Mandarin Oriental International : 2020 Report

Annual Report 2020

Mandarin Oriental Hotel Group is an international hotel investment and management group with luxury hotels, resorts and residences in sought-after destinations around the world. Having grown from its Asian roots over 50 years ago into a global brand, the Group now operates 34 hotels and seven residences in 24 countries and territories, with each property reflecting the Group's oriental heritage and unique sense of place. Mandarin Oriental regularly receives international recognition and awards for outstanding service and quality management, and 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$5.2 billion as at 31st December 2020.

Mandarin Oriental continues to drive its reputation as an innovative leader in luxury hospitality, seeking selective opportunities to expand the reach of the brand, with the aim to maximise profitability and long-term shareholder value.

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.

Contents

1 Corporate Overview

1. Corporate Information
2. Highlights

6 Chairman's Statement

8 Group Chief Executive's Review

14 Operating Summary

16 Development Portfolio

18 International Brand Recognition

22 Corporate Responsibility and Sustainability Roadmap

24 Financial Review

30 Directors' Profiles

32 Financial Statements

101 Independent Auditors' Report

1. Report of the Valuers
2. Five Year Summary
3. Responsibility Statement
4. Corporate Governance

123 Principal Risks and Uncertainties

1. Shareholder Information
2. Mandarin Oriental Hotel Group Contact Addresses

2 Mandarin Oriental International Limited

Corporate Information

Directors

Ben Keswick Chairman

(stepped down as Managing Director on 15th June 2020)

John Witt Managing Director

(joined the Board on 15th June 2020)

James Riley Group Chief Executive

Craig Beattie

Jack Yilun Chen

Edouard Ettedgui

(stepped down on 6th May 2020)

Mark Greenberg

(stepped down on 31st December 2020)

Julian Hui

Adam Keswick

Archie Keswick

Simon Keswick

(stepped down on 1st January 2020)

Lincoln K.K. Leong

Anthony Nightingale

Y.K. Pang

Jeremy Parr

(stepped down on 3rd December 2020)

Lord Sassoon, kt

(stepped down on 9th April 2020)

James Watkins

Percy Weatherall

Company Secretary

Jonathan Lloyd

Registered Office

Jardine House

33-35 Reid Street

Hamilton

Bermuda

Mandarin Oriental Hotel Group International Limited

Directors

John Witt Chairman

(appointed as chairman on 15th June 2020)

Ben Keswick

(stepped down as chairman and director on 15th June 2020)

James Riley Group Chief Executive

Craig Beattie Chief Financial Officer

Graham Baker

(joined the board on 15th June 2020)

Richard Baker

(stepped down on 24th April 2020)

Kieren Barry

Paul Clark

Mark Greenberg

(stepped down on 31st December 2020)

Jill Kluge

Christoph Mares

Vincent Marot

Paul Massot

Anne O'Riordan

Y.K. Pang

Jeremy Parr

Corporate Secretary

Jonathan Lloyd

Annual Report 2020 3

Highlights

Mandarin Oriental International Limited

Underlying loss of US$206 million

COVID-19 travel restrictions dramatically reduced demand

Extensive cost reduction measures implemented across the business

Robust liquidity and funding position

Development pipeline remains solid and four new management contracts signed No dividend proposed for 2020

Results

	Year ended 31st December
	2020	2019	Change
	US$m	US$m	%
Combined total revenue of hotels under management1	593.0	1,325.1	(55)
Revenue	183.7	566.5	(68)
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)2	(74.2)	154.5	n/a
Underlying (loss)/profit attributable to shareholders3	(205.9)	41.2	n/a
Revaluation loss on investment property under development	(474.9)	(67.3)	n/a
Loss attributable to shareholders	(680.1)	(55.5)	n/a
	US¢	US¢	%
Underlying (loss)/earnings per share3	(16.30)	3.26	n/a
Loss per share	(53.84)	(4.39)	n/a
Dividends per share4	-	1.50	(100)
	US$	US$	%
Net asset value per share	2.78	3.26	(15)
Adjusted net asset value per share5	4.09	4.70	(13)
Net debt/shareholders' funds	14%	7%
Net debt/adjusted shareholders' funds5	10%	5%

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 34 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. In light of the substantially reduced levels of business due to the impact of COVID-19 pandemic, the Directors withdrew their recommendation of a final dividend in respect of the 2019 financial year. No dividend in respect of the 2020 financial year has been declared or proposed by the Board.
5. The Group's investment property under development is carried at fair value on the basis of a valuation carried out by independent valuers at 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 have included the market value of the Group's freehold and leasehold interests.

4 Mandarin Oriental International Limited