Mandarin Oriental International : 2021 Half-Yearly Results Announcement

29th July 2021

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

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2021

HIGHLIGHTS

• Underlying losses reduced by 34% compared to the same period last year
• Business levels increased in the second quarter
• Robust hotel development pipeline
• Strong liquidity and funding position

"While trading conditions remain difficult, business volumes have begun to improve in markets where vaccination programmes are being implemented effectively, particularly in the second quarter, leading to a reduction in underlying losses. The Group's development pipeline remains robust, and the restored Mandarin Oriental Ritz, Madrid, opened to critical acclaim. A return to profitability by the Group will be dependent on the removal of barriers to international travel, particularly in Asia."

Ben Keswick

Chairman

RESULTS

	(unaudited)
	Six months ended 30th June
	2021	2020	Change
	US$m	US$m	%
Combined total revenue of hotels under management(1)	381.8	276.4	+38
Revenue	101.8	95.5	+7
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)(2)	(17.0)	(50.1)	+66
Underlying loss attributable to shareholders(3)	(66.8)	(101.8)	+34
Revaluation loss on investment property under development	(89.1)	(333.7)	+73
Loss attributable to shareholders	(155.9)	(435.5)	+64
	US¢	US¢	%
Underlying loss per share(3)	(5.29)	(8.06)	+34
Loss per share	(12.34)	(34.48)	+64
	US$	US$	%
Net asset value per share(4)	2.63	2.78	-5
Adjusted net asset value per share(4)(5)	3.95	4.09	-3
Net debt/shareholders' funds(4)	18%	14%
Net debt/adjusted shareholders' funds(4)(5)	12%	10%

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 7 to the condensed 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. At 30th June 2021 and 31st December 2020, respectively.
5. The Group's investment property under development is carried at fair value on the basis of valuations carried out by independent valuers at 30th June 2021 and 31st December 2020. The other freehold and leasehold interests are carried at amortised cost in the consolidated balance sheet. Both the adjusted net asset value per share and net debt/adjusted shareholders' funds for 30th June 2021 and 31st December 2020 have included the market value of the Group's freehold and leasehold interests which were appraised as at 31st December 2020.
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MANDARIN ORIENTAL INTERNATIONAL LIMITED

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2021

OVERVIEW

Operating conditions generally improved towards the end of the first half, with all hotels under operation open in the second quarter. During the same period in the prior year, almost all hotels were effectively closed. Performance did, however, vary by market, depending mostly upon vaccination roll-out progress and the impact of government actions to curtail the spread of the virus. In most markets, the customer base was largely domestic and leisure-orientated.

Combined total revenue of hotels under management increased by 38% in the first half of 2021 compared to the equivalent period in 2020.

Government financial support in some markets and the Group's ongoing cost containment measures continued to benefit results.

FINANCIAL PERFORMANCE

Underlying losses before interest, tax, depreciation and amortisation ('EBITDA') for the first half of 2021 were US$17 million, a 66% improvement compared to EBITDA losses of US$50 million in the first half of 2020. Results benefited from an increase in business levels in certain markets, continued cost control measures and government financial support.

The Group's losses were entirely attributable to its portfolio of owned hotels. The management business was broadly breakeven in the period, due to increased management fees and lower operating costs.

Underlying losses for the period were US$67 million, compared to US$102 million for the first half of 2020.

Non-trading items comprised a 3%, or US$89 million, decrease in the valuation of the Causeway Bay site under development as a result of market reductions in property values. Total losses attributable to shareholders were US$156 million in the first half, compared to US$436 million in the same period in 2020.

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At 30th June 2021, net debt was US$590 million compared to US$506 million at the end of 2020, with the increase primarily due to investments made to develop the Causeway Bay site and increase the size of the Munich hotel. The Group remains well funded, with headroom of US$441 million in its available cash and committed facilities. The average tenor of the Group's debt facilities at 30th June 2021 was 2.6 years and gearing as a percentage of adjusted shareholders' funds was 12%, taking into account the market value of the Group's properties.

No interim dividend will be paid in respect of 2021 first half results.

HOTEL PERFORMANCE

Occupancy levels varied significantly between hotels. In Asia, Mandarin Oriental, Hong Kong delivered positive EBITDA in the first half of 2021, albeit still well below 2019 levels, compared to a loss in the first half of 2020. Demand in the Chinese mainland remained strong. Trading conditions in Southeast Asia were exceedingly difficult, with borders remaining effectively closed and tight lockdown restrictions in some cities preventing food and beverage and spa facilities from operating. In much of Europe, the Middle East and America, COVID-19 restrictions slowly eased, allowing occupancy levels to start to recover.

NEW DEVELOPMENTS

Mandarin Oriental Ritz, Madrid opened in April after an extensive restoration and is expected to become a flagship property for the brand.

The Group also assumed management of the Al Faisaliah hotel in Riyadh with effect from March and this property will be rebranded as Mandarin Oriental Al Faisaliah, Riyadh in 2022 following its renovation. Two new management contracts were announced in the first half of the year: a resort on the beach in Da Nang, Vietnam and a city property in Hangzhou, China. Mandarin Oriental Bosphorus, Istanbul will open in August 2021 and Mandarin Oriental, Shenzhen is expected to open towards the end of the year.

PEOPLE

The last six months have continued to be a difficult period for the hospitality industry and I would like to thank all Mandarin Oriental colleagues for their continued dedication and loyalty.

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James Watkins retired from the Board following today's Board meeting. On 20th May 2021, it was announced that Craig Beattie would step down from the Board on 31st August 2021. The Board would like to record its gratitude to both of them for their significant contribution to the Group. As announced on 20th May 2021, Matthew Bishop will be appointed as a Director and Chief Financial Officer of the Company with effect from 1st September 2021.

OUTLOOK

While trading conditions remain difficult, business volumes have begun to improve in markets where vaccination programmes are being implemented effectively, particularly in the second quarter, leading to a reduction in underlying losses. The Group's development pipeline remains robust, and the restored Mandarin Oriental Ritz, Madrid, opened to critical acclaim. A return to profitability by the Group will be dependent on the removal of barriers to international travel, particularly in Asia.

Ben Keswick

Chairman

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Mandarin Oriental International Limited

Consolidated Profit and Loss Account

										(unaudited)
										Six months ended 30th June												Year ended 31st December
			2021									2020									2020
		Underlying												Underlying												Underlying
		business			Non-trading								business			Non-trading								business			Non-trading
	performance				Items				Total			performance				Items				Total			performance				Items	Total
		US$m				US$m				US$m				US$m				US$m				US$m				US$m				US$m	US$m
Revenue (note 2)	101.8	-	101.8	95.5	-	95.5	183.7	-					183.7
Cost of sales		(114.7)		-		(114.7)		(122.1)		-		(122.1)		(233.0)		-					(233.0)
Gross loss	(12.9)	-	(12.9)	(26.6)	-	(26.6)	(49.3)	-					(49.3)
Selling and distribution costs	(9.8)	-	(9.8)	(16.2)	-	(16.2)	(31.4)	-					(31.4)
Administration expenses	(44.8)	-	(44.8)	(52.7)	-	(52.7)	(97.5)	-					(97.5)
Other operating
income/(expense)	22.1	-	22.1	14.4	-	14.4	(7.6)	0.7					(6.9)
Change in fair value of
investment property under
development		-		(89.1)		(89.1)		-		(333.7)		(333.7)		-		(474.9)					(474.9)
Operating loss (note 3)	(45.4)	(89.1)	(134.5)	(81.1)	(333.7)	(414.8)	(185.8)	(474.2)					(660.0)
Financing charges	(6.9)			-			(6.9)			(8.0)			-			(8.0)			(14.2)			-					(14.2)
Interest income	0.5			-			0.5			1.1			-			1.1			1.6			-					1.6
Net financing charges	(6.4)	-	(6.4)	(6.9)	-	(6.9)	(12.6)	-					(12.6)
Share of results of associates and
joint ventures (note 4)		(15.0)		-		(15.0)		(13.5)		-		(13.5)		(26.8)		-					(26.8)
Loss before tax	(66.8)	(89.1)	(155.9)	(101.5)	(333.7)	(435.2)	(225.2)	(474.2)					(699.4)
Tax (note 5)		-		-		-		(0.3)		-		(0.3)		19.4		-					19.4
Loss after tax	(66.8)	(89.1)	(155.9)	(101.8)	(333.7)	(435.5)	(205.8)	(474.2)					(680.0)
Attributable to:
Shareholders of the Company
(note 6 & 7)	(66.8)	(89.1)	(155.9)	(101.8)	(333.7)	(435.5)	(205.9)	(474.2)					(680.1)
Non-controlling interests		-		-		-		-		-		-		0.1		-					0.1
		(66.8)		(89.1)		(155.9)		(101.8)		(333.7)		(435.5)		(205.8)		(474.2)					(680.0)
		US¢								US¢				US¢								US¢				US¢									US¢
Loss per share (note 6)
- basic	(5.29)					(12.34)	(8.06)					(34.48)	(16.30)									(53.84)
- diluted	(5.29)					(12.34)	(8.06)					(34.48)	(16.30)									(53.84)

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