26th February 2001
-
Hong Kong recovery gathering momentum
-
Integration of The Rafael Group successfully completed
-
London hotel reopened and new Miami hotel launched
Results
Year ended 31st December
|
2000
US$m
|
1999
US$m
|
Change
%
|
Combined total revenue of hotels under management |
473 |
342 |
+38 |
Profit before interest and tax |
53 |
42 |
+25 |
Profit after tax and minority interests |
18 |
17 |
+4 |
Cash flows from operating activities |
31 |
31 |
- |
|
US¢
|
US¢
|
%
|
Earnings per share |
2.21 |
2.39 |
-8 |
Dividends per share |
1.35 |
1.35 |
- |
�2000 has been a significant year of development
for Mandarin Oriental during which we made considerable progress towards
our vision of being recognised as one of the top global luxury hotel groups.�
- Simon Keswick, Chairman
�Our results in 2001 will benefit from the full
year�s contribution of the restored London flagship hotel, the enlarged
portfolio from the Rafael acquisition and the continued recovery in Hong
Kong.� - Edouard Ettedgui, Chief Executive Officer
The final dividend of US¢0.85 per share will
be payable on 24th May 2001, subject to approval at the Annual General
Meeting to be held on 16th May 2001, to shareholders on the register of
members at the close of business on 23rd March 2001. The ex-dividend date
will be on 21st March 2001, and the share registers will be closed from
26th to 30th March 2001, inclusive.
OVERVIEW
Mandarin Oriental International Limited today
announced that 2000 has been a significant year of development for the
Group during which it made considerable progress towards its vision of
being recognised as one of the top global luxury hotel groups. The number
of hotels operated by the Group grew from 12 to 20, including the New York
hotel currently under development, through the successful acquisition and
integration of The Rafael Group and the launch of a new hotel in Miami.
Mandarin Oriental Hyde Park in London was reopened in late May as one of
London�s most luxurious hotels following the completion of an extensive
renovation programme.
PERFORMANCE
The consolidated profit before interest and tax
for the year ended 31st December 2000 was US$53 million, an increase of
US$11 million from 1999 including the writeback of a provision of US$4
million on the Singapore hotel previously recorded in the profit and loss
account. The increase in consolidated profit before interest and tax includes
the contribution of The Rafael Group hotels from late May onwards following
the completion of the acquisition. However, as a result of higher financing
charges, including interest on the US$76 million convertible bonds issued
in March 2000, the consolidated profit after tax and minority interests
was US$18 million compared with US$17 million in the previous year.
Earnings per share were US¢2.21 (1999: US¢2.39).
A Directors� review of the valuation of the Group�s
hotel properties at the end of 2000, in consultation with its independent
valuers, has indicated that the significant decrease in values recorded
in 1998 continues to reverse. In addition to the writeback in relation
to the Singapore hotel, valuation increases of US$101 million principally
on the Group�s two Hong Kong properties have been reflected in the balance
sheet.
The Directors recommend a final dividend of US¢0.85
per share. This, together with the interim dividend of US¢0.50 per
share, will make a total annual dividend of US¢1.35 per share, unchanged
from 1999.
DEVELOPMENTS
Turning to the Group�s developments, the Chairman,
Simon Keswick, said that Mandarin Oriental acquired The Rafael Group, an
operator of six distinctive luxury hotels in May 2000. 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.
In September, the Group signed an exclusive joint venture agreement with
Indian Hotels and Health Resorts, to manage and develop luxury hotels throughout
India. The first property to open under this joint venture is Mandarin
Oriental Ananda, The Himalayas. Mandarin Oriental, Miami, in which
the Group has a 25% interest and a long-term management contract, opened
in late November 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 key international destinations. The objective is
to increase the number of rooms under operation to 10,000 from the current
7,000 and a number of opportunities are being pursued.
OUTLOOK
In conclusion, Simon Keswick said, �The necessary
elements for the long-term success of the Group�s expansion strategy are
now firmly in place with the integration of the Rafael hotels complete
and the London and Miami properties now opened. The Group is well-positioned
for 2001 and should benefit from both the expected continuing recovery
in room rates of the two Hong Kong hotels and a full year contribution
from the London property.� The Directors recommend a final dividend of
US¢0.85 per share. This, together with the interim dividend of US¢0.50
per share, will make a total annual dividend of US¢1.35 per share,
unchanged from 1999.
OVERVIEW
The year 2000 has been an important one for the
Group with our growth strategy having gained momentum. Our results benefited
from an improved second half performance, buoyed by the continued recovery
in Hong Kong and the contribution of the new hotels in the Group. We have
increased our portfolio to 20 hotels worldwide through the acquisition
of The Rafael Group in May, the opening of a new luxury property in Miami
in November, and the continued development of our new, luxury hotel in
New York. Other important events during the year include the relaunch of
our London property in May, which has met with critical acclaim; the completion
of the first phase of a significant renovation at the legendary Oriental,
Bangkok which is celebrating its 125th anniversary in 2001; the signing
of a joint venture agreement to develop luxury hotels in India; and, to
support our growth strategy, we launched a well-recognised international
advertising campaign designed to raise awareness of our luxury brand around
the world.
THE WAY FORWARD
Progress has been made in achieving our strategic
objectives, which are aligned with our vision. By focusing on these objectives,
we will build for the future and improve our profitability, while maintaining
our commitment to excellence.
We will:
-
Improve our competitive position in each market
-
Establish Mandarin Oriental Hyde Park as London�s
best hotel
-
Increase the number of rooms under operation to 10,000
-
Strengthen our corporate core competencies
-
Ensure a strong cash flow and balance sheet
1. Improve our competitive position
in each market
Across the Group, most of our hotels have maintained
or enhanced their leadership positions in their respective markets, with
significantly improved performances in some cities, particularly Hong Kong.
Each hotel is benchmarked against a targeted control group of local competitors
with comparative performance measurements in place for guest services and
financial returns. I would now like to review some of the highlights from
each region.
Asia
Encouraging performances at the two Hong Kong
hotels were led by Mandarin Oriental, Hong Kong, which increased its occupancy
to 77% in 2000 from 65% in 1999, and also achieved an overall improvement
in competitive position. Occupancy at The Excelsior also rose, reaching
87% in 2000 compared to 84% in 1999. While average room rates at both hotels
improved, particularly in the second half, they still remained well below
the levels achieved before the onset of the Asian economic downturn.
The performance of the Singapore hotel improved
over the previous year, with a 9% increase in revenue. While the Macau
property also enjoyed a 22% increase in revenue, gains recognised in 1999
on the disposal of fixed assets resulted in this year�s contribution to
the Group remaining the same as last year. In both Manila and Jakarta,
our properties were affected by weaker currencies and continuing economic
and political uncertainty.
In Bangkok, The Oriental performed very well,
increasing room revenue by 7% in local currency terms, while at the same
time undergoing a self-financed US$30 million renovation programme. However
the depreciation of the Thai Baht meant that The Oriental�s contribution
to the Group was slightly down in US dollar terms. Phase I of the renovation
programme was completed in September 2000 with Phase II scheduled to take
place between May 2001 and September 2001.
In Kuala Lumpur, the hotel entered its second
full year of operation and has established itself as the firm market leader.
However, market conditions in Kuala Lumpur, particularly an oversupply
of luxury hotel rooms, resulted in depressed average room rates.
Europe
Upon re-opening in May, Mandarin Oriental Hyde
Park, London is quickly establishing itself within the top tier of luxury
hotels in London. Through the acquisition of The Rafael Group, we
have two additional properties in Europe. Mandarin Oriental, Munich continues
to be the market leader in that city, with total revenue up 6% in local
currency terms over 1999. In Geneva, Mandarin Oriental Hotel du Rhône
met expectations and continues to be recognised as one of the city�s finest
hotels. However the relative strength of the US dollar affected negatively
the results of both these hotels when converting from local currency.
The Americas
The Group continues to increase its presence
in this important market, and our existing properties enjoyed improved
performances in 2000. Kahala Mandarin Oriental, Hawaii significantly increased
its occupancy rates to 71%, up from 62% in 1999. This was accompanied by
a 4% increase in average room rates, contributing to a 19% increase in
revenue overall. Kahala Mandarin Oriental was also awarded the American
Automobile Association�s Five Diamond Award for the third year in a row.
Mandarin Oriental, San Francisco increased both
its average room rate and occupancy, which helped to achieve a 15% increase
in revenue over 1999, and was rewarded with the Mobil Five Star Award for
the second consecutive year. Our new properties in The Americas that have
joined from the Rafael Group, have also performed well since the acquisition.
The Mark, New York achieved a 7% increase in the average room rate while
increasing occupancy to 79%. Turnberry Isle, Florida and Elbow Beach, Bermuda
both improved their performances with increased revenue of 12% and 11%
respectively.
While focusing on improving their competitive
positions, each hotel has also ensured their reputation for excellence
remains undiminished. At the same time we have continued to invest in our
hotels to ensure that they remain within the top-performing hotels in their
destination.
As a consequence, the outstanding service and
facilities that our hotels provide have resulted in our properties receiving
a record-breaking number of prestigious awards in 2000, from the world�s
most respected publications and associations.
Europe
Upon re-opening in May, Mandarin Oriental Hyde
Park, London is quickly establishing itself within the top tier of luxury
hotels in London. Through the acquisition of The Rafael Group, we
have two additional properties in Europe. Mandarin Oriental, Munich continues
to be the market leader in that city, with total revenue up 6% in local
currency terms over 1999. In Geneva, Mandarin Oriental Hotel du Rhône
met expectations and continues to be recognised as one of the city�s finest
hotels. However the relative strength of the US dollar affected negatively
the results of both these hotels when converting from local currency.
2.Establish
Mandarin Oriental Hyde Park as London�s best hotel
In London, the closure of the hotel in the first
five months had a negative impact of US$6 million on the Group�s performance.
In addition, the renovation programme was more extensive than originally
anticipated due to the complex restoration of this heritage building. We
also identified opportunities to increase the number of revenue-producing
areas, including two restaurants instead of one.
Since re-opening its doors in May and launching
a luxurious spa in November, Mandarin Oriental Hyde Park has received impressive
reviews, particularly for the new facilities and has achieved a significantly
higher average rate. With the total restoration now complete, the
hotel has begun to make a positive operating contribution in the second
half of the year, and we are expecting the full profit impact of the new
facilities to benefit the hotel�s performance in 2001.
3. Increase the number of rooms under
operation to 10,000
Success in extending our brand to 10,000 rooms
in key international cities remains a critical factor in our overall strategy.
The acquisition of The Rafael Group in May, followed by the smooth integration
of these new hotels into our existing Group, has moved us closer to our
objective by increasing our portfolio to 7,000 rooms worldwide. This has
also created a more balanced geographic mix of properties across three
continents. Greater visibility in key cities in North America and Europe
adds value to our prestigious Asian base as well as resulting in attractive
financial returns.
We continue to seek opportunities to leverage
the strength of our brand by negotiating more management contracts with
limited equity ownership, that offer higher returns than our traditional
reliance on income generated by owned hotels. In September, Mandarin
Oriental entered into an exclusive joint venture agreement with Indian
Hotels and Health Resorts to manage and develop luxury hotels in India.
Mandarin Oriental Ananda, The Himalayas, a unique resort and destination
spa with 75 luxurious rooms and suites, is the first property to open under
this joint venture. Mandarin Oriental, Miami, which is 25% owned,
opened to considerable acclaim in November 2000, and is set to become the
market leader in this dynamic city. In New York, ground breaking
has commenced on an exciting mixed-use development in the heart of Manhattan,
in which we have taken a 50% stake in the development of the 250-room Mandarin
Oriental, New York, the hotel section of the project. With experienced
partners and prestigious neighbours, the development is set to become an
icon in the city.
Our financial position remains strong as a result
of the US$150 million raised in the Rights Issue in March. Following the
upswing in the Asian property market, we have reviewed the values of the
Group�s hotel properties at the year end resulting in an uplift in value
of US$101 million principally in relation to the two Hong Kong hotels.
In addition, we have written back the provision of approximately US$4 million
on the Singapore property, previously recorded in the profit and loss account.
The financial position of the Group continues to be strong and at 31st
December 2000 the Group�s gearing (or net debt over shareholder�s funds)
was 34% with liquid cash resources of US$100 million.
In conclusion, our results in 2001 will benefit
from the full year�s contribution of the restored London flagship hotel,
the enlarged portfolio from the Rafael acquisition and the continued recovery
in Hong Kong. Our vision to be recognised as one of the top global luxury
hotel brands has progressed following the growth of our portfolio to 7,000
rooms around the world. We will continue to focus on improving profitability
while maintaining our commitment to excellence. The Group is in a strong
position to continue on our growth path and fully leverage our global brand.
Edouard Ettedgui
Chief Executive Officer
26th February 2001
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