Mandarin Oriental International : 2021 Annual Results Presentation

3rd March 2022

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 2021 PRELIMINARY ANNOUNCEMENT OF RESULTS

HIGHLIGHTS

• Much improved performance
• Pandemic continues to impact results
• Strong liquidity and funding position
• Four hotels opened and five new projects announced

"2021 was a challenging year, as the impact and uncertainties of COVID-19 continued to restrict global travel. However, performance improved in the second half as barriers to travel were gradually reduced in most parts of the world. This, together with government and other pandemic-related support enabled the Group to significantly reduce underlying losses. Trading conditions, however, remain difficult, particularly in East Asia, and an underlying loss is expected for the first half of 2022. The outlook for the full year is dependent on the level of travel restrictions implemented by governments. With its strong, globally recognised brand, loyal customer base and robust development pipeline, Mandarin Oriental remains well positioned for long-term growth."

Ben Keswick Chairman

RESULTS

	Year ended 31st December
	2021	2020	Change
	US$m	US$m	%
Combined total revenue of hotels under management(1)	1,053.5	593.0	+78
Revenue	316.9	183.7	+73
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)(2)	40.7	(74.2)	n/a
Underlying loss attributable to shareholders(3)	(68.1)	(205.9)	+67
Revaluation loss on investment property under development	(73.9)	(474.9)	+84
Loss attributable to shareholders	(141.4)	(680.1)	+79
	US¢	US¢	%
Underlying loss per share(3)	(5.39)	(16.30)	+67
Loss per share	(11.19)	(53.84)	+79
Dividends per share(4)	-	-	-
	US$	US$	%
Net asset value per share	2.62	2.78	-6
Adjusted net asset value per share(5)	3.93	4.09	-4
Net debt/shareholders' funds	16%	14%
Net debt/adjusted shareholders' funds(5)	10%	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/loss' 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, no interim and final dividends in respect of the 2021 and 2020 financial years have 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 2021. 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.
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MANDARIN ORIENTAL INTERNATIONAL LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31ST DECEMBER 2021

OVERVIEW

The Group's financial performance in 2021 improved significantly compared with 2020, although results remained materially below pre-pandemic levels, with underlying losses of US$68 million. Combined total revenue of hotels under management increased by 78% in 2021 compared to the prior year, benefitting from the relaxation of travel restrictions in most parts of the world in the second half of 2021. Travel restrictions, however, in most of East Asia remained in place throughout the year.

Results were boosted by COVID-19-related receipts that included government support, primarily in Europe, rent concessions in Tokyo, and business interruption insurance proceeds for hotels in the United States. At 31st December 2021, the Group's liquidity position remained robust.

2021 FINANCIAL PERFORMANCE

Underlying earnings before interest, tax, depreciation and amortisation ('EBITDA') were US$41 million, compared to EBITDA losses of US$74 million in 2020. The Group's underlying losses were reduced to US$68 million for the year, from US$206 million in 2020. The 2020 result included a US$31 million post-tax impairment of the carrying value of the leasehold interest in the Geneva hotel.

There was a non-trading loss of US$74 million (US$475 million in 2020), due to a 3% decrease in the fair valuation of the Causeway Bay site, which is being developed into a new office and retail complex (compared with a decrease of 15% in 2020). Accordingly, losses attributable to shareholders were US$141 million, compared to losses of US$680 million in 2020.

The adjusted net asset value per share, which reflects both the independent valuation of the Group's owned hotel properties and of the Causeway Bay site, was US$3.93 at 31st December 2021, a 4% decrease compared with US$4.09 per share at the end of 2020.

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At 31st December 2021, net debt was US$517 million, compared to US$506 million at the end of 2020. Gearing as a percentage of adjusted shareholders' funds was 10%, unchanged from 2020. The Group remains well funded with a robust liquidity position that was strengthened with the addition of new committed facilities in 2021.

No dividend will be paid in respect of 2021.

YEAR IN REVIEW

Performance in 2021 was better than 2020, as restrictions on travel and hospitality operations were gradually relaxed in most countries. Performance varied by region, however, as demand remained heavily influenced by the extent and pace with which these restrictions were lessened.

In East Asia, restraints on international travel remained in place throughout the year, limiting most hotels to domestic demand. In Europe and the United States, a relaxation of travel restrictions in the second half of the year allowed business levels to improve.

EBITDA for most of the Group's owned hotels improved, driven by both better trading conditions and government support in some countries. Results were notably better in Hong Kong, London, Munich, Geneva, Paris, Boston and New York. The EBITDA from the Group's property interests in 2021 was US$24 million, compared to a loss of US$62 million in 2020. After depreciation and interest charges, there was an underlying loss from the Group's property interests of U$71 million in 2021, compared to a loss of US$174 million in the prior year.

Performance of the management business improved substantially, producing an EBITDA of US$17 million compared to a loss of US$12 million in 2020. Particularly strong management fees were earned in resort destinations such as Bodrum and Dubai. There was an underlying profit of US$5 million in 2021, compared to a loss of US$30 million in 2020.

Whilst the Group continues to maintain cost control and to seek permanent savings, its main focus is now on rebuilding revenues and business activity levels. Capital expenditure continues to be closely scrutinised.

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DEVELOPMENT

The Group's total number of hotels under operation has increased to 36, following the opening of its latest property in Shenzhen in January 2022. In 2021, the Group took over the management of the Al Faisaliah Hotel in Riyadh and opened a new hotel on the Bosphorus in Istanbul, both under management contracts. The Group also reopened Mandarin Oriental Ritz, Madrid, in which it owns a 50% interest, after an extensive programme of restoration and refurbishment.

The Group's development pipeline remains robust, with 24 projects expected to open in the next five years. In 2021, new management contracts were announced in Da Nang, Vietnam and Hangzhou, China, in addition to a standalone residences project in Beverly Hills. Two new deals in Costa Navarino and the Maldives have recently been announced since the start of 2022.

Two hotels and three standalone residences projects are scheduled for opening in 2022, while the Group also expects to rebrand the Al Faisaliah Hotel in Riyadh, as well as the Emirates Palace in Abu Dhabi.

In Hong Kong, the Causeway Bay site under development remains on track to complete in 2025.

GOVERNANCE ENHANCEMENTS

The Group has an ongoing focus on enhancing its governance, and in the past year it has made changes to the composition of its Board, to reduce its size and to increase its diversity and bring greater sector expertise through the appointment of new independent non-executive directors. The Group has also established formal Audit, Remuneration and Nominations Committees.

PEOPLE

On behalf of the Board, I would like to take this opportunity to express my sincere appreciation to all our colleagues for their continuing commitment and dedication during these very challenging times. The contributions of our colleagues are central to the Mandarin Oriental guest experience and we will remain focused on ensuring Mandarin Oriental is an employer of choice.

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Jack Chen, Julian Hui, Lincoln K.K. Leong, Anthony Nightingale and Percy Weatherall retired from the Board in December 2021. We thank each of them for their valuable contributions over many years. With effect from 1st December 2021, Jinqing Cai and Richard Solomons have joined the Board as Independent Non-Executive Directors and bring a wealth of relevant experience.

Craig Beattie stepped down as Chief Financial Officer at the end of August and was succeeded by Matthew Bishop. We would like to thank Craig for his contribution to Mandarin Oriental.

OUTLOOK

2021 was a challenging year, as the impact and uncertainties of COVID-19 continued to restrict global travel. However, performance improved in the second half as barriers to travel were gradually reduced in most parts of the world. This, together with government and other pandemic-related support enabled the Group to significantly reduce underlying losses. Trading conditions, however, remain difficult, particularly in East Asia, and an underlying loss is expected for the first half of 2022. The outlook for the full year is dependent on the level of travel restrictions implemented by governments. With its strong, globally recognised brand, loyal customer base and robust development pipeline, Mandarin Oriental remains well positioned for long-term growth.

Ben Keswick

Chairman

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