weak markets, although good cost control at Mandarin Oriental, Manila enabled it to achieve profit growth. Elsewhere, tight control has been exercised over expenses, but margins have declined, and operating profit fell 54% to US$20 million for the period.
The Oriental, Bangkok increased its occupancy in the first six months, which largely offset the impact of the Baht's depreciation. Kahala Mandarin Oriental increased its revenue and improved operating margins despite a decline in Japanese visitors to Hawaii. The depressed travel markets led to a significant fall in profit contribution from Mandarin Oriental, Macau and The Oriental, Singapore. Overall, the share of profits from associate hotels for the period was reduced by 22%.
Hotel values in Hong Kong have declined by some 35% since the end of 1997. A revaluation of the Group's assets by the Directors will take place at the year end.
DEVELOPMENTS
Mandarin Oriental, Kuala Lumpur, in which the Group has a 25% interest, is now nearing completion but will take time to achieve satisfactory returns as it is being opened in a depressed market.
Construction commenced on the 325-room Mandarin Oriental Brickell Key, Miami in September and the hotel, in which the Group has a 25% interest, will open in late 2000.
YEAR 2000
As reported in the 1997 Annual Report, the Group has a programme in place to address its exposure to the Year 2000 issue. Work is progressing to ensure that millennium compliance is achieved for all business critical systems, and the Board continues to monitor progress on a regular basis. Costs are expensed as incurred and were not material for the half year.
OUTLOOK
In conclusion, Simon Keswick said, "Mandarin Oriental is maintaining a tight control over costs in the face of unusually weak markets in Asia, while ensuring that it does not compromise its commitment to exceptional customer service."
No interim valuation of the Group's properties has been undertaken. Stated values at 30th June 1998 and 1997 reflect the values at the previous 31st December.
1. BASIS OF PREPARATION
The unaudited half-year results have been prepared in conformity with International Accounting Standards.
In accordance with the revised International Accounting Standard 12, deferred taxation is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values. This is a change in accounting policy as in previous years deferred taxation is provided to the extent that a liability or an asset is expected to be payable or receivable in the foreseeable future. The comparative figures for 1997 have been restated to reflect the change in policy. The effect of this change has been to increase the profit after taxation and minority interests for the six months ended 30th June 1997 and for the year ended 31st December 1997 by US$0.4 million and US$0.7 million respectively, and to decrease the Shareholders' funds at 31st December 1997 by US$31.6 million.
There have been no other changes to the accounting policies described in the 1997 Financial Statements.
2. PROFIT BEFORE INTEREST AND TAXATION
3. TAXATION
Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates. Taxation includes United Kingdom tax of US$10,000 (1997: US$97,000).
4. EARNINGS PER SHARE
Earnings per share are calculated on the profit after taxation and minority interests of US$9.6 million (1997: US$33.9 million) and on the weighted average number of 702.8 million (1997: 696.1 million) shares in issue during the period.
Earnings per share excluding non-recurring item in 1997 was calculated on the profit after taxation and minority interests and after adjusting for the non-recurring item of US$9.2 million.
The weighted average number excludes the shares held by the Trustee under the Company's Senior Executive Share Incentive Schemes. Full exercise of the options under the Senior Executive Share Incentive Schemes would not result in a dilution of the earnings per share.
5. INTERIM REPORT
The Interim Report will be posted to Shareholders on or about 8th October 1998. Copies may be obtained from Butterfield Corporate Services Limited, P.O. Box HM 1540, Hamilton HM FX, Bermuda; IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England; and M & C Services Private Limited, 16 Raffles Quay #23-01, Hong Leong Building, Singapore 048581.
The interim dividend of US¢0.50 per share will be payable on 24th November 1998 to Shareholders on the register of members at the close of business on 2nd October 1998. The share registers will be closed from 5th to 9th October 1998, inclusive. Shareholders will receive their dividends in United States Dollars, unless they are registered on the United Kingdom branch register where they will have the option to elect for Sterling. These Shareholders may make new currency elections by notifying the United Kingdom transfer agent in writing by 5th November 1998. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing ten business days prior to the payment date. 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. There is no scrip alternative being offered in respect of the current dividend. Those Shareholders who have made a permanent scrip election will be notified separately of their dividend payment arrangement.
For further information, please contact:
| Mandarin Oriental Hotel Group International Limited Stuart Burnett |
(852) 2895 9288 (office) |
| Ludgate Asia Limited Martin Spurrier |
(852) 2543 5413 (office) |
Full text of this announcement can be accessed through the Internet at
"http://www.irasia.com/listco/sg/mandarin". It is also available through "First Call".
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