Mandarin Oriental Hotel Group is an international hotel investment and management groupwith deluxe and first class hotels, resorts and residences in sought-after destinations around the world.
Having grown from a well-respected Asian hotel company into a global brand, the Group now operates,or has under development, 46 hotels representing 11,000 rooms in 24 countries, with 21 hotels in
Asia, nine in The Americas and 16 in Europe, Middle East and North Africa. In addition, the Group
operates, or has under development, 15 Residences at Mandarin Oriental connected to its properties.
The Group has equity interests in a number of its properties and adjusted net assets worth
approximately US$3.6 billion as at 31st December 2015.
Mandarin Oriental’s aim is to be recognized widely as the best global luxury hotel group, providing
21st century luxury with oriental charm in each of its hotels. This will be achieved by investingin the Group’s exceptional facilities and its people, while maximizing profitability and long-term
shareholder value. The Group regularly receives recognition and awards for outstanding service
and quality management. The Group is committed to exceeding its guests’ expectations throughexceptional levels of hospitality, while maintaining its position as an innovative leader in the hotelindustry. The strategy of the Group is to open the hotels currently under development, while
continuing to seek further selective opportunities for expansion around the world.
The parent company, Mandarin Oriental International Limited, is incorporated in Bermuda andhas a standard listing on the London Stock Exchange as its primary listing, with secondary listingsin 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.

2 Mandarin Oriental International Limited

Contents

1

Corporate Overview

3

Corporate Information

4

Highlights

6

Chairman’s Statement

8Group Chief Executive’s Review

16

Operating Summary

18

Development Portfolio

19International Recognition

21

Financial Review

26

Directors’ Profiles

28

Financial Statements

84

Principal Subsidiaries, Associates, Joint Ventures and Managed Hotels

86

Independent Auditors’ Report

88

Five Year Summary

89

Responsibility Statement

90

Corporate Governance97

Principal Risks and Uncertainties

99

Shareholder Information

100

Mandarin Oriental Hotel Group Contact Addresses

103

Sales and Reservations Offices

Annual Report 2015

Corporate Information

Directors
Ben Keswick Chairman and Managing Director
Edouard Ettedgui Group Chief Executive
Stuart Dickie
Mark Greenberg
Julian Hui
Adam Keswick
Sir Henry Keswick
Simon Keswick
Lord Leach of Fairford
Dr Richard Lee
Lincoln K.K. Leong
Anthony Nightingale
Jeremy Parr
Lord Powell of Bayswater, kcmg
Lord Sassoon, kt
James Watkins
Percy Weatherall

Mandarin Oriental Hotel GroupInternational Limited
Directors
Ben Keswick Chairman
Edouard Ettedgui Group Chief Executive
Stuart Dickie Chief Financial Officer
R.D. Baker
K.J. Barry
P.J. Clark
J.D. Goessing
Mark Greenberg
M.H. Hobson
Adam Keswick
C.J.W. Mares
V.F.J. Marot
Jeremy Parr
James Riley

Company Secretary

Corporate Secretary

Neil M. McNamara

Neil M. McNamara

Registered Office
Jardine House
33-35 Reid Street
Hamilton
Bermuda3

4 Mandarin Oriental International Limited

Highlights

Mandarin Oriental International Limited• Resilient profit despite challenging conditions in a number of key markets• US$316 million rights issue• Acquisition of a 50% interest in the Hotel Ritz, Madrid• Acquisition of Mandarin Oriental, Boston announced• New hotels in Milan and Marrakech, and three new management contracts announced

Results
Year ended 31st December
2015		
2014		
US$m		
US$m		

Change%1,335.3

1,389.9		

(4)

188.4

217.3		

(13)

Underlying profit attributable to shareholders3

90.3

97.0		

(7)

Profit attributable to shareholders

89.3

97.0		

(8)

US¢

US¢		

%

Underlying earnings per share3&4

7.53

9.29		

(19)

Earnings per share 4

7.44

9.29		

(20)

Dividends per share

5.00

7.00		

(29)

US$		

%

Combined total revenue of hotels under management1
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortization) 2

US$		

Net asset value per share 4

0.98

0.92		

7

Adjusted net asset value per share 4&5

2.84

3.02		

(6)

Net debt/shareholders’ funds

11%

42%		

Net debt/adjusted shareholders’ funds5

4%

13%		

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 performanceand non-trading items, as more fully described in note 7 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

The comparative figures in 2014 have been adjusted to reflect the effect of the rights issue completed in April 2015.

5

The adjusted net asset value per share and net debt/adjusted shareholders’ funds have been adjusted to include the market valueof the Group’s freehold and leasehold interests which are carried in the consolidated balance sheet at amortized cost.

Annual Report 2015

Combined total revenue

Combined total revenue

US$m

US$m

by geographical areaby type of business

1,360.8
1,283.3
1,196.4

285.8

1,389.9

1,360.8

1,335.3

290.9

277.6

277.5

1,283.3
1,196.4

743.7

1,389.9

1,335.3

755.1

709.9

689.2

641.3

267.2
450.7

442.5

410.9

438.3
401.8

324.8

312.6

242.7

214.8

360.0

349.7

471.2

481.9

508.6

503.2

116.5

122.9

135.2

126.2

122.2

2011

2012

2013

2014

2015

438.6

264.3

2012

2011

368.6

2013

297.1

287.9

2015

2014

Hong Kong

The Americas

Rooms

Other Asia

EuropeFood and beverage

Underlying EBITDA andnet interest expense

OthersNet debt/adjusted
shareholders’ funds

US$m

US$m
3,568.9

217.3
208.7
188.4

3,152.4

3,061.2
2,876.2

172.6
2,691.7

163.0

15.6%
478.5
18.3

2011

15.5

2012

19.3

2013

20.8

2014

Underlying earnings before interest, tax,
depreciation and amortization (EBITDA)
Net interest expense

15.3

2015

4.7%

4.2%
112.4

2011

12.8%
403.1

136.5

2012

2013

Adjusted shareholders’ funds
Net debt

3.7%
131.8

2014

2015

5

6 Mandarin Oriental International Limited

Chairman’s Statement

Overview
Softer demand in Hong Kong and Paris, together with disruption from renovations at a number of properties,
led to a 7% decrease in underlying profit compared to the prior year’s record result. The Group’s development
projects remained active, however, with two new hotel openings and three new management contracts announced.
The Group also raised US$316 million by way of a rights issue, with the proceeds reducing debt as well as fundingits 50% share of the acquisition of the Hotel Ritz, Madrid, in May 2015.

Performance
Underlying earnings before interest, tax, depreciation and amortization for 2015 were US$188 million.
This compares with US$217 million reported in 2014, which benefited from US$15 million of branding feesfrom The Residences at Mandarin Oriental in Bodrum.
Underlying profit of US$90 million was US$7 million lower than the prior year, and underlying earnings
per share were US¢7.53 compared with US¢9.29 in 2014. Profit attributable to shareholders was US$89 million,
after deducting US$1 million of acquisition transaction costs, compared to US$97 million in 2014.
Following an independent valuation of the Group’s hotel properties, the net asset value per share was US$2.84
at 31st December 2015, compared with US$3.02 per share at the end of 2014.
The Directors recommend a final dividend of US¢3.00 per share. This, together with the interim dividendof US¢2.00 per share, will make a total annual dividend on the enlarged share capital of US¢5.00 per share,compared to US¢7.00 per share in 2014.

Group review
In Asia, despite an improved performance in Tokyo due to increased visitor arrivals, softer demand in Hong Kongand Singapore, together with disruption from a renovation in Kuala Lumpur, resulted in a lower contribution fromthe region.
The Group’s performance in Europe was affected by challenging conditions in Paris following the terrorist attacks
and by the adverse impact of a renovation in Munich, which were only partially offset by improved results in
London. In The Americas, all of the Group’s hotels reported higher revenue per available room, with the exceptionof New York which undertook a refurbishment of suites during the first half of the year.

Business developments
The Group continued to pursue its development strategy of seeking new hotel and residences management
contracts, while maintaining the quality of its properties and making selective acquisitions that meet the Group’s
strategic criteria.
The Group opened Mandarin Oriental, Milan, in July followed by the partial opening of Mandarin Oriental,
Marrakech in October. Management contracts were announced for new hotels under development in Beijing,
Beirut and Boca Raton. In the first quarter of 2015, the Group ceased management of its hotel in San Francisco.

Annual Report 2015

In May 2015, the Group acquired a 50% interest in the Hotel Ritz, Madrid for €65 million (US$73 million) in ajoint venture with The Olayan Group, with Mandarin Oriental managing the hotel under a long-term managementagreement. The hotel is to undergo a comprehensive renovation in 2017, currently estimated to cost a total of some
€90 million, of which the Group’s share will be €45 million (US$49 million).
In January 2016, the Group exercised its right to acquire the 148-room Mandarin Oriental, Boston for
US$140 million, with the transaction expected to close by the end of April 2016. The Group has managed
the hotel under a long-term contract since it opened in October 2008.
The Group is to undertake a major £85 million (US$126 million) refurbishment of Mandarin Oriental Hyde Park,
London, which is scheduled to commence in the third quarter of 2016 and last 18 months.
Mandarin Oriental now operates 29 hotels, and has a further 17 under development. Together these represent morethan 11,000 rooms in 24 countries, with 21 hotels in Asia, nine in The Americas and 16 in Europe, Middle Eastand North Africa. In addition, the Group operates or has under development 15 Residences at Mandarin Oriental
connected to its properties.
Within the next 18 months, two hotels are scheduled to open in Doha and Beijing.

PeopleOn behalf of the Directors, I would like to acknowledge the contribution of all employees throughout the Groupfor continuing to provide the exceptional service for which the brand is renowned.
Edouard Ettedgui is to step down as Group Chief Executive on 31st March 2016 and we would like to thank him
for his tremendous contribution to the business since his appointment in 1998. Edouard will remain on the Board
as a non-executive director. He will be succeeded by James Riley who is currently the Group Finance Director of
Jardine Matheson Holdings Limited, and has served on the board of Mandarin Oriental’s management company
for the past ten years.
Giles White stepped down from the Board on 31st July 2015, and we would like to thank him for his significant
contribution. On 1st August 2015, Jeremy Parr joined the Board.

Outlook
Trading conditions in a number of Mandarin Oriental’s key markets are expected to remain challenging.
Nevertheless, the Group is in a strong competitive position with an increasingly diversified geographical presence
and earnings stream. Over the longer term, Mandarin Oriental will benefit from the strength of its brand and thelimited new supply of luxury hotels in its key markets.

Ben Keswick
Chairman
3rd March 2016

7

8 Mandarin Oriental International Limited

Group Chief Executive’s Review

Strategy
Mandarin Oriental Hotel Group is an award-winning international hotel investment and management groupwith deluxe and first class hotels, resorts and residences in sought-after destinations around the world. The Group
operates, or has under development, 46 hotels representing 11,000 rooms in 24 countries, with 21 hotels in Asia,nine in The Americas and 16 in Europe, Middle East and North Africa. In addition, the Group operates, or has
under development, 15 Residences at Mandarin Oriental connected to its properties.
The Group holds equity interests in a number of its hotels, and had adjusted net assets of approximately
US$3.6 billion as at 31st December 2015. Capitalizing on the strength of its brand, Mandarin Oriental also
operates hotels on behalf of third party owners that require no equity investment by the Group.
The Group’s strategy is to be recognized widely as the world’s best luxury hotel group, which it will achieve by
investing in its exceptional facilities and its people while continuing to seek further selective opportunities for
expansion around the world. This approach, combined with a strong balance sheet, is designed to achieve
long-term growth in both earnings and net asset value.

Progress achieved
The continued growth in recognition of the Mandarin Oriental brand internationally attracted an increasing
number of high net worth travellers during 2015. The Group’s overall performance benefited from the resiliencethat comes with a broad portfolio of hotels and residences across many destinations, with some markets
experiencing a softening of demand while other markets performed better.
The hotels in Asia performed well against their competition, although the Hong Kong properties were impacted by
reduced arrivals to the city from mainland China. The region’s results were also affected by softer city-wide demandin Singapore and a renovation of the Group’s property in Kuala Lumpur. In Europe, despite a strong performancein London, an extensive renovation in Munich and a drop in city-wide demand in Paris led to a lower contribution
overall. In The Americas, most hotels experienced improved demand, although New York was negatively impacted
by an extensive suite renovation in the first half of the year.
Mandarin Oriental’s global brand recognition was further enhanced in 2015 with the well-received launches ofluxury hotels in Milan, Italy and Marrakech, Morocco in July and October, respectively. During the year, three
hotel management contracts were announced for new properties in Beijing, Beirut and Boca Raton. The Group’s
equity participation in its portfolio also increased when it acquired a 50% interest in the Hotel Ritz, Madrid inMay. In January of 2016, the Group announced it would acquire Mandarin Oriental, Boston, with the transaction
expected to close by the end of April.
The recognition of the Mandarin Oriental brand internationally, together with its strong balance sheet, ensures
the Group remains well positioned to take advantage of opportunities for further growth.

Annual Report 2015

Performance in 2015
Set out below is a review of the Group’s performance in 2015, with reference to the following strategic objectives:• Being recognized as the world’s best luxury hotel group• Strengthening our competitive position• Increasing the number of rooms under operation to 10,000• Achieving a strong financial performance

1) Being recognized as the world’s best luxury hotel group
Mandarin Oriental has created some of the world’s most sought-after properties, delivering 21st century luxury
with oriental charm. Each hotel ensures its position as one of the best in its market through a combination of
tradition, quality and innovation. Throughout the portfolio, the Group invests behind its core brand attributesof creative hotel design, architecture and technology, excellent dining experiences and holistic spa operations.
Above all, the delivery of legendary service to our guests remains at the forefront of everything we do.
The Group’s increasing global recognition is evidenced by the achievement of many significant awards
from respected travel associations and publications worldwide. Highlights include a record 14 hotels listed
in Institutional Investor 2015 ‘Top 100 World’s Best Hotels’, with seven properties voted as ‘Best in the City’.
The Group was also well represented with a record 18 hotels being recognized in the 2016 Forbes Travel Guide,with 14 properties around the world gaining the top ‘Five Star Hotel’ status, and four properties gaining therare ‘triple crown’ for hotel, spa and restaurant. Mandarin Oriental, Hong Kong is the only hotel in the world toachieve five ‘Five Star’ Awards, for the hotel, spa, and three of its restaurants. Furthermore, four of the Group’s
hotels in the United States achieved the coveted ‘Five Diamond Lodging Award’ for 2016 from the American
Automobile Association.
Condé Nast Traveler, US ‘Readers’ Choice Awards’ 2015 featured a record 19 Mandarin Oriental hotels, with five
hotels being listed as one of the top three in their respective cities. In the US, five hotels were awarded ‘Best Hotels
in the USA’ in the US News World Report, 2015. In China, Condé Nast Traveler, China ‘Readers’ Choice Awards’
listed Mandarin Oriental as ‘Best Hotel Brand’.
The Group’s reputation for excellent and innovative dining experiences was again acknowledged in the most recent
2016 Michelin guides with 11 restaurants being honoured and a total of 16 stars being granted. This is more thanany other hotel group in the world. Once again, both Amber at The Landmark Mandarin Oriental, Hong Kongand Dinner at Mandarin Oriental Hyde Park, London were voted as two of the ‘Top 50 Restaurants’ in the worldin the prized San Pellegrino listings.
The Group’s spa operations were acknowledged as being among the best, with a record 12 hotels gaining theprestigious Forbes ‘Five Star Spa’ award. Again, this is more than any other hotel group in the world. In addition,
two of the Group’s hotels in China were identified as the best in their respective destinations by SpaChina in
the 2015 awards.

910 Mandarin Oriental International Limited

Group Chief Executive’s Review Continued

The Group’s commitment to working with some of the best architects and designers was also recognized in 2015.
In particular, Mandarin Oriental, Bodrum was honoured twice at the European Hotel Design Awards 2015. Firstly,
the resort was recognized as the best ‘Newbuild’ in the ‘Architecture Awards’ and was also nominated for ‘Best
Interior Design for Spa and Wellness’.
The Group’s award-winning international advertising campaign now features 30 celebrity ‘fans’, who regularly
stay at Mandarin Oriental hotels. During the last 12 months, the Group welcomed celebrated French actress,
Isabelle Huppert, and Chinese actor, singer and model, Chen Kun, to the campaign. In May 2016, the tennis
champion, Maria Sharapova, will become its latest fan. The Group’s relationship with its celebrity fans goes far
beyond their appearance in the advertisements alone, as they frequently stay at the Group’s hotels and attend
important gala events.
The Group also continues to invest in digital marketing across all online devices and in multiple languages.
Online revenues now represent 13% of total room revenue generated from individual travel bookings. Furthermore,
the Group actively encourages a global conversation with consumers through its social media strategy, and now has
a larger and more connected global digital network than ever before, reaching consumers in all corners of the globe,
including a growing following on China’s most important social media platforms.
Further brand recognition will be accomplished as more Mandarin Oriental hotels under development open in
new and exciting travel destinations.

2) Strengthening our competitive position
Every hotel is focused on maintaining or enhancing its leadership position against primary competitors in its
individual market. This is critical to the Group’s success. Strong brand recognition, combined with the strengthof the hotel management teams, plus the added support provided by an established corporate structure, allows each
property to compete effectively and to achieve premium rates. In 2015, the Group’s position was further supported
by limited new supply in many of the key markets in which it operates.
Demographic trends continue to support the Group’s strategy of creating quality services and facilities which attract
individuals who will pay a premium for genuine luxury experiences, allowing the hotels to further increase average
rates. Demand for understated luxury experiences which are meaningful and of value remains strong amongst thehigher spending leisure customers who make up close to 50% of the Group’s room nights. These high net worth
individuals continue to originate from the Group’s traditional markets, but increasingly, the Group is attracting
additional customers from emerging markets. This is particularly true of China, which remains the second largest
source of business after the United States, accounting for 17% of total visitor arrivals. The contribution from China
will continue to grow, as the total number of hotels that the Group now operates or has under development in
mainland China has increased to eight, and the outbound market continues to develop.
Across the Group’s portfolio, overall Revenue per Available Room (‘RevPAR’) was down 4% in local currency
terms, and 9% in US dollar terms on a like-for-like basis1, although 2015 results also included the negative impact
from hotels undergoing renovations.

1

Like-for-like comparison excludes hotels without a full year of operation in either 2014 or 2015.

Annual Report 2015

The highlights of each region are as follows:

Asi a
The Group’s hotels in the region competed effectively in 2015, despite a softening in demand in some markets,particularly in Hong Kong, which put pressure on occupancy and rates. Overall, RevPAR for Asia in 2015 ona like-for-like basis, which was also negatively impacted by a renovation in Kuala Lumpur, was down 7% in local
currency terms, and 12% in US dollar terms.
Mandarin Oriental, Hong Kong was affected by reduced demand from mainland China and Europe, particularlyin the leisure segment. As a result, the hotel’s RevPAR was down 8% over the previous year. Nonetheless, continued
strong local demand led to an increase in the hotel’s food and beverage revenues of 3% over 2014, and the property
successfully retained four Michelin stars.
The Excelsior, the Group’s other wholly-owned hotel in Hong Kong, was impacted by the city-wide decline inleisure demand, particularly from mainland China, combined with aggressive rate discounting in their competitive
set. As a consequence, RevPAR was down 16%. Despite this decrease, the hotel’s food and beverage performance
was robust, improving by 5% over 2014.
In Tokyo, the hotel’s performance benefited from a further increase in visitor arrivals, and a particularly strong
performance in the first quarter when the hotel became the location of a pop-up restaurant for Noma, attracting
significant demand. Average rates increased by 14% in local currency terms, leading to an overall RevPAR increaseof 20% in local currency and 5% in US dollar terms, with the hotel ending the year as the market leader in the city.
Moreover, 2015 was an excellent year for Mandarin Oriental, Tokyo in terms of recognition. The hotel was ranked‘The World’s Number 1’ in Institutional Investor’s 2015 ‘100 World’s Best Hotels’ listing. In addition, the property
was voted the ‘Best Leisure Dining Destination’ in the 2015 Robb Report and three of its restaurants were awarded
Michelin stars in the 2016 guide, the only hotel in the city to achieve this accolade.
Mandarin Oriental, Singapore was impacted by weaker city-wide corporate and leisure demand, resulting in a 5%
decrease in RevPAR in local currency terms compared to 2014. The hotel continues to achieve strong recognition
and was awarded the Forbes ‘Five Star’ status in the annual 2016 Forbes Travel Guide for both the hotel and its spa.
It was also voted one of the top city hotels in Asia in Travel + Leisure’s ‘World’s Best Awards’ 2015, as well as Singapore’s‘Leading Lifestyle Hotel’ at the World Travel Awards 2015.
In Bangkok, despite a nine-month renovation of the historic Authors’ and Garden Wings, including Le Normandie
restaurant, and a terrorist attack in the city in August, the hotel performed well, achieving an overall RevPAR
increase of 7% in local currency terms. It was voted ‘The World’s Number 2’ in Condé Nast Traveler’s, US ‘Readers’
Choice Awards’ 2015, and is one of only two hotels in Thailand to be listed in the Robb Report’s ‘Top 100 Hotels’,
2015. Furthermore, the hotel also achieved Forbes ‘Five Star’ status in the 2016 Forbes Travel Guide in Thailand
for both the hotel and its spa.
Mandarin Oriental, Kuala Lumpur was negatively affected by the ongoing renovation programme combined withsofter city-wide demand. As a result, the hotel’s RevPAR was down 20% in local currency terms. The hotel was
voted ‘Best hotel in Kuala Lumpur’ in the 2015 DestinAsian ‘Readers’ Choice Awards’.

1112 Mandarin Oriental International Limited

Group Chief Executive’s Review Continued

Mandarin Oriental, Jakarta maintained its market share and achieved an overall increase in RevPAR of 7%
in local currency terms, despite reduced demand in the city. The weakening Indonesian rupiah, however,led to a 6% decline in RevPAR in US dollar terms. The hotel was voted ‘Best Business Hotel in Jakarta’ in
Robb Report, Singapore 2015 and was again honoured to receive the ASEAN ‘Green Hotel Award’ 2015 forits corporate responsibility initiatives.
In China, the Group’s recently opened hotels in Guangzhou and Shanghai moved further towards stabilization
and achieved double digit increases in RevPAR. Both gained increasing recognition for their personalized
service and high quality facilities, and were listed in Condé Nast Traveler China’s ‘Readers’ Choice Awards’.
Finally, Mandarin Oriental, Taipei, which opened in 2014, was listed in Condé Nast Traveler’s, US 2015
‘Hot List’ as an ‘Urbanist Standout’ and was awarded ‘Taiwan’s Best Hotel Spa’ in the World Spa Awards, 2015.
Performances at the Group’s remaining Asian hotels, in Macau and Sanya, were impacted by reduced demand.

EuropeIn Europe, most of the Group’s hotels successfully maintained their positions at the top end of their markets,
benefiting from resilient demand in the leisure sector. However, weaker city-wide demand in Paris, and a significant
renovation in Munich, adversely impacted results. Across the region, RevPAR on a like-for-like basis, which
includes disruption caused by the renovation in Munich, was in line with the prior year in local currency terms.
When translated into US dollars, however, overall RevPAR on a like-for-like basis decreased by 12%.
Mandarin Oriental Hyde Park, London performed well as a result of strong city-wide demand, which led to
an increase in RevPAR of 9% in local currency terms. The hotel was voted ‘Best Business Hotel’ in the UK
in Condé Nast Traveller’s, UK ‘Readers’ Choice Awards’ 2015, and one of the ‘Top 10 Hotels in London’ inCondé Nast Traveler’s, US ‘Readers’ Choice Awards’ 2015. Food and beverage performed well, with the hotel’saward-winning restaurant, Dinner, being nominated once again as one of the UK’s ‘Top 100 Restaurants’ inthe 2015 National Restaurant Awards.
As announced in March 2015, the Group will embark on an £85 million (US$126 million) renovation of the
London hotel, scheduled to commence in the third quarter of 2016. It will take approximately 18 months tocomplete, and will comprise a full renovation of the existing guestrooms, restaurants, bars, meeting facilities andlobby. In addition, two new penthouse suites overlooking Hyde Park will be created as well as an expansion of the
spa facilities and improvements to core buildings services. The hotel will remain open during the renovation periodwith reduced facilities and room inventory.
Mandarin Oriental, Munich’s performance was disrupted by an extensive renovation in 2015, which led to adecrease in RevPAR in local currency terms of 21%, and a decrease in EBITDA of US$6 million when comparedto the prior year. Nevertheless, the hotel remained the undisputed market leader and the new facilities, which
include a lobby lounge, bar and Matsuhisa restaurant by renowned chef Nobu, are expected to extend further its
appeal as the best hotel in the city.
In Geneva, a strong performance in the leisure segment helped to offset reduced demand from the corporate andgroup segment, with overall RevPAR in line with the prior year in local currency terms.

Annual Report 2015

Mandarin Oriental, Paris was impacted by weaker city-wide demand due to travel security concerns following
the terrorist incidents during the year. This led to a decline in RevPAR of 15% in local currency terms. The hotel’s
food and beverage operations, led by renowned chef Thierry Marx, have attained many accolades, and the signature
restaurant, Sur Mesure, was once again awarded two Michelin stars in the 2016 listing. The hotel is one of only eight
hotels in the city to be honoured with an official ‘Palace Distinction’, and was also listed in Condé Nast Traveler’s,
US ‘Readers’ Choice Awards’ 2015.
The Group’s 50% joint venture acquisition of the iconic Hotel Ritz in Madrid in May has provided an exciting
opportunity to extend Mandarin Oriental’s portfolio to another key European capital city, and will complement
the Group’s top-performing Barcelona hotel. Since the acquisition, the hotel has performed in line with expectations,achieving occupancy of more than 70% at an average rate approaching €300. The hotel is scheduled to undergo
a comprehensive renovation in 2017.
Elsewhere in the region, Mandarin Oriental, Barcelona remained the undisputed market leader, while the hotel
in Prague successfully maintained its competitive position. Both properties received further global recognition for
excellence, and were featured in Condé Nast Traveler’s, US ‘Readers’ Choice Awards’ 2015 as two of the top hotels
in their respective cities, with Mandarin Oriental, Prague being awarded ‘Top Hotel in Central Europe’.
Mandarin Oriental, Bodrum continued to stabilize and increased its reputation as one of the best resorts in
the region with an inclusion in the Robb Report’s ‘Best of the Best’ 2015, as well as being nominated by the
Daily Telegraph, UK as one of the ‘Top 10 Beach Hotels in Turkey’.
The Group’s international recognition was further enhanced by the opening of two new hotels in Europe andNorth Africa in 2015. Just five months after opening, Mandarin Oriental, Milan was awarded the Forbes ‘Five Star’award and its fine-dining restaurant, Seta, achieved one Michelin star. Mandarin Oriental, Marrakech, which
partially opened in October, was also singled out by Architectural Digest as one of the year’s ‘Design Discoveries’,
and was listed in Fodor’s Travel Guide 2015 as one of the world’s ‘25 Best New Hotels’.

The A mer ic as
The trading environment in The Americas was generally positive in 2015, however, due to the displacement ofbusiness associated with a suite refurbishment in New York, overall RevPAR across the region on a like-for-likebasis was flat.
Mandarin Oriental, Washington D.C. benefited from stronger leisure demand which led to a 3% increase in
RevPAR. The hotel appeared in numerous reader surveys in prestigious publications and was voted the ‘Best Hotelin Washington D.C.’ in Institutional Investor’s 2015 ‘World’s Best Hotels’.
Mandarin Oriental, New York continued to perform at the top end of the luxury hotel market, however,occupancy was impacted by the suite renovation in the first half of the year, which led to an overall decrease
in RevPAR of 5%, despite maintaining a high average rate. The hotel’s positioning as one of the world’s mostluxurious properties was further reinforced through a variety of awards including being one of the ‘Top 10 Hotels’in the city in Condé Nast Traveler’s, US ‘Readers’ Choice Awards’ 2015, as well as one of the ‘Best Hotels in The
Americas’ in Institutional Investor’s 2015 ‘Top 100 World’s Best Hotels’. Importantly, the hotel retained both theprestigious Forbes ‘Five Star’ rating and the American Automobile Association’s ‘Five Diamond Lodging Award’.
At Mandarin Oriental, Miami, favourable market conditions led to an uplift in RevPAR of 3%, and the hotel’s
newest restaurant and bar, La Mar, continues to gain positive press reviews for its outstanding cuisine.

1314 Mandarin Oriental International Limited

Group Chief Executive’s Review Continued

Mandarin Oriental, Boston maintained its position as market leader, with RevPAR in line with the previous year.
The hotel was ranked ‘Best Hotel in Boston’ in Institutional Investor’s 2015 ‘Top 100 World’s Best Hotels’, andBar Boulud continues to be well received by the local community and international guests.
Elsewhere, the Group’s hotels in Atlanta and Las Vegas increased their RevPAR over the prior year.

3) Increasing the number of rooms under operation to 10,000
Mandarin Oriental has achieved strong geographic diversification with a well-balanced portfolio across the globe
and is on track to meet its mid-term goal of operating 10,000 rooms in key global locations within the next few
years. Today, the Group operates over 8,000 rooms in 29 hotels around the world, and, including the hotels underdevelopment, the total portfolio now extends to more than 11,000 rooms in 46 hotels located in 24 countries.
Three new hotel management contracts and two new hotel acquisitions have been announced, including one
in 2016:• In May, the Group acquired a 50% interest in the Hotel Ritz, Madrid for €65 million (US$73 million) ina joint venture with The Olayan Group, with Mandarin Oriental managing the hotel under a long-term
management agreement. The hotel is to undergo a comprehensive renovation in 2017, currently estimatedto cost some €90 million, of which the Group’s share will be €45 million (US$49 million).
• In June, the Group announced a management contract for a 74-room hotel in the heart of Beijing, China,scheduled to open in 2017. The hotel, which will be the Group’s second in the city, will occupy the top two floorsof a luxury mixed-use project in Wangfujing, which is owned by the Group’s sister company, Hongkong Land.
• In September, the Group announced that it will manage a new 280-room hotel and 103 branded Residences
currently under development in Beirut and scheduled to open in 2018. The project provides the Group witha unique opportunity to further extend its reach in the important Middle East market.
• In November, the Group announced that it will manage a 158-room hotel and 100 branded Residences currently
under development in Boca Raton, south Florida. The project is scheduled to open in 2017.
• In January 2016, the Group announced that it would acquire the freehold interest in the property housing
Mandarin Oriental, Boston for US$140 million, with the transaction expected to close by the end of April.
The Group has managed the 148-room hotel on Boylston Street since its opening in 2008, and also manages
85 privately owned Residences at Mandarin Oriental connected to the hotel.
During 2015, the Group ceased to manage its San Francisco hotel and the project in Grand Cayman will nolonger proceed.
In total, Mandarin Oriental has 17 new hotels currently under development, all of which are long-term management
contracts requiring no capital investment by the Group. Two of these properties will open within the next 18 months.
Mandarin Oriental, Doha, the Group’s first hotel in the Middle East, followed by Mandarin Oriental, Beijing,
located in the iconic CCTV complex.
In addition to the Group’s portfolio of hotels, a total of 15 Residences at Mandarin Oriental projects are open
or under development. Over the past five years, the associated branding of these projects has, on average,
resulted in fees of approximately US$10 million per annum. These fees, together with ongoing revenues frommanagement fees and the use of hotel facilities by the home owners, should provide a growing return for theGroup in future years.

Annual Report 2015

The Group’s strategy of operating both owned and managed hotels remains in place. Mandarin Oriental is well
positioned to take advantage of selective investment opportunities in strategic locations that offer attractive returns,
while at the same time its strong brand continues to be sought after by developers of luxury hotels. The long-term
potential for growth is significant, and the Group has in the pipeline many opportunities for additional luxurious
hotels and residences in important or unique locations around the world.

4) Achieving a strong financial performance
The Group’s overall financial performance in 2015 was impacted by softer demand in Hong Kong and Paris,
together with disruption from renovations at a number of properties. Nonetheless, overall underlying profitabilityof the Group at US$90 million was resilient when compared to the record US$97 million result achieved in 2014.
Strong competitive performances were maintained across the majority of the portfolio and the Group’s development
objectives remained active throughout the year.
The Group’s balance sheet was further strengthened during the year following a successful US$316 million
rights issue, the proceeds of which were used to fund a reduction in the Group’s debt and to finance its shareof the investment in Madrid.
At 31st December 2015, gearing was 4% of adjusted shareholders’ funds, compared to 13% at the end of 2014.
Including the impact of the acquisition of Mandarin Oriental, Boston on a pro forma basis (i.e. assuming thatthe hotel had been acquired on 31st December 2015), gearing would have been 8%.
The Board has recommended a final dividend of US¢3.00 per share, which, when combined with the interim
dividend of US¢2.00 per share, makes a full year dividend of US¢5.00 per share on the enlarged shareholder base.

The future
While challenging conditions are expected to continue in some markets, demand for the Mandarin Oriental brandremains strong. Despite significant renovations which will begin in London in 2016, the Group’s results should
benefit from the further stabilization of its recently opened and acquired hotels. Looking forward, the Group will
be supported by the continued growth of its global portfolio, by the increasing number of high net worth travellers
from both traditional and emerging markets, and by the limited supply of competitive luxury hotels in our key
mature markets.
The geographical broadening of the Group’s hotel portfolio, and the increasing opportunities for branded Residences
projects internationally, underlie the strength of the brand and the growing recognition of Mandarin Oriental as
one of the best luxury hotel groups in the world.

Edouard EttedguiGroup Chief Executive
3rd March 201615

16 Mandarin Oriental International Limited

Operating Summary

There are 29 hotels in operation, but the operating summary includes only hotels in which the Group has
an equity interest and were operating in 2015.

ASIA
Mandarin Oriental, Hong Kong 100% ownership

Mandarin Oriental, Singapore 50% ownership					
%2015		 2014		 Change					%2015		 2014		 Change

Available rooms

501

501		

0

Available rooms

527

527		

0

Average occupancy (%)

66

68		

(3)

Average occupancy (%)

80

82		

(2)

Average room rate (US$)

518

545		

(5)

Average room rate (US$)

274

307		

(11)

RevPAR (US$)

341

370		

(8)

RevPAR (US$)

220

251		

(12)

The Excelsior, Hong Kong 100% ownership

Mandarin Oriental, Bangkok 44.9% ownership					
%2015		 2014		 Change					%2015		 2014		 Change

Available rooms

883

884		

(0)

Available rooms

368

374		

(2)

Average occupancy (%)

78

85		

(8)

Average occupancy (%)

47

41		

15

Average room rate (US$)

194

212		

(8)

Average room rate (US$)

340

386		

(12)

RevPAR (US$)

152

180		

(16)

RevPAR (US$)

160

159		

1

Mandarin Oriental, Tokyo 100% leasehold

Mandarin Oriental, Kuala Lumpur 25% ownership					
%2015		 2014		 Change					%2015		 2014		 Change

Available rooms

178

178		

0

Available rooms

632

632		

0

Average occupancy (%)

80

76		

5

Average occupancy (%)

48

63		

(24)

Average room rate (US$)

520

520		

0

Average room rate (US$)

173

198		

(13)

RevPAR (US$)

417

397		

5

RevPAR (US$)

83

124		

(33)

Mandarin Oriental, Jakarta 96.9% ownership					
%2015		 2014		 Change

Available rooms

272

272		

0

Average occupancy (%)

55

59		

(7)

Average room rate (US$)

186

184		

1

RevPAR (US$)

103

109		

(6)

Annual Report 2015

EUROPETHE AMERICAS

Mandarin Oriental Hyde Park, London 100% ownership

Mandarin Oriental, Washington D.C. 80% ownership					
%2015		 2014		 Change					%2015		 2014		 Change

Available rooms

193

194		

(0)

Available rooms

397

397		

0

Average occupancy (%)

80

78		

3

Average occupancy (%)

60

57		

5

Average room rate (US$)

861

872		

(1)

Average room rate (US$)

316

324		

(2)

RevPAR (US$)

690

682		

1

RevPAR (US$)

191

185		

3

Mandarin Oriental, Munich 100% ownership

Mandarin Oriental, New York 25% ownership					
%2015		 2014		 Change

Available rooms

73

73		

0

Average occupancy (%)

62

76		

Average room rate (US$)

804

RevPAR (US$)

495

Available rooms

244

244		

0

(18)

Average occupancy (%)

71

74		

(4)

983		

(18)

Average room rate (US$)

971

986		

(2)

751		

(34)

RevPAR (US$)

694

732		

(5)

Mandarin Oriental, Paris 100% ownership

Mandarin Oriental, Miami 25% ownership					
%2015		 2014		 Change

Available rooms

138

138		

0

Average occupancy (%)

57

68		

Average room rate (US$)

1,122
635

RevPAR (US$)

					%2015		 2014		 Change					%2015		 2014		 Change

Available rooms

326

326		

0

(16)

Average occupancy (%)

72

70		

3

1,303		

(14)

Average room rate (US$)

376

371		

1

890		

(29)

RevPAR (US$)

271

261		

3

Mandarin Oriental, Geneva 92.6% ownership					
%2015		 2014		 Change

Available rooms

189

196		

(4)

Average occupancy (%)

58

58		

0

Average room rate (US$)

669

701		

(5)

RevPAR (US$)

388

408		

(5)

Hotel Ritz, Madrid 50% ownership (following a 50:50 joint ventureacquisition on 22nd May 2015)

					
%
2015		 2014		 Change

Available rooms

167

N/A		

N/A

Average occupancy (%)

72

N/A		

N/A

Average room rate (US$)

325

N/A		

N/A

RevPAR (US$)

234

N/A		

N/A

17

18 Mandarin Oriental International Limited

Development Portfolio

Mandarin Oriental Hotel Group currently has 17 hotels and 8 Residences at Mandarin Oriental under development.
Asia
Mandarin Oriental, Bali
A 100-room resort located on Bali’s southern Bukit peninsula. Perched on a cliffside plateau, the resort will offer dramatic and spectacular views withdirect access to a secluded and protected white-sand beach.

The Residences at Mandarin Oriental, Bangkok
146 luxury residences located across the Chao Phraya River from Mandarin Oriental, Bangkok, part of an iconic mixed-use riverfront development.

Mandarin Oriental, Beijing
A 241-room hotel located in the central business district, and part of the iconic headquarters of China Central Television (CCTV).

Mandarin Oriental Wangfujing, Beijing
A 74-room hotel located in a premier mixed-use development WF CENTRAL, with impressive views overlooking the Forbidden City.

Mandarin Oriental, Chengdu
A 327-room hotel with 18 serviced apartments located on the top 33 floors of an iconic tower, on a prime riverfront site in Jinjiang District, across fromthe ancient Wang-jiang Park.

Mandarin Oriental, Chongqing
A 207-room hotel with 18 serviced apartments situated in the heart of the central business district with panoramic views of the city skyline.

Mandarin Oriental, Maldives
An exclusive hideaway retreat located on a pristine private island, featuring 114 spacious stand-alone villas, including 20 water villas in a stunning
natural setting.

Mandarin Oriental, Manila
A 275-room hotel located within the Ayala Triangle in Makati central business district.

Mandarin Oriental, Shenzhen
A 190-room hotel situated on the top of an impressive 400-metre tower with outstanding views of the city skyline and the surrounding city parks.

Europe, Middle East and North Africa
Mandarin Oriental, Abu Dhabi
A 153-room resort and 66 Residences at Mandarin Oriental located on Saadiyat Island, set to become a leading leisure and cultural destination.

Mandarin Oriental, Beirut
A 255-room luxury hotel with 25 serviced apartments and 103 Residences at Mandarin Oriental located in Beirut’s Central District at the heart ofLebanon’s capital.

Mandarin Oriental, DohaA 158-room hotel with 91 serviced apartments located in Msheireb Downtown Doha, adjacent to Doha’s cultural gem, Souk Waqif, and the city’sbusiness centre in West Bay.

Mandarin Oriental, Dubai
A 265-room urban resort located on Jumeirah Beach Road, one of the most sought-after waterfront locations in the city.

Mandarin Oriental, Bosphorus, Istanbul
A 130-room hotel prominently located on the banks of the Bosphorus, with panoramic vistas of the famed strait, surrounding hills and the city’s historical sites.

Mandarin Oriental, Marbella
A 114-room hotel and 94 Residences at Mandarin Oriental located on a hill top in southern Spain, with spectacular views overlooking the Mediterranean Sea.

The Residences at Mandarin Oriental, Munich
19 luxury Residences at Mandarin Oriental located in a mixed-use complex being developed opposite Mandarin Oriental, Munich, which will include
51 additional hotel rooms.

The Americas
Mandarin Oriental, Boca Raton
A 158-room hotel and 100 Residences at Mandarin Oriental as part of a mixed-use complex, surrounded by Boca Raton’s most affluent, residential
neighbourhoods and a short walk from miles of pristine beaches.

Mandarin Oriental, Costa Rica
A 130-room beach resort and 92 Residences at Mandarin Oriental located at Playa Manzanillo, on Costa Rica’s northern Pacific coast.

Mandarin Oriental Dellis Cay, Turks & Caicos
A secluded 150-room hideaway resort including 86 Residences at Mandarin Oriental, located on an unspoiled 35-acre beachfront site.
Opening dates are determined by each project’s owner/developer. All of the above projects will be managed by Mandarin Oriental Hotel Group with no equity
investment from the Group.
Room numbers reflect the latest estimate from each project’s owner/developer, and may therefore differ from the original announcements and the final
number once the project is completed.

Annual Report 2015

International Recognition

Mandarin Oriental Hotel Group has been recognizedconsistently by global influential publications as an
outstanding hotel company. Below are quotes froma selection of these publications in the last year thathighlight individual properties and the Group.

The best hotels aren’t always the new ones, but great
old favourites that offer beauty, luxury and unparalleledservice. Mandarin Oriental, Hong Kong, the grandedame of Asia has turned 50 most elegantly. She stillboasts discreet service and harbour views, but now also
abounds with contemporary touches.

Mandarin Oriental Hotel Group

Harper’s Bazaar

At “only” 50-plus years, Mandarin Oriental seems
older than it actually is, a brand so well executed in theluxury space that it feels like it has always been there.
ForbesElegant and distinctive, each Mandarin Oriental
property has its own unique personality while remainingtrue to the brand’s rich Asian heritage. With legendary
service, beautiful artistry, and above all else, a deep
passion for delighting guests, it’s no wonder it has somany fans the world over.
Centurion

Mandarin Oriental, Bangkok
With its stellar service and facilities, along with its
unrivalled soul, Mandarin Oriental, Bangkok may
have been built way back in 1876 but it has nothing
to envy other hotels in the city. And for those who findit just too hard to leave, good news is on the horizon:
the hotel will be inaugurating its private residences
across the river in 2018.

The Landmark Mandarin Oriental, Hong Kong
The Landmark Mandarin Oriental is special: small by
Hong Kong standards, at just 14 floors, and very sexy,it has suites that exhibit extreme ingenuity in their useof space (dining tables that turn into desks in an instant),and staff that set a new bar for personalised service.
Financial Times How to Spend It

A striking counterpoint to Hong Kong’s historicsister hotel, this 113-room property blends high-techamenities with modern design. The French restaurant
Amber earned a pair of Michelin stars in 2012;
cocktails are unrivalled at MO Bar.
Robb Report

Mandarin Oriental, Macau
Mandarin Oriental, Macau has elegance, superlative
service, a lap pool and a luxury spa. It’s a refreshing
contrast to the glitzy casino hotels.
Lonely Planet Traveller

Forbes

A legend in Bangkok, the riverside Mandarin Oriental
is where all the VIPs stay, from George Bush to the
Beckhams. Synonymous with luxury, the hotel is allabout plush rooms, tiptop service and Asian-inspired
elegance. An oasis away from the city’s chaos, it overlooks
the Chao Phraya and its never-ending parade of life.
Elle

Mandarin Oriental, Hong Kong
Mandarin Oriental, Hong Kong has been knocking
all competition out of the park since 1963 and showsno signs of slowing down.
Tatler

The service at Mandarin Oriental, Hong Kong is truly
wonderful. The team there is slick and professionalwith a touch of class.
The Wall Street Journal

Mandarin Oriental Pudong, Shanghai
In Shanghai, the fabulous Mandarin Oriental Pudong,Shanghai was world-class. Beautiful rooms, incredible
staff, and the option of a full English breakfast. I neednothing else.
Daily Mail

Mandarin Oriental, Singapore
There is something in the service and ambience ofMandarin Oriental, Singapore that makes it feel personal.
I felt more like an honoured guest than a customer.
BA High Life

Mandarin Oriental, Taipei
Grand and glitzy, the 256-room Mandarin Oriental,
Taipei is now the most luxurious hotel in the city
since it opened last year. It’s all about decadent accents,
a stunning art collection and a big lineup of dining
options, ranging from Italian to Cantonese to French.
Condé Nast Traveler, US

19

20 Mandarin Oriental International Limited

International Recognition Continued

Mandarin Oriental, Tokyo

Mandarin Oriental, Munich

A five-star luxury hotel is meant to be an experience,even if it’s for business trips, and Mandarin Oriental,
Tokyo, ranks among the best in the world, and one of
the chain’s standout properties.

Nobu Matsuhisa has opened the first Matsuhisa
restaurant in Germany in the redesigned super luxury
Mandarin Oriental, Munich.
Bunte

Variety

Mandarin Oriental, Barcelona
With an ideal location, unbeatable selection of finedining and amazingly attentive staff, Mandarin
Oriental, Barcelona is the perfect hotel, in the perfectcity, for the most perfectly sophisticated of vacations.
Pursuitist

Mandarin Oriental, Bodrum
This place delivers privacy. The rooms are
sophisticated, elegant, the suites with teak panellingand cosy rugs, all comforts in place, a pretty view out
across the vast blue Aegean. It would be easy to spend
a week without ever leaving the tender embrace ofthe sensational spa and wellness centre.
Condé Nast Traveller, UK

Mandarin Oriental, Paris
The rooms are spacious, stylish and comfortable,
the service is second to none and the overall effectis of cool, calm, chic efficiency.
EsquireMandarin Oriental, Boston
With its contemporary Feng-Shui-influenced décor,the 148-room Mandarin Oriental, Boston is Beantown’s
most fashionable address.
Robb Report

Mandarin Oriental, Las Vegas
The ultra-luxurious Mandarin Oriental, Las Vegas
is a hotbed of luxury in Nevada’s Mojave Desert.
USA Today

Mandarin Oriental Hyde Park, London

Mandarin Oriental, Miami

Impressive from the moment you step inside. The staff
are amazing. I run in Hyde Park and can cross the street
to Harvey Nichols. Maybe in my next life I’ll live here.

A perfect city resort. During our stay we wererepeatedly impressed with the staff’s attention todetail – everything was always so tastefully presented.

Condé Nast Traveller, UK

About.com

Mandarin Oriental, Marrakech

Mandarin Oriental, New York

Mandarin Oriental’s first African venture combines
subtle refinement with Berber and Moorish design
influences, resulting in an exotic elegance that vibrates
through its 50 landscaped acres.

Mandarin Oriental, New York has mastered the art ofstanding out from the crowd. Occupying the 230 metrehigh Time Warner building since its launch over a
decade ago, the hotel continues to push the boundaries
of service and live up to its five-star expectations.
The launch of the property’s 42 one and two bedroom
suites has introduced a contemporary aspect withan exceptional attention to detail that has becomea definitive feature of the luxury brand.

Departures

Mandarin Oriental, Milan
Purring with glamour, with a townhouse setting,sumptuous interiors and modern-arty light fixtures.
Like all MOs, these converted 19th-century townhouses
have a business-like streak, but the leisure factor lies in
the chic, tree-lined terrace for lunch and a subterranean
spa for lazing.
The Sunday Times Travel

Wallpaper Magazine

Annual Report 2015

Financial Review

Accounting policies
The Directors continue to review the appropriatenessof the accounting policies adopted by the Group
having regard to developments in International
Financial Reporting Standards (‘IFRS’).
The accounting policies adopted are consistent withthose of the previous year, except that the Group has
adopted several amendments to IFRS effective on
1st January 2015, as more fully detailed in the ‘Basisof preparation’ note in the financial statements. The
adoption of these amendments did not have a material
impact on the Group’s financial statements.

Results
Overall
The Group uses earnings before interest, tax,
depreciation and amortization (‘EBITDA’) to analyze
operating performance. Total underlying EBITDA
including the Group’s share of underlying EBITDA
from associates and joint ventures is shown below:
				2015		
US$m		

2014
US$m

Subsidiaries

160.7

185.8

Associates and joint ventures

27.7

31.5

Underlying EBITDA

188.4

217.3

		
		

2015		
US$m		

2014
US$m

Underlying EBITDA from subsidiaries

160.7

185.8

(0.5 )–EBITDA from subsidiaries

160.2

185.8

Less: depreciation and amortization(52.9 )

(65.0 )

Operating profit

107.3

120.8

Subsidiaries

Non-trading items:
Less: acquisition costs related toHotel Ritz, Madrid

In 2015, underlying EBITDA from subsidiaries
decreased by US$25.1 million or 14%, toUS$160.7 million. Excluding the US$14.9 millionof branding fees received in 2014 in relation to the saleof Residences at Mandarin Oriental in Bodrum, 2015
underlying EBITDA decreased by US$10.2 million,
or 6%. After deducting US$0.5 million of non-trading
expenses related to the acquisition of the Group’s
50% interest in the Hotel Ritz, Madrid, EBITDA
from subsidiaries in 2015 was US$160.2 million.
Softer city-wide demand in Hong Kong, particularly
from the mainland China leisure segment, led to lower
average rates and occupancy at Mandarin Oriental,
Hong Kong and The Excelsior, which was also
impacted by aggressive discounting in its segment.
Robust performances in Food and Beverage, however,helped to mitigate the impact at both hotels, withMandarin Oriental, Hong Kong maintaining EBITDA
in line with the prior year. In Tokyo, a further increasein the number of visitor arrivals led to a strong
performance, with RevPAR up 20% in local currency
terms. A weaker Japanese yen, however, meant that
performance gains were not fully reflected in the
US dollar results. Similarly, while the Jakarta hotelalso reported an improved performance in local
currency terms, a weaker Indonesian rupiah resulted
in its EBITDA contribution being lower whentranslated into US dollars.
In Europe, while stronger city-wide demand in London
led to a higher EBITDA from the hotel, this was morethan offset by a lower contribution in Paris due to theadverse impact of terrorist attacks in city. In Munich,disruption due to a significant renovation of the hotel
during the year resulted in a decline in EBITDA of
US$6 million. In Geneva, an improved performancein the leisure segment allowed the hotel to maintain
EBITDA in line with the prior year, despite softer
city-wide demand.

21

22 Mandarin Oriental International Limited

Financial Review Continued

Subsidiaries continued
In The Americas, positive trading conditions resulted
in a higher contribution from Washington D.C.
In 2015, the contribution from management
activities decreased by US$11.0 million, or 29%,
to US$26.3 million, from US$37.3 million in 2014,
which included US$14.9 million of branding fees
received from sale of Residences at Mandarin Oriental
in Bodrum.

Improved conditions in The Americas led to a higher
contribution from the Group’s 25% owned hotel in
Miami. The Group’s results also benefited from a newhotel contribution following the 50% joint ventureacquisition of the Hotel Ritz in Madrid in May 2015,
with the hotel performing in line with expectations.
Depreciation and amortization of associates andjoint ventures were at a similar level as 2014, as were
the Group’s share of net financing charges fromassociates and joint ventures.

Associates and joint ventures
The Group’s share of results from associates and joint
ventures was as follows:				2015		
US$m		

2014
US$m

Underlying EBITDA fromassociates and joint ventures

27.7

31.5

Non-trading items:
Less: acquisition costs related toHotel Ritz, Madrid(0.5 )–EBITDA from associates andjoint ventures

27.2

31.5

Less: depreciation and amortization(10.8 )

(12.1 )

Operating profit

16.4

19.4

Less: net financing charges(3.5 )(3.5 )   tax(2.4 )(3.6 )

Share of results of associates
and joint ventures

10.5

12.3

In total, the Group’s share of underlying EBITDA
from associates and joint ventures decreased by
US$3.8 million or 12% to US$27.7 million in 2015.
The reduction was due primarily to the disruption
from renovations at the Group’s 25% owned hotels
in New York and Kuala Lumpur, which was also
impacted by softer city-wide demand.
In Bangkok, the hotel performed well and maintained
EBITDA broadly in line with 2014, despite a terrorist
attack in the city in August and a nine-monthrenovation of the historic Authors’ and Garden Wings.
In Singapore, softer city-wide demand led to a slightly
lower contribution from the Group’s 50% owned hotel.

Non-trading items
In 2015, there was a total of US$1.0 million of
non-trading items relating to transaction costs
associated with the acquisition of the Group’s 50%
interest in the Hotel Ritz, Madrid. These are disclosed
separately as US$0.5 million of expenses attributable
to the Group itself, and the Group’s US$0.5 million
share of costs incurred by the joint venture.
Net financing charges
Net financing charges for the Group’s subsidiaries
decreased to US$11.8 million in 2015, from
US$17.3 million in 2014. The decrease is mainly due
to a US$262 million repayment of bank debt following
the Group’s US$316 million rights issue in April 2015.
Interest cover
EBITDA is used as an indicator of the Group’s
ability to service debt and ﬁnance its future capital
expenditure. Interest cover in 2015 calculated asunderlying EBITDA (including the Group’s shareof underlying EBITDA from associates and joint
ventures) over net financing charges (including theGroup’s share of net financing charges from associates
and joint ventures), was 12.3 times compared with
10.4 times in 2014.

Annual Report 2015

Tax
The tax charge for 2015 of US$16.6 million wasslightly lower than the US$19.0 million charge in2014, reflecting lower profitability. The underlying
effective tax rate for the year was 20%, broadly in linewith the prior year.
Cash flow
The Group’s consolidated cash ﬂows are summarized
as follows:
2015		
US$m		

2014
US$m

Operating activities

140

160

Investing activities:• Capital expenditure on	  existing properties

(50 )

(29 )

• Acquisition of 50% interest
	  in Hotel Ritz, Madrid

(73 )

–

–

(17 )

		
		

• Payment for Munich expansion• Repayment of loans to associates

1

4• Purchase of intangible assets

(2 )

(3 )

• Other–(1 )Financing activities:• Issue of shares

314–• Net repayment of borrowings(262 )(29 )• Dividends paid

(75 )

(70 )

Net (decrease)/increase in cash

(7 )

15

324

316

(9 )

(7 )

308

324

Cash and cash equivalents
at 1st January
Effect of exchange rate changes
Cash and cash equivalents
at 31st December

In May 2015, the Group acquired a 50% interest in the
Hotel Ritz, Madrid for €65 million (US$73 million)
in a joint venture with The Olayan Group, withMandarin Oriental managing the hotel undera long-term management agreement. The hotel
is to undergo a comprehensive renovation in 2017,
which is currently estimated to cost a total of some
€90 million, of which the Group’s share will be€45 million (US$49 million).
In April 2015, the Group completed a 1 for 4 rights
issue, raising gross proceeds of US$316 million,
which were used to fund the Group’s 50% share of
the acquisition of the Hotel Ritz, Madrid and to repay
US$262 million of existing bank debt. In particular,
the Group repaid fully its €150 million facility
associated with the acquisition of the Paris property,
and repaid £40 million of its £80 million term loan
in London, thus providing the Group with the capacity
to finance some US$300 million of previously
announced significant capital commitments plannedover the next five years in relation to the following
development projects:
Significant capital commitments, as previously announced		

London renovation

The Group’s cash flows from operating activities were
US$140 million in 2015, a decrease of US$20 million
from the US$160 million inflow in 2014.
Under investing activities, capital expenditure on
existing properties was US$50 million in 2015,
compared to US$29 million in 2014. The
US$21 million increase is due primarily to therenovation of the lobby and restaurants in Munich,
which was completed towards the end of the year, andthe commencement of a rooms refurbishment inWashington D.C., with capital expenditure at theother subsidiary hotels broadly in line with 2014.

US$m		

Timing126		

2016-18

Madrid renovation (Group’s 50% share)49		

2017-18

Munich extension*122		

2017-20

Total

297		

* Excludes US$17 million already spent up to 31st December 2015.

These projects, commencing with the London
renovation in late 2016, will be funded throughan appropriate mixture of existing cash reserves anddebt facilities to be determined closer to the time.

23

24 Mandarin Oriental International Limited

Financial Review Continued

Dividends
The Board is recommending a final dividend ofUS¢3.00 per share for a full-year dividend ofUS¢5.00 per share on the enlarged share capital(2014: US¢7.00 per share). No scrip alternative isbeing offered in respect of the dividend. The final
dividend is payable on 11th May 2016 to shareholders
on the register of members at the close of businesson 18th March 2016.

On an IFRS basis, the Group’s consolidated net debt
of US$132 million at 31st December 2015 was 11%
of shareholders’ funds, compared with consolidated
net debt of US$403 million at 31st December 2014
which was 42% of shareholders’ funds. Taking into
account the fair market value of the Group’s interests
in freehold and leasehold land, gearing was 4% ofadjusted shareholders’ funds at 31st December 2015,
compared with 13% at 31st December 2014.

Supplementary information

Treasury activities

Although the Group’s accounting policy in respectof its freehold land and buildings and the building
component of owner-occupied leasehold properties
is based on the cost model, the Directors continue
to review the fair market values in conjunction withindependent appraisers on an annual basis. The fairmarket value of both freehold and leasehold land andbuildings is used by the Group to calculate adjusted
net assets, which the Directors believe gives important
supplementary information regarding net asset value
per share and gearing as outlined below:

The Group manages its exposure to ﬁnancial risk using
a variety of techniques and instruments. The main
objective is to manage exchange and interest rate risks
and to provide a degree of certainty in respect of costs.
The Group has ﬁxed or capped interest rates on 56%
of its gross borrowings.

2015

2014

			Per share		Per share*
		
US$m
US$
US$m
US$

Shareholders’ funds/net
assets at amortized cost

1,227

In respect of specific hotel financing, borrowings
are normally taken in the local currency to hedge
partially the investment and the projected income.
At 31st December 2015, the Group’s net assets/(liabilities) were denominated in the following currencies:

0.98

956

0.92

Add: surplus for fairmarket value offreehold and leasehold
land and buildings

2,342

1.86

2,196

2.10

Adjusted shareholders’funds/net assets

3,569

2.84

3,152

3.02

* The comparative figures in 2014 have been adjusted for the effectof the rights issue completed in April 2015.

Net assets/(liabilities)
		

US$m		

Adjusted
net assets*%		

US$m		%

Hong Kong dollar

(23 )

(2 )

1,865		

52

Euro

514		

42		

617		

17

United States dollar

287		

23		

334		

9

United Kingdom sterling

189		

16		

269		

8

Singapore dollar

46		

4		

178		

5

Thai baht

26		

2		

87		

3

Swiss franc

119		

10		

119		

3

Indonesian rupiah

27		

2		

53		

2

Others

42		

3		

47		

1

1,227		

100		3,569		

100		

* See supplementary information section above.

Annual Report 2015

The Group, excluding associates and joint ventures,
had committed borrowing facilities totalling
US$578 million, of which US$440 million was drawn
at 31st December 2015. The principal amounts due
for repayment are as follows:
		
		
		

Facilities
Facilities		
committed		drawn		US$m		
US$m		

Unusedfacilities
US$mWithin one year

4		

4		

–

Between one and two years

3		

3		

–

Between two and three years

–		

–		

–

Between three and four years

570		

432		

138

Between four and five years

–		

–		

–

Beyond ﬁve years

1		

1		

–

578		

440		

138

		

At 31st December 2015, the Group had US$138 millionof committed, undrawn facilities in addition to its net
cash balances of US$308 million. The average tenor of
the Group’s borrowings was 3.6 years (2014: 3.7 years),with only US$4 million of committed facilities due tomature before the end of 2016.
On 6th January 2016, the Group announced it would
acquire Mandarin Oriental, Boston for US$140 million,
a hotel that the Group has managed since its opening
in 2008. The transaction, which is expected to close by
the end of April, will be funded through an appropriate
mixture of existing cash reserves and debt facilities.

Principal risks and uncertainties
A review of the principal risks and uncertainties facing
the Group is set out on pages 97 and 98.

Stuart Dickie
Chief Financial Officer
3rd March 201625

26 Mandarin Oriental International Limited

Directors’ Profiles

Ben Keswick* Chairman and Managing Director
Mr Ben Keswick joined the Board as Managing
Director in 2012 and became Chairman in 2013.
He has held a number of executive positions sincejoining the Jardine Matheson group in 1998, including
finance director and then chief executive officer
of Jardine Pacific between 2003 and 2007 and,
thereafter, group managing director of Jardine Cycle &Carriage until 2012. He has an MBA from INSEAD.
Mr Keswick is chairman of Jardine Matheson Limited
and Jardine Cycle & Carriage and a commissionerof Astra. He is also chairman and managing directorof Dairy Farm and Hongkong Land, managing
director of Jardine Matheson and Jardine Strategic,
and a director of Jardine Pacific and Jardine Motors.
Edouard Ettedgui* Group Chief Executive
Mr Ettedgui joined the Board in 1998 and ismanaging director of Mandarin Oriental HotelGroup International. He was formerly group financedirector of Dairy Farm, prior to which he was businessdevelopment director of British American Tobacco.
He has extensive international experience in bothfinancial and general management.
Stuart Dickie* Chief Financial Officer
Mr Dickie joined the Board as Chief Financial
Officer in 2010. He was director of Corporate
Finance of the Group from 2000. Prior to joining
the Group, Mr Dickie was a senior manager at
PricewaterhouseCoopers in Hong Kong from 1994
to 2000. He is a Chartered Accountant and a Memberof the Association of Corporate Treasurers.
Mark Greenberg
Mr Greenberg joined the Board in 2006. He isgroup strategy director of Jardine Matheson. He had
previously spent 16 years in investment banking with
Dresdner Kleinwort Wasserstein in London. He is alsoa director of Jardine Matheson Limited, Dairy Farm,
Hongkong Land and Jardine Cycle & Carriage, anda commissioner of Astra and Bank Permata.
Julian Hui
Mr Hui joined the Board in 1994. He is an executive
director of Owens Company, and a director ofCentral Development and Jardine Strategic.
* Executive Director

Adam Keswick
Mr Adam Keswick joined the Board in 2012.
He is deputy managing director of Jardine Matheson,
chairman of Jardine Pacific, and chairman and chief
executive of Jardine Motors. He has held a number of
executive positions since joining the Jardine Matheson
group from N M Rothschild & Sons in 2001, includinggroup strategy director and, thereafter, group managing
director of Jardine Cycle & Carriage between 2003
and 2007. Mr Keswick is also deputy chairmanof Jardine Matheson Limited, and a director of
Dairy Farm, Hongkong Land, Jardine Strategic,
Yonghui Superstores and Zhongsheng Group Holdings.
Sir Henry Keswick
Sir Henry joined the Board in 1988. He is chairmanof Jardine Matheson, having first joined the group in
1961, and is also chairman of Jardine Strategic. He isa director of Dairy Farm and Hongkong Land. He is
also vice chairman of the Hong Kong Association.
Simon Keswick
Mr Simon Keswick joined the Board in 1986 andwas Chairman of the Company from 1986 to 2013.
He joined the Jardine Matheson group in 1962 andis a director of Dairy Farm, Hongkong Land, Jardine
Matheson and Jardine Strategic.
Lord Leach of Fairford
Lord Leach joined the Board in 1987. He is deputy
chairman of Jardine Lloyd Thompson, and a directorof Dairy Farm, Hongkong Land, Jardine Matheson
and Jardine Strategic. He is also a member of thesupervisory board of Rothschild & Co. He joined
the Jardine Matheson group in 1983 after a careerin banking.
Dr Richard Lee
Dr Lee joined the Board in 1987. Dr Lee’s principal
business interests are in the manufacturing of textiles
and apparel in Southeast Asia, and he is the honorary
chairman of TAL Apparel. He is also a director of
Jardine Matheson and Hongkong Land.

Annual Report 2015

Lincoln K.K. Leong
Mr Leong joined the Board in 2012. He is a Chartered
Accountant and has extensive experience in theaccountancy and investment banking industries.
Mr Leong is also chief executive officer of MTR
Corporation.
Anthony Nightingale
Mr Nightingale joined the Board in 2006 and was
Managing Director of the Company from 2006 to
2012. He is also a director of Dairy Farm, HongkongLand, Jardine Cycle & Carriage, Jardine Matheson,
Jardine Strategic, Prudential, Schindler, Shui On
Land and Vitasoy, and a commissioner of Astra.
Mr Nightingale also holds a number of senior public
appointments, including acting as a non-official
member of the Commission on Strategic Development,a Hong Kong representative to the Asia Pacific
Economic Cooperation (APEC) Business Advisory
Council and a director of the UK ASEAN BusinessCouncil. He is chairman of The Sailors Home andMissions to Seamen in Hong Kong.
Jeremy Parr
Mr Parr joined the Board in August 2015. He is
general counsel of the Jardine Matheson group.
He was previously a senior corporate partner with
Linklaters, where he was the global head of the firm’s
corporate division, based in London. Mr Parr is alsoa director of Jardine Matheson Limited, Dairy Farmand Jardine Matheson.
Lord Powell of Bayswater, kcmg
Lord Powell joined the Board in 1992. He waspreviously Private Secretary and adviser on foreign
affairs and defence to British Prime Ministers,
Baroness Thatcher and Rt Hon John Major.
He is a director of Hongkong Land, LVMH MoëtHennessy Louis Vuitton, Matheson & Co, Northern
Trust Corporation and Textron Corporation.
Previously president of the China-Britain BusinessCouncil and chairman of the Singapore-British
Business Council, he is currently a British Business
Ambassador. He is an independent member ofthe House of Lords.

Lord Sassoon, kt
Lord Sassoon joined the Board in 2013. He began
his career at KPMG, before joining SG Warburg(later UBS Warburg) in 1985. From 2002 to 2006
he was in the United Kingdom Treasury as a civil
servant, where he had responsibility for financial
services and enterprise policy. Following this,he chaired the Financial Action Task Force; andconducted a review of the UK’s system of financial
regulation. From 2010 to 2013 Lord Sassoon was
the first Commercial Secretary to the Treasury andacted as the Government’s Front Bench Treasury
spokesman in the House of Lords. He is a directorof Dairy Farm, Hongkong Land, Jardine Lloyd
Thompson and Jardine Matheson. He is alsochairman of the China-Britain Business Council.
James Watkins
Mr Watkins joined the Board in 1997. He wasa director and group general counsel of Jardine
Matheson from 1997 to 2003. Mr Watkins qualified
as a solicitor in 1969 and was formerly a partnerof Linklaters. He is also a director of Asia Satellite
Telecommunications Holdings, Global Sources,
Hongkong Land, IL&FS India Realty Fund II and
Jardine Cycle & Carriage.
Percy Weatherall
Mr Weatherall joined the Board in 2000 and was
Managing Director from 2000 to 2006. He first joined
the Jardine Matheson group in 1976 and retired fromexecutive office in 2006. He is also a director of Dairy
Farm, Hongkong Land, Jardine Matheson and Jardine
Strategic. He is chairman of Corney & Barrow and
the Nith District Salmon Fishery Board.

27

28 Mandarin Oriental International Limited

Consolidated Profit and Loss Accountfor the year ended 31st December 2015

		
		
		
Note

2015
Underlying						Underlying
business		 Non-trading				business		
performance		
items		Total		 performance		
US$m		
US$m		
US$m		
US$m		

2014
Non-trading
items		US$m		

Total
US$m

679.9

1

607.3		

–		

607.3

679.9		

–		

Cost of sales		(362.1)–		(362.1)(410.0)–		(410.0 )Gross profit		

245.2		

–		

245.2

269.9		

–		

Selling and distribution costs		(37.0)–		(37.0)(44.7)–		(44.7 )Administration expenses		

(100.4)(0.5)(100.9)(104.4)–		(104.4 )Operating profit

2

107.8		

(0.5)

107.3

120.8		

–		

Financing charges		(13.7)–		(13.7)(19.9)–		(19.9 )Interest income		

1.9		

–		

1.9

2.6		

Revenue

–		

269.9

120.8

2.6

Net financing charges

3(11.8)–		(11.8)(17.3)–		(17.3 )Share of results of associates
and joint ventures

4

11.0		

(0.5)

10.5

12.3		

–		

12.3

Profit before tax		

107.0		

(1.0)

106.0

115.8		

–		

115.8

Tax

5

(16.6)–		(16.6)(19.0)–		(19.0 )Profit after tax		

90.4		

(1.0)

89.4

96.8		

–		

96.8

6&7

90.3		

(1.0)

89.3

97.0		

–		

97.0

Non-controlling interests		

0.1		

–		

0.1

(0.2)

–		(0.2 )		
90.4		
(1.0)
89.4

96.8		

–		

96.8

		
US¢				US¢		

US¢				

US¢

Attributable to:Shareholders of the Company

Earnings per share

6– basic		

7.53				7.449.29				9.29– diluted		

7.50				7.419.25				9.25Annual Report 201529

Consolidated Statement of Comprehensive Income
for the year ended 31st December 2015

		
2015		
2014
Note
US$m		
US$m

Profit for the year		

89.4

96.8

Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans

12

(5.4)

(5.6 )Tax on items that will not be reclassified

5

0.9

0.9

		
(4.5)
(4.7 )
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences(43.3)(57.0 )– fair value losses on other investments		

–(0.1 )– transfer to profit and loss		

(0.6)

–

Fair value gains on cash flow hedges		–4.0

Tax relating to items that may be reclassified

5–(0.7 )

Share of other comprehensive expense of associates and joint ventures		(11.7)(4.0 )– net losses arising during the year		
Revaluation of other investments		(55.6)(57.8 )
Other comprehensive expense for the year, net of tax		

(60.1)(62.5 )

Total comprehensive income for the year		

29.3

34.3

Shareholders of the Company		

29.3

35.0

Non-controlling interests		–		(0.7 )

Attributable to:

		
29.3
34.3

30 Mandarin Oriental International Limited

Consolidated Balance Sheetat 31st December 2015

		
2015		
2014
Note
US$m		US$m

Net assets
Intangible assets

8

44.1

45.6

Tangible assets

91,255.0

1,315.1

Associates and joint ventures

10

164.4

101.6

Other investments		

10.2

10.5

Loans receivable

11

–

–

Pension assets

12

–

7.3

Deferred tax assets

13

2.8

2.2

Non-current assets		

1,476.5

1,482.3

Stocks		
6.0
5.9
14

89.9

94.5

Current tax assets		

1.8

1.3

15

308.6

324.6

Current assets		

406.3

426.3

Creditors and accruals

16(138.6)(144.6 )Current borrowings

17

(4.2)

(217.0 )Current tax liabilities		(9.3)(9.6 )

Current liabilities		

(152.1)(371.2 )Net current assets		

254.2

55.1

Long-term borrowings

17(436.2)(510.7 )Deferred tax liabilities

13(59.8)(62.3 )

Other non-current liabilities

25

(3.0)

(3.0 )

Debtors and prepayments

Bank and cash balances		
1,231.7
961.4
Total equity
Share capital

20

62.8

50.2

Share premium

21

490.3

188.2

Revenue and other reserves		

673.6

718.0

Shareholders’ funds		

1,226.7

956.4

Non-controlling interests		

5.0

5.0

		
1,231.7
961.4

Approved by the Board of Directors
Ben Keswick
Edouard Ettedgui
Directors
3rd March 2016

Annual Report 2015

Consolidated Statement of Changes in Equity
for the year ended 31st December 2015														Attributable to		Attributable to		Share		Share		Capital		
Revenue		Hedging		Exchange		shareholders of		non-controlling				
capital		premium		
reserves		
reserves		
reserves		
reserves		 the Company		interests		
Note
US$m		
US$m		
US$m		
US$m		
US$m		
US$m		
US$m		
US$m		

Total
equityUS$m2015
At 1st January		50.2		

188.2		

283.1		

495.6		

(2.7 )(58.0 )

956.4		

5.0		

961.4

Total comprehensive
income		

–		

–		

–		

84.2		

–		(54.9 )

29.3		–

29.3

Dividends paid by
the Company

23

–		

–		

–		

(75.3 )

–		–		(75.3 )–

(75.3 )

Issue of shares		12.6		

301.4		

–		

–		

–		

–		

314.0		–

314.0Employee shareoption schemes		

–		

–		

2.3		

–		

–		

–		

2.3		

–

2.3

0.7		

(0.9 )

0.2		

–		

–		

–		

–

–

62.8		

490.3		

284.5		

504.7		

(2.7 )(112.9 )1,226.7		

5.0		

1,231.7

At 1st January		50.2		

186.6		

282.1		

473.6		

(6.0 )

2.5		

989.0		

5.7		

994.7

Total comprehensive
income		

–		

–		

–		

92.2		

3.3		(60.5 )

35.0		

(0.7 )

34.3

Dividends paid by
the Company

23

–		

–		

–		

(70.2 )

–		–		(70.2 )

–		(70.2 )

Issue of shares		

–		

–		

–		

–		

–		

–		

–		

–		

–

Employee shareoption schemes		

–		

–		

2.6		

–		

–		

–		

2.6		

–		

2.6

Transfer		

–		

1.6		

(1.6 )

–		

–		

–		

–		

–		

–

At 31st December		50.2		

188.2		

283.1		

495.6		

(2.7 )(58.0 )

956.4		

5.0		

961.4

Transfer		–		At 31st December		2014

Total comprehensive income included in revenue reserves comprises profit attributable to shareholders of the Company
of US$89.3 million (2014: US$97.0 million). There is no fair value loss on other investments in 2015 (2014: net fairvalue loss on other investments of US$0.1 million).

31

32 Mandarin Oriental International Limited

Consolidated Cash Flow Statement
for the year ended 31st December 2015

		
2015		
2014
Note
US$m		
US$m

Operating activities
Operating profit

2

107.3

120.8

Depreciation

9

50.6

62.4

Amortization of intangible assets

8

2.3

2.6

Other non-cash items

24a

2.2

1.5

Movements in working capital

24b

(1.6)

2.2

Interest received		

2.0

2.6

Interest and other financing charges paid		

(12.1)(24.4 )Tax paid		

(18.5)(21.4 )

		
132.2
146.3
Dividends and interest from associates		

8.0

13.2

Cash flows from operating activities		
140.2
159.5
Investing activities
Purchase of tangible assets		

(50.0)(29.4 )

Purchase of intangible assets		(1.5)(2.9 )

Payment on Munich expansion

26–(16.9 )

Acquisition of Hotel Ritz, Madrid

27(73.3)–

Purchase of other investments		(0.9)(1.0 )

Advance to joint ventures		

(0.1)

–

Repayment of loans to associates

24c

0.6

4.3

Sale of tangible assets		–

0.3

Sale of other investments		

0.8–

Cash flows from investing activities		
(124.4)(45.6 )
Financing activities
24d

314.0

–

Drawdown of borrowings		

–

512.5

Repayment of borrowings		

(261.5)(540.8 )Dividends paid by the Company(75.3)(70.2 )

Issue of shares

23

Cash flows from financing activities		(22.8)(98.5 )Net (decrease)/increase in cash and cash equivalents		

(7.0)

15.4

Cash and cash equivalents at 1st January		

324.3

315.7

Effect of exchange rate changes		(8.7)(6.8 )

308.6

324.3

Cash and cash equivalents at 31st December

24eAnnual Report 2015

Principal Accounting Policies

A Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations adopted by the International Accounting Standards
Board. The financial statements have been prepared on a going concern basis and under the historical cost convention
except as disclosed in the accounting policies below.

Amendments effective in 2015 which are relevant to the Group’s operations:
Amendments to IAS 19
Annual Improvements to IFRSs

Defined Benefit Plans: Employee Contributions
2010 – 2012 Cycle
2011 – 2013 Cycle

The adoption of these amendments does not have a material impact on the Group’s accounting policies and disclosures.
Amendments to IAS 19 ‘Employee Benefits’ clarify the accounting for defined benefit plans that require employeesor third parties to contribute towards the cost of the benefits. The objective of the amendments is to simplify theaccounting for contributions that are independent of the number of years of employee service, for example, employee
contributions that are calculated according to a fixed percentage of salary.
Annual Improvements to IFRSs 2010 – 2012 Cycle and 2011 – 2013 Cycle comprise a number of amendments to
IFRSs. The amendments which are relevant to the Group’s operations include the followings:
Amendment to IFRS 2 ‘Share-based Payment’ clarifies the definition of a ‘vesting condition’ and separately defines‘performance condition’ and ‘service condition’.
Amendment to IFRS 3 ‘Business Combinations’ clarifies that an obligation to pay contingent consideration
which meets the definition of a financial instrument is classified as a financial liability or as equity, on the basis of
the definitions in IAS 32 ‘Financial Instruments: Presentation’. The standard is further amended to clarify that all
non-equity contingent consideration, both financial and non-financial, is measured at fair value at each reporting date,with changes in fair value recognized in profit and loss. It also clarifies that IFRS 3 does not apply to the accounting
for the formation of any joint arrangement under IFRS 11.
Amendment to IFRS 8 ‘Operating Segments’ requires disclosure of the judgements made by management inaggregating operating segments. This includes a description of the segments which have been aggregated andthe economic indicators which have been assessed in determining that the aggregated segments share similar
economic characteristics.
Amendment to IAS 24 ‘Related Party Disclosures’ requires the reporting entity to disclose the fees paid for key
management personnel services from another entity (‘the management entity’). The reporting entity is not required
to disclose the compensation paid by the management entity to the management entity’s employees or directors.
Amendment to IFRS 13 ‘Fair Value Measurement’ clarifies that the portfolio exception in IFRS 13, which allows
an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis, applies toall contracts within the scope of IAS 39 or IFRS 9.

33

34 Mandarin Oriental International Limited

Principal Accounting Policies Continued

A Basis of preparation continued
The following standards and amendments which are effective after 2015, are relevant to the Group’s operations andyet to be adopted:
		
		
		

Effective for accounting
periods beginningon or after

IFRS 9Financial Instruments
IFRS 15
Revenue from Contracts with Customers
IFRS 16
LeasesAmendments to IFRS 11
Accounting for Acquisitions of Interests
	  in Joint Operations
Amendments to IAS 1
Disclosure Initiative: Presentation of	  Financial Statements
Amendments to IAS 7
Disclosure Initiative: Statement of Cash Flows
Amendments to IAS 12
Recognition of Deferred Tax Assets for	  Unrealized Losses
Amendments to IAS 16 and IAS 38
Clarification of Acceptable Methods of	  Depreciation and Amortization
Annual Improvements to IFRSs
2012 – 2014 Cycle

1st January 2018
1st January 2018
1st January 2019
1st January 2016
1st January 2016
1st January 2017
1st January 2017
1st January 2016
1st January 2016

The Group is currently assessing the potential impact of these new standards and amendments. The Group will adopt
these new standards and amendments from their respective effective dates.
A complete set of IFRS 9 ‘Financial Instruments’ has been published which replaces IAS 39 ‘Financial Instruments:
Recognition and Measurement’. This complete version includes revised guidance on the classification andmeasurement of financial assets and liabilities. It also includes a new expected credit losses model that replaces
the incurred loss impairment model used today. A substantially-reformed approach to hedging accounting is also
introduced. It also carries forward the guidance on recognition and derecognition of financial instruments fromIAS 39.
IFRS 15 ‘Revenue from Contracts with Customers’ establishes a comprehensive framework for determining whento recognize revenue and how much revenue to recognize. The core principle in that framework is that a company
should recognize revenue to depict the transfer of promised goods or services to customers in amounts that reflect theconsideration to which the company expects to be entitled in exchange for those goods or services. The new standard
will also result in new disclosure requirements on revenue, provide guidance for transactions that were not previously
addressed comprehensively (for example, service revenue and contract modifications) and improve guidance formultiple-element arrangements. lFRS 15 replaces IAS 11 ‘Construction Contracts’, IAS 18 ‘Revenue’, IFRIC 13‘Customer Loyalty Programmes’, IFRIC 15 ‘Agreements for the Construction of Real Estate’, IFRIC 18 ‘Transfersof Assets from Customers’ and SIC-31 ‘Revenue – Barter Transactions Involving Advertising Services’.

Annual Report 2015

A Basis of preparation continued
IFRS 16 ‘Leases’, which replaces IAS 17 ‘Leases’ and related interpretations, requires lessees to bring their leases
onto the balance sheet. For lessees, IFRS 16 eliminates the classification of leases as either operating leases or financeleases which is required by IAS 17 and, instead, introduces a single lessee accounting model. The model requires
a lessee to recognize assets and liabilities for all leases with a term of more than 12 months. A lessee is required torecognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing
its obligation to make lease payments. A lessee measures a right-of-use asset similarly to other non-financial asset anda lease liability similarly to other financial liability. As a consequence, a lessee recognizes depreciation of the right-of-use
asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion
and an interest portion. Assets and liabilities arising from a lease are initially measured on a present value basis. IFRS 16
substantially carries forward the lessor accounting requirements in IAS 17. A lessor continues to classify its leases as
operating leases or finance leases, and to account for those two types of leases differently.
Amendments to IFRS 11 ‘Joint Arrangements’ introduce new guidance on the accounting for the acquisition of aninterest in a joint operation that constitutes a business. Acquirers of such interests shall apply all of the principles on
business combinations accounting in IFRS 3 ‘Business Combinations’, and other IFRSs, that do not conflict with theguidance in IFRS 11 and disclose the information that is required in those IFRSs in relation to business combinations.
Amendments to IAS 1 and IAS 7 ‘Disclosure Initiative’ are part of the International Accounting Standards Board’s
initiatives to improve the effectiveness of disclosure in financial reporting. Amendments to IAS 1 clarify thatcompanies shall apply professional judgements in determining what information to disclose and how to structure
it in the financial statements. The amendments include narrow-focus improvements in the guidance on materiality,
disaggregation and subtotals, note structure, disclosure of accounting policies and presentation of items of othercomprehensive income arising from equity accounted investments. Amendments to IAS 7 require companies toprovide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing
activities, including both changes arising from cash flows and non-cash changes.
Amendments to IAS 12 ‘Income Taxes’ clarify the requirements on the recognition of deferred tax assets for unrealized
losses related to debt instruments measured at fair value.
Amendments to IAS 16 ‘Property, Plant and Equipment’ and IAS 38 ‘Intangible Assets’ clarify that the use ofrevenue-based methods to calculate the depreciation or amortization of an asset is not appropriate because revenue
generated by an activity that includes the use of an asset generally reflects factors other than the consumption of theeconomic benefits embodied in the asset. The amendments to IAS 38 further clarify that revenue is generally presumed
to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset.
This presumption however, can be rebutted in certain limited circumstances.
Annual Improvements to IFRSs 2012 – 2014 Cycle comprise a number of non-urgent but necessary amendments.
None of these amendments is likely to have a significant impact on the consolidated financial statements of the Group.
The principal operating subsidiaries, associates and joint ventures have different functional currencies in line withthe economic environments of the locations in which they operate. The functional currency of the Company is
United States dollars. The consolidated financial statements are presented in United States dollars.
The Group’s reportable segments are set out in note 1.

35

36 Mandarin Oriental International Limited

Principal Accounting Policies Continued

B Basis of consolidationi) The consolidated financial statements include the financial statements of the Company, its subsidiaries, and theGroup’s interests in associates and joint ventures.
ii) A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost ofan acquisition includes the fair value at the acquisition date of any contingent consideration. The Group recognizes
the non-controlling interest’s proportionate share of the recognized identifiable net assets of the acquired subsidiary.
In a business combination achieved in stages, the Group remeasures its previously held interest in the acquiree
at its acquisition-date fair value and recognizes the resulting gain or loss in profit and loss. Changes in a parent’s
ownership interest in a subsidiary that do not result in the loss of control are accounted for as equity transactions.
When control over a previous subsidiary is lost, any remaining interest in the entity is remeasured at fair value andthe resulting gain or loss is recognized in profit and loss.
All material intercompany transactions, balances and unrealized surpluses and deficits on transactions between
Group companies have been eliminated. The cost of and related income arising from shares held in the Company
by subsidiaries are eliminated from shareholders’ funds and non-controlling interests, and profit, respectively.
iii) An associate is an entity, not being a subsidiary or joint venture, over which the Group exercises significant
influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharingof control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
Associates and joint ventures are included on the equity basis of accounting.
Profits and losses resulting from upstream and downstream transactions between the Group and its associates andjoint ventures are recognized in the consolidated financial statements only to the extent of unrelated investor’sinterests in the associates and joint ventures.
iv) Non-controlling interests represent the proportion of the results and net assets of subsidiaries and their associates
and joint ventures not attributable to the Group.
v) The results of subsidiaries, associates and joint ventures are included or excluded from their effective dates ofacquisition or disposal, respectively. The results of entities other than subsidiaries, associates and joint ventures
are included to the extent of dividends received when the right to receive such dividend is established.

Annual Report 2015

C Foreign currencies
Transactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates.
Assets and liabilities of subsidiaries, associates and joint ventures, together with all other monetary assets and liabilities
expressed in foreign currencies, are translated into United States dollars at the rates of exchange ruling at the year end.
Results expressed in foreign currencies are translated into United States dollars at the average rates of exchange ruling
during the year, which approximate the exchange rates at the dates of the transactions.
Exchange differences arising from the retranslation of the net investment in foreign subsidiaries, associates and joint
ventures, and of financial instruments which are designated as hedges of such investments, are recognized in othercomprehensive income and accumulated in equity under exchange reserves. On the disposal of these investments,
such exchange differences are recognized in profit and loss. Exchange differences on available-for-sale investments
are recognized in other comprehensive income as part of the gains and losses arising from changes in their fair value.
Exchange differences relating to changes in the amortized cost of monetary securities classified as available-for-saleand all other exchange differences are recognized in profit and loss.
Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treatedas assets and liabilities of the foreign entity and translated into United States dollars at the rate of exchange rulingat the year end.

D Impairment of non-financial assets
Assets that have indefinite useful lives are not subject to amortization and are tested for impairment annually andwhenever there is an indication that the assets may be impaired. Assets that are subject to amortization are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purpose of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable
cash flows. Cash-generating units or groups of cash-generating units to which goodwill has been allocated are tested
for impairment annually and whenever there is an indication that the units may be impaired. An impairment loss isrecognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is thehigher of an asset’s fair value less costs to sell and value in use. Non-financial assets other than goodwill that sufferedan impairment are reviewed for possible reversal of the impairment annually.

E Intangible assetsi) Goodwill represents the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the acquisition-date fair value of any previously held equity interest in the acquiree
over the acquisition-date fair value of the Group’s share of the net identifiable assets acquired. Non-controllinginterests are measured at their proportionate share of the net identifiable assets at the acquisition date. If the costof acquisition is less than the fair value of the net assets acquired, the difference is recognized directly in profit
and loss. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions ofassociates and joint ventures is included in investment in associates and joint ventures. Goodwill is allocatedto cash-generating units or groups of cash-generating units for the purpose of impairment testing and is carriedat cost less accumulated impairment loss.
The profit or loss on disposal of subsidiaries, associates and joint ventures is stated after deducting the carrying
amount of goodwill relating to the entity sold.

37

38 Mandarin Oriental International Limited

Principal Accounting Policies Continued

E Intangible assets continuedii) Leasehold land represents payments to third parties to acquire short-term interests in property. These payments arestated at cost and are amortized over the useful life of the lease which includes the renewal period if the lease can be
renewed by the Group without significant cost.
iii) Computer software represents acquired computer software licences which are capitalized on the basis of the costs
incurred to acquire and bring to use the specific software and are stated at cost less accumulated amortization.
Amortization is calculated on the straight line basis to allocate the cost over their estimated useful lives.
iv) Development costs directly attributable to hotel projects under development, including borrowing costs, which
are capitalized to the extent that such expenditure is expected to generate future economic benefits and uponcompletion of the project are included in non-current assets. Capitalized development costs are amortized over
the term of the management contracts.

F Tangible fixed assets and depreciation
Freehold land and buildings, and the building component of owner-occupied leasehold properties are stated at costless any accumulated depreciation and impairment. Long-term interests in leasehold land are classified as finance leases
and grouped under tangible assets if substantially all risks and rewards relating to the land have been transferred to theGroup, and are amortized over the useful life of the lease. Grants related to tangible assets are deducted in arriving at
the carrying amount of the assets. Other tangible fixed assets are stated at cost less amounts provided for depreciation.
Depreciation of tangible fixed assets is calculated on the straight line basis to allocate the cost or valuation of each asset
to its residual value over its estimated useful life. The residual values and useful lives are reviewed at each balance sheet
date. The estimated useful lives are as follows:
Freehold and long leasehold buildings
Properties on leases with less than 20 years
Surfaces, finishes and services of hotel properties
Leasehold improvements
Leasehold land
Plant and machinery
Furniture, equipment and motor vehicles

21 years to 150 years
over unexpired period of lease
20 years to 30 years
10 years or period of the lease
period of the lease
5 years to 15 years
3 years to 10 years

No depreciation is provided on freehold land as it is deemed to have an indefinite life.
Where the carrying amount of a tangible fixed asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
The profit or loss on disposal of tangible fixed assets is recognized by reference to their carrying amount.

G Loans receivable
Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted inan active market and are carried at amortized cost using the effective interest method.
Loans receivable are classified as non-current assets unless their maturities are within 12 months after the balance
sheet date.

Annual Report 2015

H Investmentsi) Investments are classified by management as available for sale or held to maturity on initial recognition.
Available-for-sale investments are shown at fair value. Gains and losses arising from changes in fair value arerecognized in other comprehensive income and accumulated in equity. On the disposal of an investment or when
an investment is determined to be impaired, the cumulative gain or loss previously deferred in equity is recognizedin profit and loss. Held-to-maturity investments are shown at amortized cost. Investments are classified under
non-current assets unless they are expected to be realized within 12 months after the balance sheet date.
ii) At each balance sheet date, the Group assesses whether there is objective evidence that an investment is impaired.
In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value ofthe security below its cost is considered as an indicator that the securities are impaired and are recognized in profit
and loss.
iii) All purchases and sales of investments are recognized on the trade date, which is the date that the Group commits
to purchase or sell the investment.

I Leases
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards ofownership to the lessee. All other leases are classified as operating leases.
i) Amount due from lessees under finance leases are recorded as receivables at the amount of the Group’s net
investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic
rate of return on the Group’s net investment outstanding in respect of the leases.
ii) Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss
on a straight line basis over the period of the lease. When a lease is terminated before the lease period has expired,any payment required to be made to the lessor by way of penalty is recognized as an expense in the year in which
termination takes place.

J Stocks
Stocks, which principally comprise beverages and consumables, are stated at the lower of cost and net realizable value.
Cost is determined by the first-in, first-out method.

K Debtors
Debtors, excluding derivative financial instruments, are measured at amortized cost except where the effect of
discounting would be immaterial. Provision for impairment is established when there is objective evidence that theoutstanding amounts will not be collected. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicatorsthat the debtor is impaired. The carrying amount of the asset is reduced through the use of an allowance account andthe amount of the loss is recognized in arriving at operating profit. When a debtor is uncollectible, it is written off
against the allowance account. Subsequent recoveries of amount previously written off are credited to profit and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.

3940 Mandarin Oriental International Limited

Principal Accounting Policies Continued

L Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and financial
institutions and bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts are includedin current borrowings.

M Provisions
Provisions are recognized when the Group has present legal or constructive obligations as a result of past events,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations,and a reliable estimate of the amount of the obligations can be made.

N Borrowings and borrowing costs
Borrowings are initially recognized at fair value, net of transaction costs incurred. In subsequent periods, borrowings
are stated at amortized cost using the effective interest method.
Borrowing costs relating to major development projects are capitalized until the asset is substantially completed.
Capitalized borrowing costs are included as part of the cost of the asset. All other borrowing costs are expensed
as incurred.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance sheet date.

O Government grants
Grants from governments are recognized at their fair value when there is reasonable assurance that the grant will bereceived and the Group will comply with all attached conditions.
Grants relating to the development of hotel property are deducted in arriving at the carrying amount of thehotel property.

P Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognized in profit and loss, except to theextent that it relates to items recognized in other comprehensive income or direct in equity. In this case, the tax is
also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets
and liabilities and their carrying values. Deferred tax is determined using tax rates and laws that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized
or the deferred tax liability is settled.
Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions, on
the difference between the fair value of the net assets acquired and their tax base. Deferred tax is provided on temporary
differences associated with investments in subsidiaries, associates and joint ventures, except where the Group is able tocontrol the reversal of the temporary difference and it is probable that the temporary difference will not reverse in theforeseeable future. Deferred tax assets relating to the carry forward of unused tax losses are recognized to the extent
that it is probable that future taxable profit will be available against which the unused tax losses can be utilized.

Annual Report 2015

Q Employee benefitsi) Pension obligations
The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in
trustee administered funds.
Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under thismethod, the costs of providing pensions are charged to profit and loss spreading the regular cost over the service
lives of employees in accordance with the advice of qualified actuaries, who carry out a full valuation of majorplans every year. The pension obligations are measured as the present value of the estimated future cash outflows
by reference to market yields on high quality corporate bonds which have terms to maturity approximating theterms of the related liability. Plan assets are measured at fair value.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognizedin other comprehensive income in the year in which they occur.
Past service costs are recognized immediately in profit and loss.
The Group’s total contributions relating to the defined contribution plans are charged to profit and loss in the year
to which they relate.

ii) Share-based compensation
Share-based long-term incentive plans have been set up to provide longer-term incentives for selected executives.
Awards can take the form of share options with an exercise price based on the then prevailing market prices or suchother price set by the Board or they can be conditional rights to receive free shares. Awards normally vest after thethird anniversary of the date of grant and may be subject to the achievement of performance conditions.
The fair value of the employee services received in exchange for the grant of the options in respect of options
granted after 7th November 2002 is recognized as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted as determined on the grant date. At eachbalance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable.
The impact of the revision of original estimates, if any, is recognized in profit and loss.

R Derivative financial instruments
The Group only enters into derivative financial instruments in order to hedge underlying exposures. Derivative
financial instruments are initially recognized at fair value on the date a derivative contract is entered into and aresubsequently remeasured at their fair value. The method of recognizing the resulting gain or loss is dependent on thenature of the item being hedged. The Group designates certain derivatives as a hedge of a forecasted transaction or of
the foreign currency risk on a firm commitment (‘cash flow hedge’), or a hedge of a net investment in a foreign entity.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective,
are recognized in other comprehensive income and accumulated in equity under hedging reserves. Changes in the fairvalue relating to the ineffective portion is recognized immediately in profit and loss. Where the forecasted transaction
or firm commitment results in the recognition of a non-financial asset or of a non-financial liability, the gains and losses
previously deferred in hedging reserves are transferred from hedging reserves and included in the initial measurementof the cost of the asset or liability. Otherwise, amounts deferred in hedging reserves are transferred to profit and loss
in the same periods during which the hedged firm commitment or forecasted transaction affects profit and loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting,any cumulative gain or loss existing in hedging reserves at that time remains in the hedging reserves and is recognizedwhen the committed or forecasted transaction ultimately is recognized in profit and loss. When a committed or
forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in hedging reserves
is immediately transferred to profit and loss.

41

42 Mandarin Oriental International Limited

Principal Accounting Policies Continued

R Derivative financial instruments continued
Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies,
do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any derivative
instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately in profit and loss.
Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in othercomprehensive income and accumulated in exchange reserves; the gain or loss relating to the ineffective portionis recognized immediately in profit and loss.
The fair value of derivatives which are designated and qualify as effective hedges are classified as non-current assets
or liabilities if the remaining maturities of the hedged assets or liabilities are greater than 12 months after the balance
sheet date.

S Financial guarantee contracts
Financial guarantee contracts under which the Group accepts significant risk from a third party by agreeing tocompensate that party on the occurrence of a specified uncertain future event are accounted for in a manner similar
to insurance contracts. Provisions are recognized when it is probable that the Group has obligations under suchguarantees and an outflow of resources embodying economic benefits will be required to settle the obligations.

T Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset
and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must
be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company
or the counterparty.

U Non-trading items
Non-trading items are separately identified to provide greater understanding of the Group’s underlying businessperformance. Items classified as non-trading items include gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable intangible assets and other investments; provisions forthe closure of businesses; acquisition-related costs in business combinations; provisions against asset impairment andwritebacks; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional
insight into underlying business performance.

V Earnings per share
Basic earnings per share are calculated on profit attributable to shareholders and on the weighted average number ofshares in issue during the year. For the purpose of calculating diluted earnings per share, the weighted average numberof shares is adjusted for the number of shares which are deemed to be issued for no consideration under the share-based
long-term incentive plans based on the average share price during the year.

Annual Report 2015

W Dividends
Dividends proposed or declared after the balance sheet date are not recognized as a liability at the balance sheet date.

X Revenue recognition
Revenue is measured at the fair value of the consideration received and receivable and represents amounts receivablefor goods and services provided in the normal course of business, net of discounts and sales related taxes.
i) Revenue from hotel ownership comprises amounts earned in respect of services, facilities and goods supplied by thesubsidiary hotels. Revenue from the rendering of services is recognized when services are performed, provided thatthe amount can be measured reliably. Revenue from the sale of goods is recognized on the transfer of significant
risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers
and title has passed.
ii) Revenue from hotel management comprises gross fees earned from the management of all the hotels operated by
the Group. Management fees are recognized when earned as determined by the management contract.
Management fees charged to the subsidiary hotels are eliminated upon consolidation.
iii) Receipts under operating leases are accounted for on an accrual basis over the lease terms.
iv) Interest income is recognized on a time proportion basis taking into account the principal amounts outstanding
and the interest rates applicable.
v) Dividend income is recognized when the right to receive payment is established.

Y Pre-operating costs
Pre-operating costs are expensed as they are incurred.

Z Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the committee that makes strategic decisions.

4344 Mandarin Oriental International Limited

Financial Risk Management

A Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk andinterest rate risk), credit risk and liquidity risk.
The Group’s treasury function co-ordinates, under the directions of the Board of Mandarin Oriental Hotel GroupInternational Limited, financial risk management policies and their implementation on a group-wide basis. The
Group’s treasury policies are designed to manage the financial impact of fluctuations in interest rates and foreignexchange rates and to minimize the Group’s financial risks. The Group uses derivative financial instruments, principallyinterest rate swaps and caps, and forward foreign exchange contracts as appropriate for hedging transactions andmanaging the Group’s assets and liabilities in accordance with the Group’s financial risk management policies.
Financial derivative contracts are executed between third party banks and the Group entity that is directly exposed to
the risk being hedged. Certain derivative transactions, while providing effective economic hedges under the Group’s
risk management policies, do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fairvalue of any derivative instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately
in the profit and loss account. It is the Group’s policy not to enter into derivative transactions for speculative purposes.
The notional amounts and fair values of derivative financial instruments at 31st December 2015 are disclosed innote 25.

i) Market risk
Foreign exchange risk
Entities within the Group are exposed to foreign exchange risk from future commercial transactions, net
investments in foreign operations and net monetary assets and liabilities that are denominated in a currency
that is not the entity’s functional currency.
Group entities are required to manage their foreign exchange risk against their functional currency. To manage
their foreign exchange risk arising from future commercial transactions, entities in the Group use forward foreignexchange contracts in a consistent manner to hedge firm and anticipated foreign exchange commitments. The
Group does not usually hedge its net investments in foreign operations except in circumstances where there is amaterial exposure arising from a currency that is anticipated to be volatile and the hedging is cost effective.
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in acurrency that is not the functional currency. In 2015 and 2014, the Group’s principal foreign exchange exposure
was with the Euro. At 31st December 2015, if the United States dollar had strengthened/weakened by 10%
against Euro with all other variables unchanged, the Group’s profit after tax would have been US$0.1 million
lower/higher (2014: US$0.7 million lower/higher), arising from foreign exchange losses/gains taken on
translation. The impact on amounts attributable to the shareholders of the Company would be US$0.1 million
lower/higher (2014: US$0.7 million lower/higher). This sensitivity analysis ignores any offsetting foreignexchange factors and has been determined assuming that the change in foreign exchange rates had occurredat the balance sheet date. The stated change represents management’s assessment of reasonably possible changes
in foreign exchange rates over the period until the next annual balance sheet date. There are no other significant
monetary balances held by Group companies at 31st December 2015 that are denominated in a non-functional
currency. Differences resulting from the translation of financial statements into the Group’s presentation currency
are not taken into consideration.

Annual Report 2015

A Financial risk factors continuedi) Market risk continued
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities andassets. These exposures are managed partly by using natural hedges that arise from offsetting interest rate sensitive
assets and liabilities, and partly through fixed rate borrowings and the use of derivative financial instruments suchas interest rate swaps and caps. The Group monitors interest rate exposure on a monthly basis by currency andbusiness unit, taking into consideration proposed financing and hedging arrangements. The Group’s guideline is
to maintain 40% to 60% of its gross borrowings, in fixed rate instruments. At 31st December 2015, the Group’s
interest rate hedge was 56% (2014: 43%), with an average tenor of 3.1 years (2014: 3.3 years). The interest rate
profile of the Group’s borrowings after taking into account hedging transactions are set out in note 17.
Cash flow interest rate risk is the risk that changes in market interest rates will impact cash flows arising fromvariable rate financial instruments. Borrowings at floating rates therefore expose the Group to cash flow interest
rate risk. The Group manages this risk by using forward rate agreements to a maturity of one year, and by entering
into interest rate swaps and caps for a maturity of up to seven years. Forward rate agreements and interest rate
swaps have the economic effect of converting borrowings from floating rate to fixed rate, caps provide protection
against a rise in floating rates above a pre-determined rate.
At 31st December 2015, if interest rates had been 100 basis points higher/lower with all other variables held
constant, the Group’s profit after tax would have been US$0.5 million lower/higher (2014: US$2.6 million
lower/higher), and hedging reserves would have been US$2.5 million (2014: US$3.5 million) higher/lower,
as a result of fair value changes to cash flow hedges. The sensitivity analysis has been determined assumingthat the change in interest rates had occurred at the balance sheet date and had been applied to the exposure tointerest rate risk for both derivative and non-derivative financial instruments in existence at that date. There isno significant sensitivity resulting from interest rate caps. The 100 basis point increase or decrease represents
management’s assessment of a reasonably possible change in those interest rates which have the most impact on
the Group, specifically the United States, Hong Kong, United Kingdom and European rates, over the period
until the next annual balance sheet date. Changes in market interest rates affect the interest income or expenseof non-derivative variable-interest financial instruments, the interest payments of which are not designated ashedged items of cash flow hedges against interest rate risks. As a consequence, they are included in the calculationof profit after tax sensitivities. Changes in the market interest rate of financial instruments that were designated as
hedging instruments in a cash flow hedge to hedge payment fluctuations resulting from interest rate movements
affect the hedging reserves and are therefore taken into consideration in the equity-related sensitivity calculations.

4546 Mandarin Oriental International Limited

Financial Risk Management Continued

A Financial risk factors continuedii) Credit risk
The Group’s credit risk is primarily attributable to deposits with banks, credit exposures to customers andderivative financial instruments with a positive fair value. The Group has credit policies in place and theexposures to these credit risks are monitored on an ongoing basis.
The Group manages its deposits with banks and financial institutions and transactions involving derivative
financial instruments by monitoring credit ratings and capital adequacy ratios of counterparties, and limiting
the aggregate risk to any individual counterparty. The utilization of credit limits is regularly monitored. At
31st December 2015, 89% (2014: 98%) of deposits and balances with banks and financial institutions were madeto institutions with credit ratings of no less than A- (Fitch). Similarly transactions involving derivative financial
instruments are with banks with sound credit ratings and capital adequacy ratios. In developing countries it may
be necessary to deposit money with banks that have a lower credit rating, however the Group only enters into
derivative transactions with counterparties which have credit rating of at least investment grade. Management
does not expect any counterparty to fail to meet its obligations.
In respect of credit exposures to customers, the Group has policies in place to ensure that sales on credit without
collateral are made principally to travel agents and corporate companies with an appropriate credit history. Sales
to other customers are made in cash or by major credit cards.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance
sheet after deducting any impairment allowance.

iii) Liquidity risk
Prudent liquidity risk management includes managing the profile of debt maturities and funding sources,
maintaining sufficient cash and marketable securities, and ensuring the availability of funding from an adequate
amount of committed credit facilities and the ability to close out market positions. The Group’s ability to fund its
existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate
committed funding lines from high quality lenders, and by monitoring rolling short-term forecasts of the Group’s
cash and gross debt on the basis of expected cash flows. In addition, long-term cash flows are projected to assist
with the Group’s long-term debt financing plans.
At 31st December 2015, total available borrowing facilities amounted to US$578 million (2014: US$861 million)of which US$440 million (2014: US$728 million) was drawn down. Undrawn committed facilities, in the formof revolving credit and term loan facilities totalled US$138 million (2014: US$133 million), in addition to cash
balances of US$308 million.

Annual Report 2015

A Financial risk factors continuediii) Liquidity risk continued
The table below analyzes the Group’s non-derivative financial liabilities and net settled derivative financial
liabilities at 31st December 2015 and 2014 into relevant maturity groupings based on the remaining period atthe balance sheet date to the contractual maturity date. Derivative financial liabilities are included in the analysis
if their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts
disclosed in the table are the contractual undiscounted cash flows.
Within		one		
year		
US$m		

Between		
one and		
two years		
US$m		

Between		
two and		
three years		
US$m		

Between		
three and		
four years		
US$m		

Between		four and		
five years		
US$m		

Beyond		Totalfive		 undiscounted
years		cash flows
US$m		
US$m

Borrowings

14.0		

11.1		

8.4		436.7		

0.2		Creditors

133.5		

–		

–		

–		

–		

–		

133.5

2.0		

0.9		

0.1		

–		

–		

–

3.0

Borrowings

231.1		

12.5		

12.3		

9.5		

510.0		

2.3		

777.7

Creditors

139.9		

–		

–		

–		

–		

–		

139.9

2.2		

1.2		

0.3		

–		

–		

–		

3.7

2015

Net settled derivative
financial instruments

2.1

472.5

2014

Net settled derivative
financial instruments

B Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
whilst seeking to maximize benefits to shareholders and other stakeholders. Capital is equity as shown in the
consolidated balance sheet plus net debt.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure andshareholder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projectedstrategic investment opportunities. In order to maintain or adjust the capital structure, the Group may adjust theamount of dividends paid to shareholders, purchase Group shares, return capital to shareholders, issue new sharesor sell assets to reduce debt.
The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover.
The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings lessbank and cash balances. Interest cover is calculated as underlying operating profit and share of results of associates
and joint ventures divided by net financing charges. The Group does not have a defined gearing or interest coverbenchmark or range.
The ratios at 31st December 2015 and 2014 based on IFRS balance sheets are as follows:
2015		

2014

Gearing ratio

11%		

42%

Interest cover

10.1		

7.7

47

48 Mandarin Oriental International Limited

Financial Risk Management Continued

C Fair value estimationi) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the balance sheet, the corresponding fair value
measurements are disclosed by level of the following fair value measurement hierarchy:a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (‘quoted prices in active markets’)
The fair value of listed securities, which are classified as available-for-sale, is based on quoted prices in active
markets at the balance sheet date. The quoted market price used for listed investments held by the Group is
the current bid price.
b) Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly
or indirectly (‘observable current market transactions’)
The fair values of derivative financial instruments are determined using rates quoted by the Group’s bankers
at the balance sheet date. The rates for interest rate swaps and caps and forward foreign exchange contracts arecalculated by reference to market interest rates and foreign exchange rates.
The fair value of unlisted investments, which are classified as available-for-sale and mainly include club andschool debentures, are determined using prices quoted by brokers at the balance sheet date.
c) Inputs for assets or liabilities that are not based on observable market data (‘unobservable inputs’)
The fair value of other unlisted securities, which are classified as available-for-sale, is determined using
valuation techniques by reference to observable current market transactions (including price-to earnings
and price-to book ratios of listed securities of entities engaged in similar industries) or the market pricesof the underlying investments with certain degree of entity specific estimates.
There were no changes in valuation techniques during the year.
The table below analyzes financial instruments carried at fair value at 31st December 2015 and 2014,
by the levels in the fair value measurement hierarchy.
Quoted		
prices in		
active markets		
US$m		

Observablecurrent market		transactions		
US$m		

–		

2.1		

–		

(3.0)

–		

(3.0 )

–		

2.9		

7.6		

10.5

–		

(3.0)

–		

(3.0 )

Unobservable
inputs		
US$m		

Total
US$m

2015
AssetsAvailable-for-sale financial assets– unlisted investments

8.1

10.2

Liabilities
Derivatives designated at fair value– through other comprehensive income
2014
AssetsAvailable-for-sale financial assets– unlisted investments
Liabilities
Derivatives designated at fair value– through other comprehensive income

There were no transfers among the three categories during the year ended 31st December 2015 and 2014.

Annual Report 2015

C Fair value estimation continuedi) Financial instruments that are measured at fair value continued
Movements of financial instruments which are valued based on unobservable inputs during the year ended
31st December are as follows:
Available-for-salefinancial assets
2015		
2014
US$m		US$m

At 1st January

7.6

6.2

Additions

0.5

1.4

At 31st December

8.1

7.6

ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank and cash balances, current creditors and current borrowings are assumed
to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.
The fair values of long-term borrowings are based on market prices or are estimated using the expected future
payments discounted at market interest rates.

D Financial instruments by category
The fair values of financial assets and financial liabilities, together with carrying amounts at 31st December 2015 and2014 are as follows:							Other							financial			
Derivatives				 instruments		
Loans and		
used for		
Available-		 at amortized		
receivables		hedging		
for-sale		
cost		
US$m		
US$m		
US$m		
US$m		

Total
carrying		
amount		
US$m		

Fair
value
US$m

10.2

10.2

2015
AssetsOther investments

–		

–		

10.2		

–		

Debtors61.2		

–		

–		

–		

61.2

61.2

Bank and cash balances

308.6		

–		

–		

–		

308.6

308.6

369.8		

–		10.2		

–		

380.0		

380.0Other non-current liabilities

–		

(3.0)

–		

–		

(3.0)

(3.0 )

Borrowings

–		

–		

–		

(440.4)(440.4)(440.3 )Trade and other payables excluding
non-financial liabilities

–		

–		

–		

(133.5)(133.5)(133.5 )

–		

(3.0)

–		

(573.9)(576.9)(576.8 )Liabilities

2014
AssetsOther investments

–		

–		

10.5		

–		10.5		

10.5

Debtors

63.2		

–		

–		

–		

63.2		

63.2

Bank and cash balances

324.6		

–		

–		

–		

324.6		

324.6387.8		

–		10.5		

–		

398.3		

398.3Other non-current liabilities

–		

(3.0)

–		

–		

(3.0)

(3.0 )

Borrowings

–		

–		

–		

(727.7)(727.7)(727.6 )Trade and other payables excluding
non-financial liabilities

– 		

– 		

– 		

(139.9)(139.9)(139.9 )

–		

(3.0)

– 		

(867.6)(870.6)(870.5 )Liabilities

49

50 Mandarin Oriental International Limited

Critical Accounting Estimates and Judgements

Estimates and judgements used in preparing the financial statements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that havea significant effect on the carrying amounts of assets and liabilities are discussed below.

A Acquisition of subsidiaries, associates and joint ventures
The initial accounting on the acquisition of subsidiaries, associates and joint ventures involves identifying anddetermining the fair values to be assigned to the identifiable assets, liabilities and contingent liabilities of the acquired
entities. The fair values of leasehold land and tangible assets are determined by independent valuers by reference tomarket prices or present value of expected net cash flows from the assets. Any changes in the assumptions used andestimates made in determining the fair values, and management’s ability to measure reliably the contingent liabilitiesof the acquired entity will impact the carrying amount of these assets and liabilities.

B Impairment of assets
The Group tests annually whether goodwill and other assets that have indefinite useful lives suffered any impairment.
Other assets such as development costs are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset ora cash generating unit is determined based on the higher of its fair value less cost to sell and its value in use, calculatedon the basis of management’s assumptions and estimates. Changing the key assumptions, including the discountrates or the growth rate assumptions in the cash flow projections, could materially affect the value-in-use calculations.

C Tangible fixed assets and depreciation
Management determines the estimated useful lives and related depreciation charges for the Group’s tangible fixed
assets. Management will revise the depreciation charge where useful lives are different to those previously estimated,or it will write off or write down technically obsolete or non-strategic assets that have been abandoned.

D Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters isdifferent from the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
Provision of deferred tax follows the way management expects to recover or settle the carrying amount of therelated assets or liabilities, which the management may expect to recover through use, sale or combination of both.
Accordingly, deferred tax will be calculated at income tax rate, capital gains tax rate or combination of both.
Recognition of deferred tax assets, which principally relate to tax losses, depends on the management’s expectationof future taxable profit that will be available against which the tax losses can be utilized. The outcome of their actual
utilization may be different.

Annual Report 2015

E Pension obligations
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the net cost/income for pensions include thediscount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be
used to determine the present value of estimated future cash outflows expected to be required to settle the pension
obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms tomaturity approximating the terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions.

F Non-trading items
The Group uses underlying business performance in its internal financial reporting to distinguish between
the underlying profits and non-trading items. The identification of non-trading items requires judgementby management, but follows the consistent methodology as set out in the Group’s accounting policies.

51

52 Mandarin Oriental International Limited

Notes to the Financial Statements

1 Revenue
2015		
US$m		

2014
US$m

– Hong Kong

238.6		

249.5– Other Asia

100.1		

118.9– Europe

204.9		

249.6– The Americas

63.7		

61.9

607.3		

679.9– Hotel ownership

574.0		

634.2– Hotel & Residences branding and management

63.6		

77.1

– Less: intra-segment revenue(30.3)(31.4 )

607.3

679.9

Analysis by geographical area

Analysis by activity

Operating segments are identified on the basis of internal reports about components of the Group that are regularly
reviewed by the executive Directors of the Company for the purpose of resource allocation and performance assessment.
The Group is operated on a worldwide basis in four regions: Hong Kong, Other Asia, Europe and The Americas which
form the basis of its reportable segments. No operating segments have been aggregated to form the reportable segments.
In addition, the Group has two distinct business activities: Hotel ownership and Hotel & Residences branding andmanagement. The Group’s segmental information for non-current assets is set out in note 19.

Annual Report 2015

2 EBITDA (earnings before interest, tax, depreciation and amortization)
	  and operating profit from subsidiaries
2015		
US$m		

2014
US$m

– Hong Kong

83.2		

85.1

– Other Asia

27.8		

29.9

– Europe

44.5		

67.6

– The Americas

5.2		

3.2

160.7		

185.8

(0.5)

–

160.2

185.8

Analysis by geographical area

Underlying EBITDA from subsidiaries
Non-trading items– acquistion-related costs (refer note 7)
EBITDA from subsidiaries
Less: depreciation and amortization(52.9)(65.0 )

Operating profit

107.3

120.8

– Hotel ownership

133.9

148.5

– Hotel & Residences branding and management

26.3

37.3

EBITDA from subsidiaries

160.2

185.8

– Hotel ownership

84.0

86.7

– Hotel & Residences branding and management

23.3

34.1

Operating profit

107.3

120.8

22.9

22.8

Analysis by activity

The following items have been credited/(charged) in arriving at operating profit:
Rental income (refer note 9)
Amortization of intangible assets (refer note 8)(2.3)(2.6 )

Depreciation of tangible assets (refer note 9)(50.6)(62.4 )

Impairment of debtors(0.2)(0.1 )(228.4)(246.8 )– share options granted(2.3)(2.6 )– defined benefit pension plans (refer note 12)(4.0)(3.7 )– defined contribution pension plans(1.1)(1.1 )(235.8)(254.2 )(0.6)(0.2 )– minimum lease payments(8.0)(8.7 )– contingent rents(4.9)(5.6 )

Employee benefit expense– salaries and benefits in kindNet foreign exchange losses
Operating leases

0.3

0.3

(12.6)(14.0 )

– audit(1.4)(1.6 )– non-audit services(1.2)(0.8 )(2.6)(2.4 )– subleases

Auditors’ remuneration

In 2014, the impact of the Manila hotel closure on EBITDA mainly included lease termination fee (US$10 million);
partly offset by loss from operations (US$1 million) and retrenchment costs (US$5 million). Including the write-off ofremaining fixed assets through depreciation (US$7 million), the total impact of the Manila closure on underlying profit
was negative US$3 million.

53

54 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

3 Net financing charges
2015		
US$m		

2014
US$m

– bank loans(11.0)(18.0 )

Commitment and other fees

(2.7)

(1.9 )

Financing charges(13.7)(19.9 )

Interest income

1.9		

2.6

(11.8)(17.3 )

Interest expense

Net financing charges

4 Share of results of associates and joint ventures
			 Depreciation				
			
and		
Operating		
EBITDA		 amortization		
profit		
US$m		
US$m		
US$m		Net				financing				charges		Tax		
US$m		
US$m		

Net
profit/(loss)
US$m

2015
Analysis by geographical area
– Other Asia

21.1		

(7.7)

13.4		

(1.4)

(2.2)

9.8

– Europe

1.5		

(0.3)

1.2		

–

(0.3)

0.9

5.1		

(2.8)

2.3		

(2.1)

0.1

0.3

27.7		

(10.8)

16.9		

(3.5)

(2.4)

11.0

(0.5)

– 		

(0.5)

–

–

(0.5 )

27.2		

(10.8)

16.4		

(3.5)

(2.4)

10.5

– Hotel ownership26.2		

(10.3)

15.9		

(3.4)

(2.3)

10.2

– Other

1.0		

(0.5)

0.5		

(0.1)

(0.1)

0.3

27.2		

(10.8)

16.4		

(3.5)

(2.4)

10.5

25.9		

(9.2)

16.7		

(1.4)

(2.9)

12.4

– 		

–

– 		

– 		

– 		

–

5.6		(2.9)

2.7		(2.1)(0.7)(0.1 )

31.5		

(12.1)

19.4		

(3.5)

(3.6)

12.3

– 		

– 		

– 		

– 		

–

–

31.5		

(12.1)

19.4		

(3.5)

(3.6)

12.3

– Hotel ownership30.4		

(11.5)

18.9		

(3.4)

(3.4)

12.1

– Other

1.1		

(0.6)

0.5		

(0.1)

(0.2)

0.2

31.5		

(12.1)

19.4		

(3.5)

(3.6)

12.3

– The Americas

Non-trading items– acquisition-related costs (refer note 7)

Analysis by activity

2014
Analysis by geographical area
– Other Asia
– Europe– The Americas

Non-trading items– acquisition-related costs (refer note 7)

Analysis by activity

Annual Report 2015

5 Tax
2015		
US$m		

2014
US$m

(17.9)(18.8)

1.3(0.2)(16.6)(19.0 )

– Hong Kong

(10.7)(11.6 )– Other Asia

(1.7)

(3.0 )– Europe(4.1)(6.5 )– The Americas

(0.1)

2.1

(16.6)(19.0 )

– Hotel ownership(12.0)(14.6 )

– Hotel & Residences branding and management(4.6)(4.4 )(16.6)(19.0 )Tax at applicable tax rate

(10.3)(11.5 )

Expenses not deductible for tax purposes(2.0)(1.5 )Tax losses not recognized(5.0)(2.7 )

Withholding tax(1.9)(4.0 )

Over provision in prior years

0.9		

0.1

Other

1.7		

0.6

(16.6)(19.0 )

0.9

0.9

–

(0.7 )

0.9

0.2

Tax (charged)/credited to profit and loss is analyzed as follows:– current tax– deferred tax (refer note 13)

Analysis by geographical area

Analysis by activity

Reconciliation between tax expense and tax at the applicable tax rate*:

Tax relating to components of other comprehensive income is analyzed as follows:Remeasurements of defined benefit plans
Cash flow hedges

Share of tax charge of associates and joint ventures of US$2.4 million (2014: US$3.6 million) is included in share of
results of associates and joint ventures (refer note 4).
* The applicable tax rate for the year was 11% (2014: 11%) and represents the weighted average of the rates of taxation prevailingin the territories in which the Group operates.

55

56 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

6 Earnings per share
Basic earnings per share are calculated on the profit attributable to shareholders of US$89.3 million(2014: US$97.0 million) and on the weighted average number of 1,199.6 million (2014: 1,044.7 million
after adjusting for the rights issue completed in April 2015) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable to shareholders of US$89.3 million(2014: US$97.0 million) and on the weighted average number of 1,204.5 million (2014: 1,048.8 million
after adjusting for the rights issue completed in April 2015) shares in issue after adjusting for the numbersof shares which are deemed to be issued for no consideration under the share-based long-term incentive
plans based on average share price during the year.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2015		
2014

1,199.6		

Weighted average number of shares for basic earnings per share calculation
Adjustment for shares deemed to be issued for no consideration
under the share-based long-term incentive plans
Weighted average number of shares for diluted earnings per share calculation

1,044.7

4.9		

4.1

1,204.5		

1,048.8

Additional basic and diluted earnings per share are also calculated based on underlying profit attributable
to shareholders. A reconciliation of earnings is set out below:
			
			
			
US$m		

2015
Basic		earnings		
per share		
US¢		

Profit attributable to shareholders

89.3		

7.44		

7.41		

97.0		

Non-trading items (refer note 7)

1.0				

		–

Underlying profit attributable
to shareholders

90.3		

7.50		

97.0		

7.53		

Diluted				earnings				per share				US¢		
US$m		

2014
Basic		earnings		
per share		US¢		

Dilutedearnings
per shareUS¢

9.29		

9.25

9.29		

9.25

The basic and diluted earnings per share for the year ended 31st December 2014 have been adjusted to reflect
the effect of the rights issue completed in April 2015.

7 Non-trading items
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
2015		
US$m		

2014
US$m

– administration expenses

0.5		

–

– share of results of associates and joint ventures

0.5		

–

1.0		

–

Acquisition-related costs

Annual Report 2015

8 Intangible assets
			Goodwill		
US$m		

Leasehold		land		
US$m		

Computer		software		
US$m		Development
costs		US$m		

23.9		

6.4		

19.4		

16.2

65.9

Amortization and impairment

– 		

(2.0)

(16.4)(1.9)(20.3 )Net book value at 1st January

23.9		

4.4		

3.0		

14.3

45.6

Total
US$m

2015
Cost

Exchange differences

– 		

(0.1)

–		

(0.3)

(0.4 )

Additions

– 		

– 		

1.1		

1.0

2.1

Amortization

– 		

(0.1)

(1.8)

(0.4)

(2.3 )

Impairment

– 		

– 		

–		

(0.9)

(0.9 )Net book value at 31st December

23.9		

4.2		

2.3		

13.7		

44.1

Cost

23.9		

6.3		

20.5		

16.1

66.8

– 		

(2.1)

(18.2)(2.4)(22.7 )

23.9		

4.2		

2.3		

13.7		

44.1

23.9		

6.5		

18.0		

12.8		

61.2

Amortization and impairment

–		

(1.9)

(14.4)(2.3)(18.6 )Net book value at 1st January

23.9		

4.6		

3.6		

10.5		

42.6

Exchange differences

– 		

– 		

(0.1)

(0.2)

(0.3 )

Additions

– 		

– 		

1.5		

4.4		

5.9

Amortization– 		(0.2)

(2.0)

(0.4)

(2.6 )

Amortization and impairment

2014
Cost

Impairment

– 		

– 		

– 		

–

–

Net book value at 31st December

23.9		

4.4		

3.0		

14.3		

45.6

Cost

23.9		

6.4		

19.4		

16.2		

65.9

– 		

(2.0)

(16.4)(1.9)(20.3 )

23.9		

4.4		

3.0		

14.3		

45.6

Amortization and impairment

Management has performed an impairment review of the carrying amount of goodwill at 31st December 2015.
For the purpose of impairment review, goodwill acquired has been allocated to the respective hotels and is reviewed
for impairment based on individual hotel forecast operating performance and cash flows. Cash flow projections forthe impairment reviews are based on individual hotel budgets prepared on the basis of assumptions reflective of theprevailing market conditions, and are discounted appropriately. Key assumptions used for value-in-use calculations
include average growth rates of between 3% to 8% to extrapolate cash flows over a five-year period after which thegrowth rate is assumed up to 5% in perpetuity, which may vary across the Group’s geographical locations, and are basedon management expectations for the market development; and pre-tax discount rates of around 8% to 10% applied tothe cash flow projections. The discount rates used reflect business specific risks relating to the business life-cycle andgeographical location. On the basis of these reviews, management concluded that no impairment is required.
The amortization charges are all recognized in arriving at operating profit and are included in cost of sales, selling anddistribution costs and administration expenses.
The remaining amortization periods for intangible assets are as follows:
Leasehold land

10 to 30 years

Computer software

3 to 5 years

Development costs

15 to 40 years

5758 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

9 Tangible assets
			Freehold		
properties		
US$m		

Leasehold				Furnitureproperties &		
Plant &		
equipment &improvements		
machinery		 motor vehicles		
US$m		
US$m		
US$m		

Total
US$m

2015
Cost

695.8		

734.7		

144.6		

255.41,830.5

Depreciation and impairment(72.9)(175.8)(73.1)(193.6)(515.4 )Net book value at 1st January

622.9		

558.9		

71.5		

61.8

1,315.1

Exchange differences(46.7)

(6.2)

(4.3)

(1.9)

(59.1 )

Additions

1.5		

12.6		

5.1		

30.7

49.9

Transfers

–

–

– 		

–

–

Disposals

(0.1)

– 		

– 		

(0.2)

(0.3 )

Depreciation charge(8.1)(15.6)(6.7)(20.2)(50.6 )Net book value at 31st December

569.5		

549.7		

65.6		

70.2		

1,255.0

Cost

650.0		

720.8		

140.2		

257.61,768.6

Depreciation and impairment(80.5)(171.1)(74.6)(187.4)(513.6 )569.5		

549.7		

65.6		

70.2		

1,255.0

Cost

755.5		

751.5		

152.2		

272.8		

1,932.0

Depreciation and impairment(66.8)(163.4)(68.1)(193.2)(491.5 )Net book value at 1st January

688.7		

588.1		

84.1		

79.6		

1,440.5

Exchange differences

2014(60.4)(21.5)

(6.0)

(3.9)

(91.8 )

Additions– 		

13.1		

1.7		

14.4		

29.2

Transfers

2.6		

1.3		

–

(3.9)

–

Disposals(0.3)(0.4 )(8.0)(22.1)(8.2)(24.1)(62.4 )Net book value at 31st December

622.9		

558.9		

71.5		

61.8		

1,315.1

Cost

695.8		

734.7		

144.6		

255.4		

1,830.5(72.9)(175.8)(73.1)(193.6)(515.4 )622.9		

558.9		

71.5		

61.8		

1,315.1

Depreciation charge

Depreciation and impairment– 		– 		(0.1)

Freehold properties include a property of US$104.6 million (2014: US$96.2 million), which is stated netof tax increment financing of US$23.0 million (2014: US$23.9 million) (refer note 18).
Net book value of leasehold properties acquired under finance leases amounted to US$183.5 million(2014: US$183.7 million).
Rental income from properties and other tangible assets amounted to US$22.9 million (2014: US$22.8 million)(refer note 2).

Annual Report 2015

9 Tangible assets continued
Future minimum rental payments receivable under non-cancellable leases are as follows:
2015		
US$m		

2014
US$mWithin one year

19.0		

21.0

Between one and two years

13.2		

16.9

Between two and five years

17.5		

21.9

Beyond five years

8.0		

12.8

57.7		

72.6

– Hong Kong

7.8		

9.4

– Other Asia

2.4		

1.6

– Europe

27.1		

16.5

– The Americas

12.6		

1.7

49.9		

29.2

48.9		

28.1

Certain of the hotel properties are pledged as security for bank borrowings as shown in note 17.
Analysis of additions by geographical area

Analysis of additions by activity– Hotel ownership

1.0		

1.1

49.9		

29.2

– Hong Kong

(16.7)(16.5 )– Other Asia

(5.8)

(13.2 )– Europe(23.9)(28.6 )– The Americas(4.2)(4.1 )(50.6)(62.4 )

– Hotel ownership(49.6)(61.4 )

– Hotel & Residences branding and management(1.0)(1.0 )(50.6)(62.4 )

– Hotel & Residences branding and management

Analysis of depreciation by geographical area

Analysis of depreciation by activity

59

60 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

10 Associates and joint ventures
2015
US$m		

2014
US$m

Listed associate – OHTL

17.1

18.8

Unlisted associates

71.0

77.3

Share of attributable net assets

88.1

96.1

Notional goodwill

5.5

5.5

93.6		

101.6

Associates

Joint ventures
Share of attributable net assets of unlisted joint ventures

64.7

–

Goodwill on acquisition

6.1

–

70.8

–

164.4

101.6

Associates

Joint ventures
2015		
2014
US$m		
US$m

2015		
US$m		

2014		
US$m		

101.6		

110.8		––

Movements of associates andjoint ventures during the year:
At 1st January

– 		

– 		

(0.8)

–

Share of results after tax andnon-controlling interests

10.1		

12.3		

0.4–

Share of other comprehensive income
after tax and non-controlling interests

(9.5)

(4.0)

(2.2)

–

Dividends received(8.0)(13.2)––

Repayment of loans to associates (refer note 24c)

(0.6)

(4.3)

–

–

Acquisition of Hotel Ritz, Madrid (refer note 27)

–

– 		

73.3

–

Exchange differences

–

– 		

0.1

–

At 31st December

93.6

101.6		

70.8–Fair value of listed associate

190.1		

82.4		

N/A

N/A

Advance to joint venturesa) Investment in associates
The material associates of the Group are listed below. These associates have share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investments in material associates in 2015 and 2014:
				Name of entity
Nature of businessCountry of incorporationand principal place ofbusiness/place of listing% of ownership interest
2015
2014

OHTL PCL (‘OHTL’)
Owner of Mandarin Oriental,
Thailand/Thailand	 Bangkok	 

44.9%

44.9%

Marina Bay Hotel Private Ltd.
Owner of Mandarin Oriental,
Singapore/Unlisted(‘Marina Bay Hotel’)	  Singapore	 

50.0%

50.0%

At 31st December 2015, the fair value of the Group’s interest in OHTL, which is listed on the Thailand Stock
Exchange, was US$190.1 million (2014: US$82.4 million) and the carrying amount of the Group’s interest was
US$22.6 million (2014: US$24.3 million).

Annual Report 2015

10 Associates and joint ventures continueda) Investment in associates continued
Summarized financial information for material associates
Summarized balance sheet at 31st December
2015		
US$m		

OHTL
2014		
US$m		

Marina Bay Hotel2015		
2014		
US$m		
US$m		

2015		
US$m		

2014
US$m

62.4

59.2		

122.5

132.8		

184.9

192.0

Cash and cash equivalents

3.5

6.4		

5.2

3.9		

8.7

10.3

Other current assets

4.1		

4.0		

2.9

3.8		

7.0

7.8

Total current assets

7.6

10.4		

8.1

7.7		

15.7

18.1

(9.7)

(10.6)(23.3)(25.0)(33.0)(35.6 )

Non-current assets

Total

Current assets

Non-current liabilities
Financial liabilities*
Other non-current liabilities*

(3.6)

(3.9)

(2.8)

(3.3)

(6.4)

(7.2 )

Total non-current liabilities(13.3)(14.5)(26.1)(28.3)(39.4)(42.8 )

(17.9)(11.1)(9.6)(10.5)(27.5)(21.6 )

Current liabilities
Financial liabilities*
Other current liabilities*

(2.8)

(4.5)

(5.7)

(7.9)

(8.5)

(12.4 )

Total current liabilities(20.7)(15.6)(15.3)(18.4)(36.0)(34.0 )Net assets

36.0

39.5		

89.2

93.8		

125.2

133.3

* Financial liabilities excluding trade and other payables and provisions, which are presented under other current and non-current liabilities.

Summarized statement of comprehensive income for the year ended 31st December
2015		
US$m		

OHTL
2014		
US$m		

Marina Bay Hotel2015		
2014		
US$m		
US$m		

2015		
US$m		

Total
2014
US$m

Revenue

55.7		

58.9		

74.3		

84.4		

130.0		

143.3Depreciation and amortization

(4.5)

(5.7)

(6.9)

(7.8)

(11.4)(13.5 )

Interest income

0.1

0.1		

–		

–		

0.1

0.1

Interest expense

(0.3)

(0.6)

(0.6)

(0.7)

(0.9)

(1.3 )

Profit from underlying business performance

7.7

7.9		

15.2		

18.8		

22.9

26.7

Income tax expense

(1.2)

(1.2)

(2.2)

(3.0)

(3.4)

(4.2 )

Profit after tax

6.5

6.7		

13.0		

15.8		

19.5

22.5

Other comprehensive expense

(3.9)

–		

(7.6)

(5.0)

(11.5)(5.0 )

Total comprehensive income

2.6

6.7		

5.4		

10.8		

8.0

17.5

Dividends received from associates

6.1

8.4		

10.0		

11.8		

16.1

20.2

The information above reflects the amounts presented in the financial statements of the associates adjusted for differencesin accounting policies between the Group and the associates, and fair value of the associates at the time of acquisition.

61

62 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

10 Associates and joint ventures continueda) Investment in associates continued
Reconciliation of the summarized financial information
Reconciliation of the summarized financial information presented to the carrying amount of the Group’s interests
in its material associates for the year ended 31st December:2015		
US$m		

OHTL
2014		
US$m		

Marina Bay Hotel2015		
2014		
US$m		
US$m		

2015		
US$m		

Total
2014
US$m

Net assets at 1st January

39.5

41.2		

93.8

94.8		

133.3

136.0

Profit for the year

6.5

6.7		

13.0

15.8		

19.5

22.5

Other comprehensive expense

(3.9)

–		

(7.6)

(5.0)

(11.5)(5.0 )

Dividends paid

(6.1)

(8.4)

(10.0)(11.8)(16.1)(20.2 )Net assets at 31st December

36.0

39.5		

89.2

93.8		

125.2

133.3

Effective interest in associates (%)*

47.6		

47.6		

50.0		

50.0

Group’s share of net assets in associates

17.1

18.8		

44.6

46.9		

61.7

65.7

Notional goodwill*

5.5

5.5		

–

–		

5.5

5.5

Carrying value

22.6

24.3		

44.6

46.9		

67.2

71.2

Fair value

190.1

82.4		

N/A

N/A		

190.1

82.4

The Group has interests in a number of individually immaterial associates. The following table analyzes, in aggregate,
the share of profit and other comprehensive expense and carrying amount of these associates.
2015		
US$m		

2014
US$m

Share of profit

0.5

1.2

Share of other comprehensive expense(3.8)(1.4 )

Share of total comprehensive expense(3.3)(0.2 )

Carrying amount of interests in these associates

26.4

30.4

* During 2013, OHTL repurchased some of its own shares. The number of OHTL shares held by the Group remained unchanged.

As a result of the share repurchase, notional goodwill of US$5.5 million was recognized and the Group’s effective interest increased
to 47.6%.

Contingent liabilities relating to the Group’s interest in associates

Financial guarantee in respect of facilities made available to an associate2015		
US$m		

2014
US$m

21.2		

21.6

The guarantee in respect of facilities made available to an associate is stated at its contracted amount. The Directors areof the opinion that it is not probable that this guarantee will be called upon.

Annual Report 2015

10 Associates and joint ventures continuedb) Investment in joint ventures
The material joint venture of the Group is listed below. This joint venture has share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investment in material joint venture in 2015 and 2014:		Name of entity
Nature of businessCountry of incorporation andprincipal place of business% of ownership interest
2015
2014

Ritz Madrid, S.A.
Owner of Hotel Ritz, Madrid(‘Ritz Madrid’)	 

Spain

50%

–

Summarized financial information for material joint venture
Summarized balance sheet at 31st December
Ritz Madrid2015		
US$m		

2014
US$m

165.1

–

Cash and cash equivalents

1.8–

Other current assets

2.3–

Total current assets

4.1–

Financial liabilities*(133.0)–

Other non-current liabilities*(35.8)–

Total non-current liabilities(168.8)–Other current liabilities*

(3.9)

–

Total current liabilities

(3.9)

–

Net liabilities

(3.5)

–

Non-current assets
Current assets

Non-current liabilities

Current liabilities* Financial liabilities excluding trade and other payables and provisions, which are presented under other current and non-current liabilities.

6364 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

10 Associates and joint ventures continuedb) Investment in joint ventures continued
Summarized financial information for material joint venture continued
Summarized statement of comprehensive income for the period from 22nd May 2015 to 31st December 2015
Ritz Madrid2015		
US$m		

2014
US$m

Revenue

17.0–

Depreciation and amortization

(0.7)

–

Profit from underlying business performance

2.5–

Income tax expense

(0.6)

–

Profit after tax from underlying business performance

1.9–

Non-trading items

(1.0)

–

Profit after tax

0.9–

Other comprehensive expense

(4.4)

–

Total comprehensive expense

(3.5)

–

The information above reflects the amounts presented in the financial statements of the joint ventures adjusted for
differences in accounting policies between the Group and the joint ventures, and fair value of the joint ventures at
the time of acquisition.
Reconciliation of the summarized financial information
Reconciliation of the summarized financial information presented to the carrying amount of the Group’s interests in
its material joint venture for the period from 22nd May 2015 to 31st December 2015:
Ritz Madrid2015		
US$m		

2014
US$m

–

–

Profit for the year

0.9–

Other comprehensive expense

(4.4)

–

Net liabilities at 31st December

(3.5)

–

Effective interest in joint venture (%)*

50.0

–

Group’s share of net liabilities in joint venture

(1.8)

–

Goodwill on acquisition

6.1–

Shareholders’ loans

66.5

–

Carrying value

70.8

–

Net liabilities at 1st January

The Group has no other joint venture other than Ritz Madrid.
* In May 2015, the Group completed its acquisition of the Hotel Ritz, Madrid in a 50/50 joint venture with The Olayan Group(refer note 27).

Annual Report 2015

10 Associates and joint ventures continuedb) Investment in joint ventures continued
Commitments and contingent liabilities in respect of joint ventures
The Group has the following commitments relating to its joint ventures as at 31st December:2015		
US$m		

Commitment to provide funding if called

40.6

2014
US$m

–

There were no contingent liabilities relating to the Group’s interest in its joint ventures at 31st December 2015.

11 Loans receivable
As at 31st December 2015 and 2014, the loans receivable comprised (i) a loan of US$2.4 million, bearing interest at
EURO LIBOR + 2%; and (ii) a loan of US$1.5 million, bearing interest at 10%; on which full provisions have been made.

12 Pension plans
The Group operates defined benefit pension plans in the main territories in which it operates, with the majority ofthe plans in Hong Kong. Most of the pension plans are final salary defined benefit plans calculated based on a members’length of service and their salaries in the final years leading up to retirement. In Hong Kong, the pension benefits arepaid in one lump sum. With the exception of certain plans in Hong Kong, all the defined benefit plans are closed to
new members. In addition, although all plans are impacted by the discount rate, liabilities are driven by salary growth.
The Group’s defined benefit plans are either funded or unfunded, with the assets of the funded plans held independentlyof the Group’s assets in separate trustee administered funds. Plan assets held in trusts are governed by local regulations
and practice in each country. Responsibility for governance of the plans, including investment decisions and contribution
schedules, lies jointly with the Company and the boards of trustees. The Group’s major plans are valued by independentactuaries annually using the projected unit credit method.
The amounts recognized in the consolidated balance sheet are as follows:
2015		
US$m		

2014
US$m

Fair value of plan assets

66.1

69.4

Present value of funded obligations(66.1)(62.1 )

–

7.3

–

7.3

Net pension assets
Analysis of net pension assets
Pension assets

65

66 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

12 Pension plans continued
The movement in the net pension assets is as follows:
Fair value		of plan		assets		
US$m		

Present
value ofobligation		
US$m		

Total
US$m

69.4		

(62.1)

7.3

2015
At 1st January

–		

(4.1)

(4.1 )

2.3		

(1.9)

0.4

–		

–

–

71.7		

(68.1)

3.6

(0.3)

–

(0.3 )(4.7)–(4.7 )– change in financial assumptions

–		

(1.3)

(1.3 )– experience losses

–		

0.6

0.6

(4.7)

(0.7)

(5.4 )

2.1		

–

2.1

Contributions from plan participants

0.7		

(0.7)

–

Benefit payments

(3.3)

3.3

–

Transfer (to)/from other plans

(0.1)

0.1		

–

At 31st December

66.1		

(66.1)–

71.9		

(58.1)

13.8

–		

(4.0)

(4.0 )

3.1		

(2.5)

0.6

–		

(0.1)

(0.1 )

75.0		

(64.7)

10.3

(0.2)

–		

(0.2 )(1.3)–		(1.3 )–		(3.1)(3.1 )

Current service cost
Interest income/(expense)
Past service cost and losses on settlements

Administration expenses
Remeasurements– return on plan assets, excluding amounts
included in interest income/(expense)

Contributions from employers

2014
At 1st January
Current service cost
Interest income/(expense)
Past service cost and losses on settlements

Administration expenses
Remeasurements– return on plan assets, excluding amounts
included in interest income/(expense)– change in financial assumptions– experience losses

–		

(1.2)

(1.2 )

(1.3)

(4.3)

(5.6 )

Contributions from employers

1.9		

–		

1.9

Contributions from plan participants

0.7		

(0.7)

–

Benefit payments

(6.6)

7.5		

0.9

Transfer (to)/from other plans

(0.1)

0.1		

–

At 31st December

69.4		

(62.1)

7.3

Annual Report 2015

12 Pension plans continued
The weighted average duration of the defined benefit obligation at 31st December 2015 is 5.0 years (2014: 5.3 years).
Expected maturity analysis of undiscounted pension benefits at 31st December is as follows:
2015		
US$m		

2014
US$m

16.0

6.6

Between one and two years

8.1

14.1

Between two and five years

22.3

23.5

Beyond five years

76.5

80.5

122.9

124.7

Less than a year

The principal actuarial assumptions used for accounting purposes at 31st December are as follows:
Hong Kong
2015		
%		

2014%

Discount rate

3.0

3.4

Salary growth rate

5.0

5.0

As participants of the plans relating to Hong Kong usually take lump sum amounts upon retirement, mortality is nota principal assumption for these plans.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:Change in		
assumption					

Impact on defined
benefit obligation
Increase in		
Decrease inassumption		assumption
US$m		
US$m

Discount rate

1%		

(3.1)

3.4

Salary growth rate

1%		

3.0		

(2.8 )

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating thesensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of thedefined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been
applied when calculating the pension liability recognized within the balance sheet.

6768 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

12 Pension plans continued
The analysis of the fair value of plan assets at 31st December is as follows:
Asia				Pacific		Europe		US$m		
US$m		

North
America		
US$m		

Global		
US$m		

Total
US$m

2015
Quoted investments
6.6		

–		

–		

–

6.6

–		

–		

0.1		

–

0.1

   – investment grade

–		

–		

–		

–

–

   – non-investment grade

–		

–		

–		

–

–

–		

–		

–		

–

–

–		

–		

0.1		

–

0.1

5.8		

4.4		

10.5		

1.9		

22.6

12.4		

4.4		

10.6		

1.9		

29.3

–		

–		

–		

–

–

1.4		

3.4		

1.5		

0.3

6.6

0.3		

1.7		

2.5		

–

4.5

–		

0.1		

0.6		

–

0.7

0.3		

1.8		

3.1		

–

5.2

1.7		

5.2		

4.6		

0.3

11.8

0.6		

0.2		

0.2		

20.7

21.7

2.3		

5.4		

4.8		

21.0

33.5

14.7		

9.8		

15.4		

22.9		

62.8

Equity instruments
Debt instruments– government– corporate bonds

Investment funds

Unquoted investments
Equity instruments
Debt instruments– government– corporate bonds   – investment grade   – non-investment grade

Investment funds

Total investments

Cash and cash equivalents									3.3									66.1Annual Report 2015

12 Pension plans continued
The analysis of the fair value of plan assets at 31st December is as follows:
Asia				Pacific		Europe		US$m		
US$m		

North
America		
US$m		

Global		
US$m		

Total
US$m

2014
Quoted investments
Equity instruments

7.4		

–		

–		

–		

7.4

–		

–		

–		

–		

–

   – investment grade

–		

–		

–		

–		

–

   – non-investment grade

–		

–		

–		

–		

–

–		

–		

–		

–		

–

–		

–		

–		

–		

–

0.4		

6.5		

11.3		

2.8		

21.0

7.8		

6.5		

11.3		

2.8		

28.4

–		

–		

–		

–		

–

2.3		

6.4		

2.9		

0.6		

12.2

0.3		

1.0		

1.5		

–		

2.8

–		

2.0		

3.2		

–		

5.2

0.3		

3.0		

4.7		

–		

8.0

2.6		

9.4		

7.6		

0.6		

20.2

0.1		

–		

–		

20.1		

20.2

2.7		

9.4		

7.6		

20.7		

40.4

10.5		

15.9		

18.9		

23.5		

68.8

Debt instruments– government– corporate bonds

Investment funds

Unquoted investments
Equity instruments
Debt instruments– government– corporate bonds   – investment grade   – non-investment grade

Investment funds

Total investments

Cash and cash equivalents									0.6									69.4The defined benefit plans in Hong Kong have strategic asset allocation for its closed plans. The closed plans havean equity/debt allocation of 55/45 split.
The strategic asset allocation is derived from the asset-liability modeling (‘ALM’) review, done triennially to ensure theplans can meet future funding and solvency requirements. The last ALM review was completed in 2015, with the newstrategic asset allocations adopted in 2015. The next ALM review is scheduled for 2018.

69

70 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

12 Pension plans continued
At 31st December 2015, the Hong Kong plans had assets of US$66.1 million (2014: US$69.4 million). These assets were
invested 23% in Asia Pacific, 16% in Europe, 25% in North America and the rest of 36% in Global (2014: 15%, 23%,
27% and 35%, respectively). Within Asia Pacific, 49% was invested in Hong Kong equities. In 2015, 47% and 53% of
the investments were in quoted and unquoted instruments respectively. In 2014, the split was 41% and 59% respectively.
The high percentage of quoted instruments provides liquidity to fund drawdowns and benefit payments. Within thequoted equity allocation, the plan is well diversified in terms of sectors, with the top three being financials, industrials
and technology with a combined fair value of US$4.6 million. In 2014, the top three sectors were financials, industrial
and consumer goods with a combined fair value of US$5.1 million.
Through its defined benefit pension plans, the Group is expected to be exposed to a number of risks such as asset
volatility changes in bond yields, inflation risk and life expectancy, the most significant of which are detailed below:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets
underperform this yield, this will create a deficit. The Group’s defined benefit plans hold a significant proportion ofequities, which are expected to outperform corporate bonds in the long term while generating volatility and risk in the
short term.
In Hong Kong, where the Group has closed plans, the assets and liabilities mix are distinct to reduce the level ofinvestment risk to the plan. In 2015, the closed plans exited from commodities and increased allocations to hedge funds.
The plans also reduced their allocations to global fixed income by holding cash and investing a portion to Asian fixedincome to reduce volatility risks. Management believes the long-term nature of the plan liabilities and the strength of
the Group supports a level of equity investment as part of the Group’s long term strategy to manage the plans efficiently.
Change in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in
the value of the plans’ bond holdings.
Inflation risk
The majority of the Group’s plan assets are unaffected by inflation.
The Group ensures that the investment positions are managed within an ALM framework that is developed to achieve
long-term returns that are in line with the obligations under the pension schemes. Within the ALM framework, theGroup’s objective is to match assets to the pension obligations by investing in a well-diversified portfolio that generates
sufficient risk-adjusted returns that match the benefit payments. The Group also actively monitors the duration and the
expected yield of the investments to ensure it matches the expected cash outflows arising from the pension obligations.
Investments across the plans are well diversified, such that the failure of any single investment would not have a material
impact on the overall level of assets.
The Group maintains an active and regular contribution schedule across all the plans. The contributions to all its plans
in 2015 were US$2.1 million and the estimated amount of contributions expected to be paid to all its plans in 2016is US$2.2 million.

Annual Report 201513 Deferred tax assets/(liabilities)									 Unremitted		Accelerated								earnings in		tax		
Fair value				Employee		
associates/		depreciation		 gains/losses		
Losses		benefits		 joint ventures		
US$m		
US$m		
US$m		
US$m		
US$m		

Provisions
and other
temporarydifferences		
US$m		

Total
US$m

2015
(58.1)

0.4		

1.1		

(1.2)

(1.6)

(0.7)

(60.1 )

Exchange differences

0.7		

0.1		

– 		

– 		

0.1		

–

0.9

Credited/(charged) to
profit and loss

1.0		

– 		

–		

0.3		

0.1		

(0.1)

1.3

At 1st January

Credited to othercomprehensive income

– 		

– 		

– 		

0.9		

–		

–

0.9

At 31st December(56.4)

0.5		

1.1		

– 		

(1.4)

(0.8)

(57.0 )

Deferred tax assets

0.2		

0.5		

1.1		

0.9		

– 		

0.1

2.8

Deferred tax liabilities(56.6)

– 		

–		

(0.9)

(1.4)

(0.9)

(59.8 )

(56.4)

0.5		

1.1		

– 		

(1.4)

(0.8)

(57.0 )

(60.3)

1.1		

1.4		

(2.2)

(1.7)

(0.7)

(62.4 )

Exchange differences

2.4		

– 		

(0.2)

– 		

– 		

0.1		

2.3

(Charged)/credited to
profit and loss

(0.2)

– 		

(0.1)

0.1		

0.1		

(0.1)

(0.2 )

– 		

(0.7)

– 		

0.9		

– 		

– 		

0.2

At 31st December(58.1)

0.4		

1.1		

(1.2)

(1.6)

(0.7)

(60.1 )

Deferred tax assets

0.1		

0.5		

1.1		

0.3		

–		

0.2		

2.2

Deferred tax liabilities(58.2)

(0.1)

– 		

(1.5)

(1.6)

(0.9)

(62.3 )

(58.1)

0.4		

1.1		

(1.2)

(1.6)

(0.7)

(60.1 )

2014
At 1st January(Charged)/credited to othercomprehensive income

Deferred tax balances predominantly comprise non-current items. Deferred tax assets and liabilities are netted when
the taxes relate to the same taxation authority and where offsetting is allowed.
Deferred tax assets of US$43.1 million (2014: US$42.4 million) arising from unused tax losses of US$171.7 million(2014: US$170.8 million) have not been recognized in the financial statements. Included in the unused tax losses,
US$135.9 million have no expiry date and the balance will expire at various dates up to and including 2035.
Deferred tax assets of US$3.6 million (2014: US$3.6 million) have not been recognized in relation to temporary
differences in subsidiaries.
The Group has no unrecognized deferred tax liabilities arising on temporary differences associated with investments
in subsidiaries at 31st December 2015 and 2014.

71

72 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

14 Debtors and prepayments
2015		
US$m

2014
US$m

– third parties

35.1		

36.9

– associates and joint ventures

4.1		

4.3

39.2		

41.2

(1.6)

(1.4 )

37.6

39.8– third parties*

52.5

55.0

– associates and joint ventures

2.2

2.2

54.7

57.2

(2.4)

(2.5 )

52.3

54.7

89.9

94.5

– Hong Kong

21.0

22.1

– Other Asia

17.1

17.5

– Europe

39.7

39.6

– The Americas

12.1

15.3

89.9

94.5

Trade debtors– provision for impairment

Other debtors– provision for impairment

Analysis by geographical area of operation* Included prepayments of US$12.5 million (2014: US$13.9 million) in respect of Munich expansion (refer note 26).

Trade and other debtors are stated at amortized cost. The fair values of short-term debtors approximate theircarrying amounts.
Fair value– trade debtors

37.6		

39.8

– other debtors**

23.6		

23.4

61.2		

63.2**Excluding prepayments, rental and other deposits.

The average credit period on provision of services varies among Group businesses and is generally not more than 30 days.
Before accepting any new customer, individual Group business assesses the potential customer’s credit quality and setscredit limits by customer using internal credit scoring systems. These limits and scoring are reviewed periodically.
An allowance for impairment of trade debtors is made based on the estimated irrecoverable amount. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or
delinquency in payment are considered indicators that the debtor is impaired.

Annual Report 201514 Debtors and prepayments continued
At 31st December 2015, trade debtors of US$1.7 million (2014: US$1.6 million) and other debtors of US$2.8 million(2014: US$2.7 million) were impaired. The amounts of the provision were US$1.6 million (2014: US$1.4 million)
and US$2.4 million (2014: US$2.5 million), respectively. It was assessed that a portion of the debtors is expected tobe recoverable. The ageing analysis of these debtors is as follows:
Trade debtors
2015		
2014		
US$m		
US$m		

Other debtors
2015		
2014
US$m		
US$m

0.1		

0.1		

0.2		

0.2

Between 31 and 60 days

– 		

–

– 		

–

Between 61 and 90 days

– 		

– 		

– 		

–

1.6		

1.5		

2.6		

2.5

1.7		

1.6		

2.8		

2.7

Below 30 days

Over 90 days

At 31st December 2015, trade debtors of US$7.9 million (2014: US$9.5 million) and other debtors of US$2.1 million(2014: US$3.6 million), respectively, were past due but not impaired. The ageing analysis of these debtors is as follows:
Trade debtors
2015		
2014		
US$m		
US$m		

Other debtors
2015		
2014
US$m		
US$m

Below 30 days

4.9		

2.6		

1.6		

1.9

Between 31 and 60 days

0.8		

2.9		

0.3		

0.6

Between 61 and 90 days

0.6		

2.8		

0.1		

0.5

Over 90 days

1.6		

1.2		

0.1		

0.6

7.9		

9.5		

2.1		

3.6

The risk of trade debtors and other debtors that are neither past due nor impaired at 31st December 2015 becoming
impaired is low as they have a good track record with the Group. Based on past experience, management believes thatno impairment allowance is necessary in respect of these balances as there has not been a significant change in credit
quality and the balances are still considered fully recoverable.
Movements in the provisions for impairment are as follows:
Trade debtors
2015		
2014		
US$m		
US$m		

Other debtors
2015		
2014
US$m		US$m

At 1st January

(1.4)

(0.8)

(2.5)

(3.6 )

Additional provisions

(0.7)

(0.7)

(0.1)

(0.4 )

Unused amounts reversed

0.4

– 		

0.2		

1.0

Amounts written off

0.1

0.1		

– 		

0.5

At 31st December

(1.6)

(1.4)

(2.4)

(2.5 )

73

74 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

14 Debtors and prepayments continued
Other debtors are further analyzed as follows:
2015		
US$m		

2014
US$m

Other amounts due from associates and joint ventures

2.2		

2.2

Other receivables

21.4		

21.2

Financial assets

23.6		

23.4

Prepayments

12.0		

12.6

Rental and other deposits

16.6		

18.1

Other

0.1		

0.6

52.3		

54.7

2015		
US$m		

2014
US$m

Deposits with banks and financial institutions

208.9		

227.4Bank balances

98.7		

96.1

Cash balances

1.0		

1.1

308.6		

324.6– Euro31.2		

33.4

– Hong Kong dollar

18.2		

15.3

– Indonesian rupiah

14.6		

13.4

– Japanese yen

15.0		

14.0

– Swiss franc

5.1		

2.4

– United Kingdom sterling24.3		

17.3

– United States dollar

192.4		

221.3No debtors and prepayments have been pledged as security.

15 Bank and cash balances

Analysis by currency– Other

7.8		

7.5

308.6		

324.6The weighted average interest rate on deposits with banks and financial institutions is 0.7% (2014: 0.9%) per annum.

Annual Report 2015

16 Creditors and accruals
2015		
US$m		

2014
US$m

Trade creditors

33.7		

34.3

Accruals

60.4		

71.0

Rental and other refundable deposits

13.0		

13.4

Other creditors

26.4		

21.2

Financial liabilities

133.5		

139.9Rental income received in advance

2.3		

2.2

Other income received in advance

2.8		

2.5

138.6		

144.6– Euro15.2		

15.0

– Hong Kong dollar

50.5		

55.4

– Japanese yen

11.9		

12.7

– Swiss franc

6.2		

7.5

– United Kingdom sterling12.7		

14.0

– United States dollar

37.0		

34.1

Analysis by currency– Other

5.1		

5.9

138.6		

144.6Creditors and accruals are stated at amortized cost. Their fair values approximate their carrying amounts.

17 Borrowings
2015		
Carrying		
amount		
US$m		

2015		
Fair		
value		US$m		

2014		
Carrying		
amount		
US$m		

2014
Fair
value
US$m

–

– 		

0.3		

0.3

– bank loans

1.4		

1.4		

211.0		

211.0– other borrowings

2.8		

2.8		

5.7		

5.7

4.2		

4.2		

216.7		

216.7

4.2		

4.2		

217.0		

217.0432.7		

432.6		

507.1		

507.0

1.8		

1.8		

1.9		

1.9

Current– bank overdrafts
Current portion of long-term borrowings

Current borrowings
Long-term borrowings– bank loans– other borrowings– tax increment financing (refer note 18)
Long-term borrowings

1.7		

1.7		

1.7		

1.7

436.2		

436.1		

510.7		

510.6440.4		

440.3		

727.7		

727.6The fair values are estimated using the expected future payments discounted at market interest rate less than 0.1%
(2014: 0.2%) per annum.

7576 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

17 Borrowings continued
2015		
US$m		

2014
US$m

Secured436.0		

516.6Unsecured

4.4		

211.1

440.4		

727.7Borrowings of US$436.0 million (2014: US$516.6 million) are secured against the tangible fixed assets ofcertain subsidiaries. The book value of these tangible fixed assets at 31st December 2015 was US$499.2 million(2014: US$521.6 million).
The borrowings at 31st December are further summarized as follows:
Fixed rate borrowings
Weighted		Weighted
average		 average period				interest rates		
outstanding				%		Years		US$m		

Floating rateborrowings		
US$m		

Total
US$m

2015
Euro

2.0		

1.4		

2.0		

– 		

2.0

Hong Kong dollar
Swiss franc

2.5		

2.5		

119.3		

253.5		

372.8

2.8		

16.0		

1.9		

2.7		

4.6

United Kingdom sterling

1.6		

– 		

– 		

59.3		

59.3

United States dollar

6.0		

1.3		

1.7		

– 		

1.7

– 		

– 		

–

– 		

–

124.9		

315.5		

440.4Japanese yen

					
2014
Euro

1.6		

2.4		

3.6		

182.5		

186.1Hong Kong dollar

2.2		

3.5		

119.3		

253.6		

372.9Swiss franc

1.8		

17.0		

1.9		

11.7		

13.6

United Kingdom sterling

1.6		

– 		

– 		

132.4		

132.4United States dollar

6.0		

2.3		

1.7		

– 		

1.7

Japanese yen

1.0		

–

– 		

21.0		

21.0

126.5		

601.2		

727.7

					

The weighted average interest rates and period of fixed rate borrowings are stated after taking into account of hedging
transactions (refer note 25).
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at 31st December
after taking into account hedging transactions are as follows:
2015		
US$m		

2014
US$mWithin one year

315.5		

601.2Between one and two years

58.5		–

Between two and three years

– 		

60.2

Between three and four years

64.5		

–

– 		

64.4

1.9		

1.9

440.4		

727.7Between four and five years
Beyond five years

Annual Report 201518 Tax increment financing
2015		
US$m		

2014
US$m

Netted off against the net book value of the property (refer note 9)23.0		

23.9

Loan (refer note 17)

1.7		

1.7

24.7		

25.6

A development agreement was entered into between one of the Group’s subsidiaries and the District of Columbia(‘District’), pursuant to which the District agreed to provide certain funds to the subsidiary out of the net proceeds
obtained through the issuance and sale of certain tax increment financing bonds (‘TIF Bonds’) for the development
and construction of Mandarin Oriental, Washington D.C.
The District agreed to contribute to the subsidiary US$33.0 million through the issuance of TIF Bonds in addition to
US$1.7 million issued in the form of a loan, bearing simple interest at an annual rate of 6%. The US$1.7 million loan
plus all accrued interest will be due on the earlier of 10th April 2017 or the date of the first sale of the hotel.
The receipt of the TIF Bonds has been treated as a government grant and netted off against the net book value in respectof the property. The loan of US$1.7 million (2014: US$1.7 million) is included in long-term borrowings.

19 Segment information
Set out below is an analysis of the Group’s non-current assets, excluding derivative financial instruments,
other investments, deferred tax assets and pension assets, by reportable segment.
2015		
US$m		

2014
US$m

– Hong Kong

383.6		

392.9– Other Asia

105.0		

118.5– Europe

856.4		

840.5Analysis by geographical area

– The Americas

118.5		

110.41,463.5		

1,462.3

2015		
US$m		

2014
US$m

20 Share capital
Ordinary shares in millions
2015		
2014		
					

Authorized
Shares of US¢5.00 each

1,500.0		

1,500.0		

75.0		

75.0

1,003.7		

1,003.0		

50.2		

50.2

250.9		

– 		12.5		

–

1.3		

0.7		

0.1		

–

1,255.9		

1,003.7		

62.8		

50.2

Issued and fully paid
At 1st January
Rights issue (refer note 24d(i))
Issued under share-based long-term
incentive plans (refer note 24d(ii))
At 31st December7778 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

21 Share premium
2015		
US$m		

2014
US$m

At 1st January

188.2		

186.6Rights issue (refer note 24d(i))

303.7		–

Share issue expenses (refer note 24d(i))

(3.6)

–

Issued under share-based long-term incentive plans (refer note 24d(ii))

1.3–Transfer from capital reserves

0.7

1.6

490.3

188.2

At 31st December

22 Share-based long-term incentive plans
Share-based long-term incentive plans have been set up to provide incentives for selected executives. Awards can takethe form of share options with an exercise price based on the then prevailing market prices or such other price set by
the Directors or share awards which will vest free of payment. Awards normally vest on or after the third anniversaryof the date of grant and may be subject to the achievement of performance conditions.
i) The Mandarin Oriental Share-based Long-term Incentive Plan (the ‘2014 Plan’) was adopted by the Company
on 6th March 2014. During 2015, conditional awards of 1,600,000 (2014: 1,890,000) shares were awarded underthe 2014 Plan. Under these awards, the free shares are received by the participants to the extent the award vests.
Conditions, if any, are at the discretion of the Directors. The fair value of the share awards granted during the year
was US$2.3 million (2014: 2.8 million). The inputs into the discounted cash flow valuation model were share priceof US$1.630 (2014: US$1.715) per share at the grant date, dividend yield of 4.4% (2014: 4.3%), and annual risk-freeinterest rate of 2.1% (2014: 2.0%).
Movements of the outstanding conditional awards during the year:
Conditional awards in millions
2015		

2014

At 1st January

1.9		

–

Adjustments*

0.1		

–

Granted

1.6		

1.9

Cancelled

(0.1)

–

At 31st December

3.5

1.9

Outstanding conditional awards at 31st December:
Ordinary shares in millions
2015		

2014

2017

1.9		

1.9

2018

1.6		

–

Total outstanding

3.5

1.9

Awards vest date

* Adjustments were made to the number of outstanding conditional awards as a result of the 1 for 4 rights issue effective on 9th March 2015

and approved by the Share Incentive Scheme Committee on 24th March 2015.

Annual Report 201522 Share-based long-term incentive plans continuedii) Prior to the adoption of the 2014 Plan, The Mandarin Oriental International Share Option Plan 2005 provided
selected executives with options to purchase ordinary shares in the Company. The exercise price of the granted
options was based on the average market price for the five trading days immediately preceding the date of grantof the options. Options are vested over a period of up to three years and are exercisable for up to ten years following
the date of grant.
Movements of the outstanding options during the year:
2015
2014
Weighted average 		
Weighted average
exercise price		
Options		
exercise price		US$in millions		
US$		

Optionsin millions

At 1st January

1.69		

32.4 		

1.68		

36.5

Adjustments*

– 		

1.9		

– 		

–

Exercised1.21		

(1.6)

1.44		

(3.1 )

Cancelled

1.70		

(0.2)

2.03		

(1.0 )At 31st December

1.61		

32.5 		

1.69		

32.4

The average share price during the year was US$1.63 (2014: US$1.77) per share.
Outstanding options at 31st December:
Ordinary shares in millions
Expiry date

Exercise price*
US$		

2015		

20142016

1.20		

0.3		

0.3

2017

1.77		

3.7		

3.6

2018

1.08-1.63		

6.9		

6.8

2019

0.66		

1.2

1.5

2020

1.36		

3.0		

3.8

2021

1.99		

4.8		

4.5

2022

1.61		

6.8		

6.4

2023

1.57		

5.8		

5.5

Total outstanding			32.5		

32.4

of which exercisable			27.4		

21.2

* Adjustments were made to the exercise price and the number of outstanding options as a result of the 1 for 4 rights issue effective on

9th March 2015 and approved by the Share Incentive Scheme Committee on 24th March 2015.

79

80 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

23 Dividends
2015
US$m		

2014
US$mFinal dividend in respect of 2014 of US¢5.00 (2013: US¢5.00) per share50.2		

50.1

Interim dividend in respect of 2015 of US¢2.00 (2014: US¢2.00) per share

25.1		

20.1

75.3		

70.2

A final dividend in respect of 2015 of US¢3.00 (2014: US¢5.00) per share amounting to a total of US$37.7 million(2014: US$50.2 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been
approved at the 2016 Annual General Meeting. The amount will be accounted for as an appropriation of revenue reservesin the year ending 31st December 2016.

24 Notes to consolidated cash flow statementa) Other non-cash items
2015		
US$m		

2014
US$m

Share-based payment

2.4

2.6

Others(0.2)(1.1 )

2.2

1.5b) Movements in working capital(Increase)/decrease in stocks

(0.3)

0.3

Increase in debtors and prepayments(0.6)(4.9 )(Decrease)/increase in creditors and accruals

(2.6)

5.9

Increase in pension obligations

1.9

0.9

(1.6)

2.2

c) The Group received repayment on its shareholder loan previously provided to Mandarin Oriental, Miami of
US$0.6 million in 2015.
In 2014, the Group received repayment on its shareholder loans previously provided to Mandarin Oriental,
Kuala Lumpur and Mandarin Oriental, New York of US$3.3 million and US$1.0 million, respectively.

Annual Report 201524 Notes to consolidated cash flow statement continuedd) i) In April 2015, the Group completed a 1 for 4 rights issue with 250.9 million new ordinary shares issued at
US$1.26 per share, raising US$316.2 million of gross proceeds. The proceeds of the issue were used to pay
down debt in advance of the proposed refurbishment of Mandarin Oriental Hyde Park, London and to fundthe Group’s acquisition of a 50% interest in the Hotel Ritz, Madrid. The Group paid expenses of US$3.6 million
in connection with the rights issue in 2015.
ii) The Group also issued 1.3 million new ordinary shares under the share-based long-term incentive plans withproceeds of US$1.4 million in 2015.
e) Analysis of balances of cash and cash equivalents

Bank and cash balances (refer note 15)
Bank overdrafts (refer note 17)2015		
US$m		

2014
US$m

308.6		

324.6

–		

(0.3 )

308.6		

324.3

2014
Positive		
fair value		
US$m		

Negative
fair value
US$m

25 Derivative financial instruments
The fair values of derivative financial instruments at 31st December are as follows:
2015
Positive		
fair value		
US$m		

Negative		
fair value
US$m		

Designated as cash flow hedges– interest rate swaps and caps

–		

3.0		

–		

3.0

At 31st December

–		

3.0		

–		

3.0

The notional principal amounts of the outstanding interest rate swap and cap contracts at 31st December 2015 were
US$243.1 million (2014: US$306.8 million).
At 31st December 2015, the fixed interest rates relating to interest rate swaps and caps varied from 1.9% to 2.9%
(2014: 1.0% to 2.9%).
The fair values of interest rate swaps are based on the estimated cash flows discounted at market rates ranging from
0.2% to 1.3% (2014: 0.2% to 1.7%) per annum.

8182 Mandarin Oriental International Limited

Notes to the Financial Statements Continued

26 Munich expansion
In March 2014, the Group announced that it had entered into an agreement with a developer for the expansion of
Mandarin Oriental, Munich. The expansion will include new hotel rooms and facilities as part of a mixed-use complex
estimated to open in 2021. The Group’s total investment in the project, which will also include a refurbishment of theexisting hotel’s 73 rooms, is estimated at €124 million (US$135 million) in today’s terms. As at 31st December 2015 and31st December 2014, cumulative costs paid by the Group in relation to the expansion project amounted to €12 million(US$16.9 million), the majority of which have been included within Other Debtors pending transfer of title in theunderlying land.

27 Acquisition of Hotel Ritz, Madrid
In May 2015, the Group acquired a 50% interest in the Hotel Ritz, Madrid for €65 million (US$73.3 million)
in a joint venture with The Olayan Group, with Mandarin Oriental managing the hotel under a long-term managementagreement. The hotel is to undergo a comprehensive renovation in 2017, currently estimated to cost a total of some
€90 million, of which the Group’s share will be €45 million (US$49 million).

28 Commitments
2015		
US$m		

2014
US$m

263.9

139.8

– joint ventures

40.6

–

– other

16.9

26.7

57.5

26.7

321.4

166.5

– due within one year

5.9

6.9

– due between one and two years

5.7

6.4

– due between two and three years

5.5

6.2

– due between three and four years

5.5

5.8

– due between four and five years

5.5

5.5

– due beyond five years

82.0

87.6

110.1

118.4

Capital commitments
Authorized not contracted– other
Contracted not provided

Operating lease commitments
Total commitments under operating leases

No future sublease payments are receivable relating to the above operating leases (2014: nil).
Operating lease commitments principally include payments in respect of the Group’s hotel in Tokyo.
In addition, the Group has operating lease commitments with rentals determined in relation to sales. It is not possible toquantify accurately future rentals payable under such leases.

Annual Report 2015

29 Related party transactions
The parent company of the Group is Jardine Strategic Holdings Limited (‘JSH’) and the ultimate holding company of
the Group is Jardine Matheson Holdings Limited (‘JMH’). Both companies are incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety of transactions with its associates and joint ventures
and with JMH and its subsidiaries, associates and joint ventures. The more significant of these transactions aredescribed below:
During 2015, the Group managed six associate and joint venture hotels (2014: five associate hotels) and received
management fees of US$13.2 million (2014: US$14.3 million) based on long-term management agreements on normal
commercial terms.
The Group uses Jardine Lloyd Thompson (‘JLT’), an associate of JMH, to place certain of its insurance. Brokerage fees
and commissions, net of rebates, paid by the Group in 2015 to JLT amounted to US$0.8 million (2014: US$0.8 million).
The Group provides hotel management services to Hongkong Land (‘HKL’), a subsidiary of JSH. Total management
fees received from HKL in 2015 amounted to US$2.5 million (2014: US$3.5 million), based on long-term managementagreements on normal commercial terms.
In addition, the Group paid a management fee of US$0.5 million (2014: US$0.5 million) to Jardine Matheson Limited(‘JML’), a subsidiary of JMH, being a fee of 0.5% of the Group’s net profit in consideration for certain management
consultancy services provided by JML. The Group did not have any amount payable to JML as at 31st December 2015(2014: nil).
The outstanding balances with associates and joint ventures are set out in debtors and prepayment in note 14.
Details of Directors’ emoluments (being the key management personnel compensation) are shown on page 92 under
the heading of ‘Directors’ appointment, retirement, remuneration and service contracts’.

30 Summarized balance sheet of the Company
Included below is certain summarized balance sheet information of the Company disclosed in accordance with
Bermuda Law.

Subsidiaries

2015		
US$m		

2014
US$m

959.2		

721.4

(3.1)

(1.4 )Net assets

956.1		

720.0Share capital (refer note 20)

62.8

50.2

Share premium (refer note 21)

490.3

188.2

Revenue and other reserves

403.0		

481.6Shareholders’ funds

956.1

720.0

Net current liabilities

Subsidiaries are shown at cost less amount provided.

31 Post balance sheet event
In January 2016, the Group announced that it would acquire Mandarin Oriental, Boston for US$140 million, a hotelthat the Group has managed since its opening in 2008. The transaction is expected to close by the end of April 2016.

83

84 Mandarin Oriental International Limited

Annual Report 2015

Principal Subsidiaries, Associates,
Joint Ventures and Managed Hotels
at 31st December 2015
Proportion of ordinary sharesand voting powers
at 31st December 2015 held by			non-controlling
Attributable interest %the Groupinterests
Company nameMain activities

2015

2014

%

%

Hotel profile

Hong Kong

Mandarin Oriental Hotel Group International Limited

Management

100

100

100

–

–

Hong Kong

Mandarin Oriental Hotel Group Limited

Management

100

100

100

–

–

Hong Kong

Mandarin Oriental, Hong Kong Limited

Owner: Mandarin Oriental, Hong Kong

100

100

100

–

501 rooms. Lease expiry 2895

Hong Kong

Excelsior Hotel (BVI) Limited

Owner: The Excelsior, Hong Kong

100

100

100

–

883 rooms. Lease expiry 2842

Japan

Mandarin Oriental Tokyo KK

Owner: Mandarin Oriental, Tokyo

100

100

100

–

178 rooms. Lease expiry 2035

Indonesia

P.T. Jaya Mandarin Agung

Owner: Mandarin Oriental, Jakarta

96.9

96.9

96.9

3.1

272 rooms. Lease expiry 2023

United Kingdom

Mandarin Oriental Hyde Park Limited

Owner: Mandarin Oriental Hyde Park, London

100

100

100

–

Switzerland

Société Immobilière de Mandarin Oriental (Genèva) SA

Owner: Mandarin Oriental, Geneva

85.3

85.3

85.3

14.7

Switzerland

Société pour l’ Exploitation de Mandarin Oriental (Genèva) SA		

100

100

100

–

–

Germany

Dinavest International Holdings B.V.

Owner: Mandarin Oriental, Munich

100

100

100

–

73 rooms. Freehold

FranceMOHG Hotel (Paris) Sarl

Owner: Mandarin Oriental, Paris

100

100

100

–

138 rooms. Freehold

United States

Portals Hotel Site LLC

Owner: Mandarin Oriental, Washington D.C.

80

80

80

20

397 rooms. Freehold

527 rooms. Lease expiry 2079

Principal country

Subsidiaries

193 rooms. Freehold
189 rooms. Lease expiry 2040

Associates and joint ventures
Singapore

Marina Bay Hotel Private Limited

Owner: Mandarin Oriental, Singapore

50

50

50

50

ThailandOHTL PCL

Owner: Mandarin Oriental, Bangkok

44.9

44.9

44.9

55.1

Malaysia

Asas Klasik Sdn Bhd

Owner: Mandarin Oriental, Kuala Lumpur

25

25

25

75

632 rooms. Freehold

Thailand

Chaophaya Development Corporation Limited

Owner: River City Shopping Complex

49

49

49

51

–

368 rooms. Various freehold/leasehold

Spain

Ritz Madrid, S.A.

Owner: Hotel Ritz, Madrid

50

–

50

50

167 rooms. Freehold (refer note 27)

United States

ICD Columbus Centre Hotel LLC

Owner: Mandarin Oriental, New York

25

25

25

75

244 rooms. Freehold

United States

Swire Brickell Key Hotel Limited

Owner: Mandarin Oriental, Miami

25

25

25

75

326 rooms. Freehold

Managed hotels
Hong Kong

The Landmark Mandarin Oriental, Hong Kong		

–

–

–

–

109 rooms

Macau

Mandarin Oriental, Macau		

–

–

–

–

213 rooms

China

Mandarin Oriental, Sanya		

–

–

–

–

296 rooms

China

Mandarin Oriental, Guangzhou		

–

–

–

–

263 rooms

China

Mandarin Oriental Pudong, Shanghai		

–

–

–

–

362 rooms

TaiwanMandarin Oriental, Taipei		

–

–

–

–

301 rooms

Czech Republic

Mandarin Oriental, Prague		

–

–

–

–

99 rooms

Spain

Mandarin Oriental, Barcelona		

–

–

–

–

120 rooms

TurkeyMandarin Oriental, Bodrum		

–

–

–

–

127 rooms

Italy

Mandarin Oriental, Milan		

–

–

–

–

104 rooms

MoroccoMandarin Oriental, Marrakech		

–

–

–

–

63 rooms

United States

Mandarin Oriental, Boston		

–

–

–

–

148 rooms

United States

Mandarin Oriental, Las Vegas		

–

–

–

–

392 rooms

United States

Mandarin Oriental, Atlanta		

–

–

–

–

127 rooms

85

86 Mandarin Oriental International Limited

Independent Auditors’ Report

To the members of Mandarin Oriental International Limited
Report on the consolidated financial statements
Our opinion
In our opinion, Mandarin Oriental International Limited’s consolidated financial statements (the ‘financial statements’):• present fairly, in all material respects, the financial position of the Group as at 31st December 2015 and its financial
performance and its cash flows for the year then ended; and• have been properly prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and theCompanies Act 1981 (Bermuda).
What we have audited
The financial statements, included within the Annual Report, comprise:• the Consolidated Balance Sheet as at 31st December 2015;• the Consolidated Profit and Loss Account and the Consolidated Statement of Comprehensive Income for the year
then ended;• the Consolidated Cash Flow Statement for the year then ended;• the Consolidated Statement of Changes in Equity for the year then ended; and• the notes to the financial statements, which include a summary of significant accounting policies and otherexplanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law
in Bermuda and IFRSs as issued by the International Accounting Standards Board (IASB).
In applying the financial reporting framework, the Directors have made a number of subjective judgements, for example
in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered
future events.

Responsibilities for the financial statements and the audit
Our responsibilities and those of the Directors
As explained more fully in the Responsibilities Statement on page 89, the Directors are responsible for the preparationand fair presentation of the financial statements in accordance with IFRSs and the Companies Act 1981 (Bermuda).
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law andInternational Standards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordancewith Section 90 of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come, including without limitation under any contractual obligations of the Company, save where expressly
agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about theamounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error. This includes an assessment of:• whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied andadequately disclosed;• the reasonableness of significant accounting estimates made by the Directors; and• the overall presentation of the financial statements.

Annual Report 2015

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming
our own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary
to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness ofcontrols, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify materialinconsistencies with the audited financial statements and to identify any information that is apparently materiallyincorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit.
If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

PricewaterhouseCoopers LLP
Chartered Accountants
LondonUnited Kingdom
3rd March 2016a) The maintenance and integrity of the Mandarin Oriental International Limited website is the responsibility of
the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial statements since they
were initially presented on the website.
b) Legislation in Bermuda governing the preparation and dissemination of financial statements may differ fromlegislation in other jurisdictions.

8788 Mandarin Oriental International Limited

Five Year Summary

Consolidated Profit and Loss AccountRevenue2011		
US$m		

2012		
US$m		

2013		
US$m		

2014		
US$m		

2015
US$m

614.2		

648.3		

668.6		

679.9		

607.3Operating profit

87.3		

83.9		

111.8		

120.8		

107.3Net financing charges(12.0)(11.1)(15.8)(17.3)(11.8)

Share of results of associates and joint ventures

9.8		

15.5		

20.6		

12.3		

10.5

Profit before tax

85.1		

88.3		

116.6		

115.8		

106.0

Tax

(18.7)(17.3)(19.8)(19.0)(16.6)

Profit after tax

66.4		

71.0		

96.8		

96.8		

89.4

Profit attributable to shareholders

66.0		

70.7		

96.3		

97.0		

89.3

Underlying profit attributable to shareholders

57.5		

69.2		

93.2		

97.0		

90.3

Earnings per share (US¢)*6.37		

6.80		

9.23		

9.29		

7.44

Underlying earnings per share (US¢)*5.54		

6.66		

8.93		

9.29		

7.53

Dividends per share (US¢)

6.00		

7.00		

7.00		

7.00		

5.00

Intangible assets

40.1		

42.1		

42.6		

45.6		

44.1

Tangible assets

Consolidated Balance Sheet
1,038.0		

1,055.5		

1,440.5		

1,315.1		

1,255.0

Associates and joint ventures

78.4		

108.6		

110.8		

101.6		

164.4Other investments

6.0		

7.2		

9.3		

10.5		

10.2

Loans receivable

–		

–		

–		

–		

–

Pension assets

12.5		

11.2		

14.4		

7.3		–Deferred tax assets

8.5		

4.7		

3.1		

2.2		

2.8

Net current assets/(liabilities)

394.9		

382.8		

(317.7)55.1		

254.2

Long-term borrowings(578.5)(580.5)(238.7)(510.7)(436.2)

Deferred tax liabilities(64.9)(64.3)(65.5)(62.3)(59.8)

Pension liabilities

(0.2)

(0.6)

(0.6)

–		

–

Other non-current liabilities(19.2)(15.5)

(3.5)

(3.0)

(3.0)

Net assets

915.6		

951.2		

994.7		

961.4		

1,231.7

Share capital

49.8		

50.0		

50.2		

50.2		

62.8

Share premium

179.7		

182.1		

186.6		

188.2		

490.3Revenue and other reserves

681.2		

713.8		

752.2		

718.0		

673.6Shareholders’ funds

910.7		

945.9		

989.0		

956.4		

1,226.7

4.9		

5.3		

5.7		

5.0		

5.0

Total equity

915.6		

951.2		

994.7		

961.4		

1,231.7

Net asset value per share (US$)*0.87		

0.91		

0.95		

0.92		

0.98

Cash flows from operating activities

146.3		

126.0		

156.9		

159.5		

140.2Cash flows from investing activities(65.0)(87.0)(422.3)(45.6)(124.4)Non-controlling interests

Consolidated Cash Flow Statement

Net cash flow before financing activities

81.3		

39.0		

(265.4)113.9		

15.8Cash flow per share from operating activities (US¢)*14.11		

12.11		

15.04		

15.27		

11.69

* The comparative figures from 2011 to 2014 have been adjusted to reflect the effect of the rights issue completed in April 2015.

Annual Report 2015

Responsibility Statement

The Directors of the Company confirm to the best of their knowledge that:a) the consolidated financial statements have been prepared in accordance with International Financial ReportingStandards, including International Accounting Standards and Interpretations adopted by the International
Accounting Standards Board; andb) the sections of this Report, including the Chairman’s Statement, Group Chief Executive’s Review and Principal Risks
and Uncertainties, which constitute the management report include a fair review of all information required to bedisclosed by the Disclosure Rules and Transparency Rules 4.1.8 to 4.1.11 issued by the Financial Conduct Authority
in the United Kingdom.

For and on behalf of the Board

Edouard Ettedgui
Stuart Dickie
Directors
3rd March 201689

90 Mandarin Oriental International Limited

Corporate Governance

Mandarin Oriental International Limited is incorporated in Bermuda. The Company was established as an Asian-based
hotel group and has since extended its operations to key locations around the world. The Company’s equity shares havea standard listing on the Main Market of the London Stock Exchange, and secondary listings in Bermuda and Singapore.
The Disclosure Rules and Transparency Rules (the ‘DTRs’) issued by the Financial Conduct Authority in the United
Kingdom (the ‘FCA’) require that this Report address all relevant information about the corporate governance practices
applied beyond the requirements under Bermuda law.
The Company attaches importance to the corporate stability and opportunities that result from it being part of
the Jardine Matheson Holdings Limited (‘Jardine Matheson’) group, which is considered to be fundamental to theCompany’s ability to pursue its long-term development strategy. By coordinating objectives, establishing common values
and standards, and sharing experience, contacts and business relationships, the Jardine Matheson group companies aim
to optimize their opportunities across countries where they operate, particularly in Asia.
The Group is committed to high standards of governance. The system of governance it has adopted is based ona well-tried approach to oversight and management that has been developed over many years by the members of theJardine Matheson group. It enables the Company to benefit from Jardine Matheson’s strategic guidance and professional
expertise, while at the same time the independence of the Board is respected and clear operational accountability rests
with the Company’s executive management team.

The Management of the GroupThe Company has its dedicated executive management under the Group Chief Executive. The Memorandum of
Association of the Company, however, provides for the chairman of Jardine Matheson to be, or to appoint, the Managing
Director of the Company. Reflecting this, and the Jardine Matheson group’s 74% interest in the Company’s share capital,
the Group Chief Executive and the Managing Director meet regularly. Similarly, the board of the Hong Kong-basedGroup management company, Mandarin Oriental Hotel Group International Limited (‘MOHG’), and its financecommittee are chaired by the Managing Director and include Group executives as well as Jardine Matheson’s deputy
managing director, group finance director, group strategy director and group general counsel.
The presence of Jardine Matheson representatives on the Board and on the board of MOHG, as well as on its audit
and finance committees, provides an added element of stability to the Company’s financial planning and supervision,
enhancing its ability to raise finance and take a long-term view of business development. It also eases the ability ofmanagement to work effectively together in exploiting the full range of the Jardine Matheson group’s commercial strengths.
The Directors of the Company retain full power to manage the business affairs of the Company, other than mattersreserved to be exercised by the Company in general meeting under Bermuda legislation or the Company’s Bye-laws.
Among the matters on which the Board decides are the Group’s business strategy, its annual budget, dividends andmajor corporate activities.

Annual Report 2015

The Board
The Company currently has a Board of 17 Directors. Their names and brief biographies appear on pages 26 and 27of this Report. The Chairman has been appointed in accordance with the provisions of the Bye-laws of the Company,
which provide that the chairman of Jardine Matheson, or any Director nominated by him, shall be the Chairman of theCompany. The Board composition and operation helps to provide the Company with the necessary stability as it seeks
to grow its business.
The role of the Chairman is to lead the Board as it oversees the Group’s strategic and financial direction, while theprincipal role of the Managing Director is to act as chairman of MOHG and of its finance committee. Ben Keswick iscurrently appointed to both positions. The responsibility for running the Group’s business and all the executive mattersaffecting the Group rests with the Group Chief Executive. The implementation of the Group’s strategy is delegated to
the Company’s executive management, with decision-making authority within designated financial parameters delegatedto the MOHG finance committee.
The Board is scheduled to hold four meetings in 2016 and ad hoc procedures are adopted to deal with urgent matters.
In 2015 one meeting was held in Bermuda and three were held in Asia. The Board receives high quality, up to date
information for each of its meetings. In addition, certain Directors of the Company who do not serve on the boardof MOHG and who are based outside Asia regularly visit Asia and Bermuda to discuss the Group’s business, as well as
to participate in the four strategic reviews that precede the regular Board meetings. These Directors are not directly
involved in the operational management of the Group’s business activities, but their knowledge and close oversightof the Group’s affairs reinforces the process by which business is reviewed before consideration at Board meetings.

Directors’ appointment, retirement, remuneration and service contracts
Candidates for appointment as executive Directors of the Company, as executive directors of MOHG or as senior
executives elsewhere in the Group may be sourced internally, or from the Jardine Matheson group or externally,
including by using the services of specialist executive search firms. The aim is to appoint individuals who combine
international best practice with familiarity of or adaptability to Asian markets. When appointing non-executive
Directors, the Board pays particular attention to the Asian business experience and relationships that they can bring.
Each new Director is appointed by the Board and, in accordance with the Company’s Bye-laws, each new Director
so appointed is subject to retirement at the first annual general meeting after appointment. Thereafter, Directors are
subject to retirement by rotation under the Bye-laws whereby one-third of the Directors retire at the annual general
meeting each year. These provisions apply to both executive and non-executive Directors, but the requirement toretire by rotation does not extend to the Chairman or Managing Director.
On 31st July 2015, Giles White retired from the Board. Jeremy Parr was appointed as a Director of the Company
with effect from 1st August 2015. On 26th November 2015 it was announced that Edouard Ettedgui will step down
as Group Chief Executive on 31st March 2016 and that James Riley will join the Board in his place on 1st April 2016.

91

92 Mandarin Oriental International Limited

Corporate Governance Continued

In accordance with Bye-law 85, Stuart Dickie, Lord Leach of Fairford, Anthony Nightingale, Lord Powell of Bayswaterand Lord Sassoon retire by rotation at this year’s Annual General Meeting and, being eligible, offer themselves for
re-election. In accordance with Bye-law 92, Jeremy Parr and James Riley will also retire and, being eligible, offer
themselves for re-election. Stuart Dickie has a service contract with a subsidiary of the Company that has a notice
period of six months, and it is proposed that upon his appointment as Group Chief Executive becoming effective
on 1st April 2016, James Riley will have a service contract with a subsidiary of the Company that has a notice periodof six months. None of the other Directors proposed for re-election has a service contract with the Company or
its subsidiaries.
The Company’s policy is to offer competitive remuneration packages to its senior executives. It is recognized that,
due to the nature of the Group and its diverse geographic base, a number of its senior executives are required to beoffered international terms and the nature of the remuneration packages is designed to reflect this. Executive Directors
joining from outside the Group may be offered an initial fixed-term service contract to reflect any requirement forthem to relocate.
Recommendations and decisions on remuneration and other benefits payable or made available to executive Directors
result from consultations between the Chairman and other Directors as he considers appropriate. Directors’ fees, which
are payable to all Directors other than the Group Chief Executive and the Chief Financial Officer, are decided upon byshareholders in general meeting as provided for by the Company’s Bye-laws.
For the year ended 31st December 2015, the Directors received from the Group US$7.3 million (2014: US$7.2 million)
in Directors’ fees and employee benefits, being US$0.7 million (2014: US$0.6 million) in Directors’ fees, US$5.9 million(2014: US$5.7 million) in short-term employee benefits including salary, bonuses, accommodation and deemed benefits
in kind, US$0.2 million (2014: US$0.2 million) in post-employment benefits and US$0.5 million (2014: US$0.7 million)in share-based payments. The information set out in this paragraph forms part of the audited financial statements.
Share-based long-term incentive plans have also been established to provide incentives for executive Directors and senior
managers. Share options and share awards are granted by the scheme trustee after consultation between the Chairman
and the Group Chief Executive as well as other Directors as they consider appropriate. Share options are granted at thethen prevailing market prices, while share awards will vest free of payment. The share options and share awards normallyvest on or after the third anniversary of the date of grant. Grants may be made in a number of instalments. Share options
and share awards are not granted to non-executive Directors.
The Company purchases insurance to cover its Directors against their costs in defending themselves in civil proceedings
taken against them in that capacity and in respect of damages resulting from the unsuccessful defence of any proceedings.
To the extent permitted by law, the Company also indemnifies its Directors. Neither the insurance nor the indemnity
provides cover where the Director has acted fraudulently or dishonestly.

Annual Report 2015

Audit Committee
The Board has established within MOHG an audit committee (the ‘Audit Committee’), the current members ofwhich are Adam Keswick, Mark Greenberg, Jeremy Parr and James Riley; they have extensive knowledge of the Group
while at the same time not being directly involved in operational management. The chairman, group chief executive
and chief financial officer of MOHG, together with representatives of the internal and external auditors, also attend
the Audit Committee meetings by invitation. The Audit Committee meets and reports to the Board semi-annually.
Prior to completion and announcement of the half-year and year-end results, a review of the financial informationand of any issues raised in connection with the preparation of the results, including the adoption of new accounting
policies, is undertaken by the Audit Committee with the executive management and a report is received from theexternal auditors. The external auditors also have access to the full Board, in addition to the Group Chief Executive,
Chief Financial Officer and other senior executives.
The Audit Committee keeps under review the nature, scope and results of the audits conducted by the internal audit
function. The Audit Committee’s responsibilities extend to reviewing the effectiveness of both the internal and external
audit functions; considering the independence and objectivity of the external auditors; and reviewing and approving
the level and nature of non-audit work performed by the external auditors.
The terms of reference of the Audit Committee can be found on the Company’s website at www.mandarinoriental.com.

Risk management and internal control
The Board has overall responsibility for the Group’s systems of risk management and internal control. The Board
has delegated to the Audit Committee responsibility for reviewing areas of risk and uncertainty, the operation andeffectiveness of the Group’s systems of internal control and the procedures by which these are monitored. The Audit
Committee considers the systems and procedures on a regular basis, and reports to the Board semi-annually. The systems
of internal control are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s assets
against fraud and other irregularities; and to give reasonable, but not absolute, assurance against material financial
misstatement or loss.
Executive management is responsible for the implementation of the systems of internal control throughout the Group.
The internal audit function also monitors the effectiveness of the systems of internal control and the approach taken by
the business units to risk. The internal audit function is independent of the operating businesses and reports its findings,
and recommendations for any corrective action required, to the Audit Committee.
The Group has in place an organizational structure with defined lines of responsibility and delegation of authority.
There are established policies and procedures for financial planning and budgeting; for information and reporting
systems; for assessment of risk; and for monitoring the Group’s operations and performance. The information systems
in place are designed to ensure that the financial information reported is reliable and up to date.
The Company’s policy on commercial conduct underpins the Group’s internal control process, particularly in the areaof compliance. The policy is set out in the Group’s Code of Conduct, which is a set of guidelines to which every employee
must adhere, and is reinforced and monitored by an annual compliance certification process.
The Audit Committee has also been given the responsibility to oversee the effectiveness of the formal procedures for
employees to raise any matters of serious concern, and is required to review any reports made under those proceduresthat are referred to it by the internal audit function.
The principal risks and uncertainties facing the Company are set out on pages 97 and 98.

9394 Mandarin Oriental International Limited

Corporate Governance Continued

Directors’ responsibilities in respect of the financial statements
The Directors are required under the Bermuda Companies Act to prepare financial statements for each financial year
and to present them annually to the Company’s shareholders at the annual general meeting. The financial statements
are required to present fairly in accordance with International Financial Reporting Standards (‘IFRS’) the financial
position of the Group at the end of the year and the results of its operations and its cash flows for the year then ended.
The Directors consider that applicable accounting policies under IFRS, applied on a consistent basis and supported
by prudent and reasonable judgements and estimates, have been followed in preparing the financial statements.
The financial statements have been prepared on a going concern basis.

Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are clearly set out
in its Code of Conduct, which is modelled on the Jardine Matheson group’s code of conduct. The Code of Conduct
requires that all Group companies comply with all laws of general application, all rules and regulations that are industry
specific and proper standards of business conduct. The Code of Conduct prohibits the giving or receiving of illicit
payments, and requires all employees to be treated fairly, impartially and with respect. It also requires that all managers
must be fully aware of their obligations under the Code of Conduct and establish procedures to ensure complianceat all levels within their organizations. The Group has in place procedures by which employees can raise, in confidence,
matters of serious concern in areas such as financial reporting or compliance.

Directors’ share interests
The Directors of the Company in office on 3rd March 2016 had interests (within the meaning of the DTRs) as set out
below in the ordinary share capital of the Company. These interests include those notified to the Company in respectof the Directors’ connected persons (as that term is used in the DTRs in relation to companies incorporated outside theUnited Kingdom).
Edouard Ettedgui

13,507,228

Stuart Dickie

271,083

Lincoln K.K. Leong

129,756

In addition, Edouard Ettedgui held share options in respect of 8,693,974 ordinary shares, and Stuart Dickie held
share options in respect of 2,385,540 ordinary shares and share awards in respect of 484,156 ordinary shares,
issued pursuant to the Company’s share-based long-term incentive plans.

Substantial shareholders
As a non-UK issuer, the Company is subject to the DTRs pursuant to which a person must in certain circumstances
notify the Company of the percentage of voting rights attaching to the share capital of the Company that he holds. The
obligation to notify arises if that person acquires or disposes of shares in the Company which results in the percentage ofvoting rights which he holds reaching, exceeding, or falling below, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%.
The Company has been informed of the holding of voting rights of 5% or more attaching to the Company’s issued ordinary
share capital by Jardine Strategic Holdings Limited (‘Jardine Strategic’), which is directly interested in 925,548,772
ordinary shares carrying 73.69% of the voting rights. By virtue of its interest in Jardine Strategic, Jardine Matheson is
also interested in the same ordinary shares. Apart from this shareholding, the Company is not aware of any holders ofvoting rights of 5% or more attaching to the issued ordinary share capital of the Company as at 3rd March 2016.
There were no contracts of significance with corporate substantial shareholders during the year under review.

Annual Report 2015

Governance principles
The Company’s primary listing on the London Stock Exchange is a standard listing on the Main Market. Undera standard listing, the Company is subject to the UK Listing Rules (other than those which apply only to companies
with a premium listing), the DTRs, the UK Prospectus Rules and the market abuse provisions of the UK Financial
Services and Markets Act. The Company, therefore, is bound by the rules in relation to continuous disclosure, periodic
financial reporting, disclosure of interests in shares and market abuse, including the rules governing insider dealing,
market manipulation and the disclosure of price sensitive information. The Company is also subject to regulatory
oversight from the FCA, as the Company’s principal securities regulator, and is required to comply with the Admission
and Disclosure Standards of the Main Market of the London Stock Exchange.
When shareholders approved the Company’s move to a standard listing from a premium listing in 2014, the Company
stated that it intended to maintain certain governance principles on the same basis as was then applicable to the Company’s
premium listing, as follows:
1. When assessing a significant transaction, being a larger transaction which would be classified as a class 1 transaction
under the provisions of the UK Listing Rules, the Company will engage an independent financial adviser to provide
a fairness opinion on the terms of the transaction.
2. In the event of a related party transaction, being a transaction with a related party which would require a sponsor
to provide a fair and reasonable opinion under the provisions of the UK Listing Rules, the Company will engage
an independent financial adviser to confirm that the terms of the transaction are fair and reasonable as far as theshareholders of the Company are concerned.
3. Further, as soon as the terms of a significant transaction or a related party transaction are agreed, an announcement
will be issued by the Company providing such details of the transaction as are necessary for investors to evaluate
the effect of the transaction on the Company.
4. At each annual general meeting, the Company will seek shareholder approval to issue new shares on a non-pre-emptivebasis for up to 33% of the Company’s issued share capital, of which up to 5% can be issued for cash consideration.
5. The Company will continue to adhere to its Securities Dealing Rules, which follow the UK Model Code as thenapplied to the Company.
6. The Company will continue its policies and practices in respect of risk management and internal controls.

95

96 Mandarin Oriental International Limited

Corporate Governance Continued

Related party transactions
Details of transactions with related parties entered into by the Company during the course of the year are included innote 29 to the financial statements on page 83.

Securities purchase arrangements
The Directors have the power under the Bermuda Companies Act and the Company’s Memorandum of Association
to purchase the Company’s shares. Any shares so purchased shall be treated as cancelled. When the Board reviews thepossibility for share repurchases, it will take into consideration the potential for the enhancement of earnings or asset
values per share. When purchasing such shares, the Company is subject to the UK market abuse regime.

Takeover Code
The Company is subject to a Takeover Code, based on London’s City Code on Takeovers and Mergers. The Takeover
Code provides an orderly framework within which takeovers can be conducted and the interests of shareholders protected.
The Takeover Code has statutory backing, being established under the Acts of incorporation of the Company in Bermuda.

Annual General Meeting
The 2016 Annual General Meeting will be held at Rosewood Tucker’s Point, Bermuda on 4th May 2016. The fulltext of the resolutions and explanatory notes in respect of the meeting are contained in the Notice of Meeting whichaccompanies this Report. A corporate website is maintained containing a wide range of information of interest toinvestors at www.mandarinoriental.com.

Power to amend Bye-laws
The Bye-laws of the Company can be amended by the shareholders by way of a special resolution at a general meetingof the Company.

Annual Report 2015

Principal Risks and Uncertainties

The Board has overall responsibility for risk management and internal control. The process by which the Groupidentifies and manages risk is set out in more detail on page 93 of the Corporate Governance section of this Report.
The following are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to
the Disclosure Rules and Transparency Rules issued by the Financial Conduct Authority in the United Kingdom andare in addition to the matters referred to in the Chairman’s Statement and Group Chief Executive’s Review.

Economic and financial risk
The Group’s business is exposed to the risk of negative developments in global and regional economies and financial
markets, either directly or through the impact on the Group’s investment partners, third-party hotel owners anddevelopers, bankers, suppliers or customers. These developments can result in recession, inflation, deflation, currency
fluctuations, restrictions in the availability of credit, business failures, or increases in financing costs. Such developments
may increase operating costs, reduce revenues, lower asset values or result in the Group being unable to meet in full its
strategic objectives. These developments could also adversely affect travel patterns which would impact demand for theGroup’s products and services.
The steps taken by the Group to manage its exposure to financial risk are set out in the Financial Risk Management
section in the Financial Statements on pages 44 to 49.

Commercial and market risk
Risks are an integral part of normal commercial practices, and where practicable steps are taken to mitigate such risks.
The Group operates within the global hotel industry which is highly competitive. Failure to compete effectively interms of quality of product, levels of service or price can have an adverse effect on earnings. Significant pressure fromcompetition or the oversupply of hotel rooms in any given market may also lead to reduced margins.
The Group competes with other luxury hotel operators for new opportunities in the areas of hotel management,
residences management and residences branding. Failure to establish and maintain relationships with hotel owners
or developers could adversely affect the Group’s business. The Group also makes investment decisions in respect ofacquiring new hotel properties and undertaking major renovations at hotels in which it has an ownership interest.
The success of these investments is measured over the longer term and as a result is subject to market risk.
Mandarin Oriental’s continued growth depends on the opening of new hotels and branded residences. Most of theGroup’s new developments are controlled by third party owners and developers and can be subject to delays due toissues attributable to planning and construction, sourcing of finance, and the sale of residential units. In extreme
circumstances, such factors might lead to the cancellation of a project.

Pandemic, terrorism and natural disasters
The Group’s business would be impacted by a global or regional pandemic as this would impact travel patterns, demand
for the Group’s products and services and could also affect the Group’s ability to operate effectively. The Group’s hotels
are also vulnerable to the effects of terrorism, either directly through the impact of an act of terrorism or indirectly
through the impact of generally reduced economic activity in response to the threat of or an actual act of terrorism.
In addition, a number of the territories in which the Group operates can experience from time to time natural disasters
such as typhoons, floods, earthquakes and tsunamis.

9798 Mandarin Oriental International Limited

Principal Risks and Uncertainties Continued

Key agreements
The Group’s business is reliant upon joint venture and partnership agreements, property leasehold arrangements,
management, license, branding and services agreements or other key contracts. Cancellation, expiry or termination,or the renegotiation of any of these key agreements and contracts, could have an adverse effect on the financial
performance of individual hotels as well as the wider Group.

Intellectual property and value of the brand
Brand recognition is important to the success of the Group and significant resources have been invested in protecting its
intellectual property in the form of trade marks, logos and domain names. Any material act or omission by any person
working for or representing the Group’s operations which is contrary to its standards could impair Mandarin Oriental’s
reputation and the equity value of the brand, as could any negative publicity regarding the Group’s product or services.

Regulatory and political risk
The Group’s business is subject to a number of regulatory environments in the territories in which it operates. Changes
in the regulatory approach to such matters as employment legislation, tax rules, foreign ownership of assets, planning
controls and exchange controls have the potential to impact the operations and profitability of the Group’s business.
Changes in the political environment, including prolonged civil unrest, could also affect the Group’s business.

Annual Report 2015

Shareholder Information

Financial calendar
2015 full-year results announced
Shares quoted ex-dividend on the Singapore Exchange
Shares quoted ex-dividend on the London Stock Exchange
Share registers closed
Annual General Meeting to be held
2015 final dividend payable
2016 half-year results to be announced
Shares quoted ex-dividend on the Singapore Exchange
Shares quoted ex-dividend on the London Stock Exchange
Share registers to be closed
2016 interim dividend payable

3rd March 2016
16th March 2016
17th March 2016
21st to 25th March 2016
4th May 2016
11th May 2016
28th July 2016*
17th August 2016*
18th August 2016*
22nd to 26th August 2016*
12th October 2016** Subject to change

Dividends
Shareholders will receive their cash dividends in United States dollars, unless they are registered on the Jersey branchregister where they will have the option to elect for sterling. These shareholders may make new currency elections for the2015 final dividend by notifying the United Kingdom transfer agent in writing by 22nd April 2016. The sterling equivalentof dividends declared in United States dollars will be calculated by reference to a rate prevailing on 27th April 2016.
Shareholders holding their shares through CREST in the United Kingdom will receive their cash dividends onlyin sterling. Shareholders holding their shares through The Central Depository (Pte) Limited (‘CDP’) in Singapore
will receive their cash dividends in United States dollars unless they elect, through CDP, to receive Singapore dollars.

Registrars and transfer agent
Shareholders should address all correspondence with regard to their shareholdings or dividends to the appropriate
registrar or transfer agent.

Principal Registrar
Jardine Matheson International Services Limited, P.O. Box HM 1068, Hamilton HM EX, Bermuda

Jersey Branch Registrar
Capita Registrars (Jersey) Limited, 12 Castle Street, St Helier, Jersey JE2 3RT, Channel Islands

Singapore Branch Registrar
M & C Services Private Limited, 112 Robinson Road #05-01, Singapore 068902

United Kingdom Transfer Agent
Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom

Press releases and other financial information can be accessed through the internet at www.mandarinoriental.com.

99

100 Mandarin Oriental International Limited

Mandarin Oriental Hotel Group Contact Addresses

Hong Kong Corporate Office
281 Gloucester Road
Causeway Bay, Hong Kong
Telephone +852 2895 9288
Facsimile +852 2837 3500
mandarinoriental.com

Asi a-PacificMandarin Oriental, Bangkok
48 Oriental Avenue
Bangkok 10500
Thailand
Telephone +66(2) 659 9000
Facsimile +66(2) 659 0000
Emailmobkk-reservations @mohg.com

The Excelsior, Hong Kong
281 Gloucester Road
Causeway Bay, Hong Kong
Telephone +852 2894 8888
Facsimile +852 2895 6459
Emailexhkg-reservations @mohg.com
Mandarin Oriental, Jakarta
Jalan M H Thamrin
PO Box 3392
Jakarta 10310
Indonesia
Telephone +62(21) 2993 8888
Facsimile +62(21) 2993 8889
Emailmojkt-reservations @mohg.com

Mandarin Oriental, Guangzhou
389 Tianhe Road, Tianhe District
Guangzhou 510620, China
Telephone +86(20) 3808 8888
Facsimile +86(20) 3808 8889
Emailmogzh-reservations @mohg.com

Mandarin Oriental, Kuala Lumpur
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia
Telephone +60(3) 2380 8888
Facsimile +60(3) 2380 8833
Emailmokul-reservations @mohg.com

Mandarin Oriental, Hong Kong
5 Connaught Road
Central, Hong Kong
Telephone +852 2522 0111
Facsimile +852 2810 6190
Emailmohkg-reservations @mohg.com

Mandarin Oriental, Macau
Avenida Dr Sun Yat Sen
NAPE, Macau
Telephone +853 8805 8888
Facsimile +853 8805 8899
Emailmomac-reservations @mohg.com

The Landmark Mandarin Oriental, Hong Kong
The Landmark
15 Queen’s Road Central
Central, Hong Kong
Telephone +852 2132 0188
Facsimile +852 2132 0199
Emaillmhkg-reservations @mohg.com

Mandarin Oriental, Sanya
12 Yuhai Road
Sanya 572000
Hainan, China
Telephone +86(898) 8820 9999
Facsimile +86(898) 8820 9393
Emailmosan-reservations @mohg.com

Annual Report 2015

Mandarin Oriental Pudong, Shanghai
111 Pudong Road (S), Pudong
Shanghai 200120, China
Telephone +86(21) 2082 9888
Facsimile +86(21) 2082 9000
Emailmopud-reservations @mohg.com
Mandarin Oriental, Singapore
5 Raffles Avenue, Marina Square
Singapore 039797
Telephone +65 6338 0066
Facsimile +65 6339 9537
Emailmosin-reservations @mohg.com
Mandarin Oriental, Taipei
158 Dunhua North Road
Taipei 10548, Taiwan
Telephone +886(2) 2715 6888
Facsimile +886(2) 2715 6699
Emailmotpe-reservations @mohg.com
Mandarin Oriental, Tokyo
2-1-1 Nihonbashi Muromachi, Chuo-ku
Tokyo 103-8328, Japan
Telephone +81(3) 3270 8800
Facsimile +81(3) 3270 8828
Emailmotyo-reservations @mohg.com

Europe, Middle E ast & North A fr ic a
Mandarin Oriental, Barcelona
Passeig de Gràcia, 38-40
08007 Barcelona, Spain
Telephone +34 93 151 8888
Facsimile +34 93 151 8889
Emailmobcn-reservations @mohg.com

Mandarin Oriental, Bodrum
Cennet Koyu Çomça Mevkii
314. Sokak No. 10, Göltürkbükü Mahallesi
48400, Bodrum, Mugla, Turkey
Telephone +90(252) 311 1888
Facsimile +90(252) 311 1889
Emailmobod-reservations@mohg.com
Mandarin Oriental, Geneva
Quai Turrettini 1
1201 Geneva, Switzerland
Telephone +41(22) 909 0000
Facsimile +41(22) 909 0010
Emailmogva-reservations @mohg.com
Mandarin Oriental Hyde Park, London
66 Knightsbridge
London, SW1X 7LA
United Kingdom
Telephone +44(0) 20 7235 2000
Facsimile +44(0) 20 7235 2001
Emailmolon-reservations @mohg.com
Hotel Ritz, Madrid
Plaza de la Lealtad 528015 Madrid
Spain
Telephone +34(91) 701 67 67
Facsimile +34(91) 701 67 76
Emailrzmad-reservations@mohg.com
Mandarin Oriental, Marrakech
Route du Golf Royal
40000 Marrakech, Morocco
Telephone +212 524 298 888
Facsimile +212 524 298 889
Emailmomrk-reservations@mohg.com

101

102 Mandarin Oriental International Limited

Mandarin Oriental Hotel Group Contact Addresses Continued

Mandarin Oriental, Milan
Via Andegari 920121 Milan, Italy
Telephone +39 02 8731 8888
Facsimile +39 02 8731 8881
Emailmomln-reservations@mohg.com

Mandarin Oriental, Boston
776 Boylston Street
Boston, Massachusetts 02199, USA
Telephone +1(617) 535 8888
Facsimile +1(617) 535 8889
Emailmobos-reservations @mohg.com

Mandarin Oriental, Munich
Neuturmstrasse 180331 Munich, Germany
Telephone +49(0) 89 290 980
Facsimile +49(0) 89 222 539
Emailmomuc-reservations @mohg.com

Mandarin Oriental, Las Vegas
3752 Las Vegas Boulevard SouthLas Vegas, Nevada 89158, USA
Telephone +1(702) 590 8888
Facsimile +1(702) 590 8880
Emailmolas-reservations @mohg.com

Mandarin Oriental, Paris251 rue Saint-Honoré
75001 Paris, France
Telephone +33(1) 7098 7888
Facsimile +33(1) 7098 7887
Emailmopar-reservations @mohg.com

Mandarin Oriental, Miami
500 Brickell Key Drive
Miami, Florida 33131, USA
Telephone +1(305) 913 8288
Facsimile +1(305) 913 8300
Emailmomia-reservations @mohg.com

Mandarin Oriental, Prague
Nebovidská 459/1
11800 Prague 1, Czech Republic
Telephone +420(2) 33 088 888
Facsimile +420(2) 33 088 668
Emailmoprg-reservations @mohg.com

Mandarin Oriental, New York80 Columbus Circle at 60th Street
New York, New York 10023, USA
Telephone +1(212) 805 8800
Facsimile +1(212) 805 8888
Emailmonyc-reservations @mohg.com

The A mer ic as

Mandarin Oriental, Washington D.C.
1330 Maryland Avenue, SW
Washington, District of Columbia 20024, USA
Telephone +1(202) 554 8588
Facsimile +1(202) 554 8999
Emailmowas-reservations @mohg.com

Mandarin Oriental, Atlanta
3376 Peachtree Road NE
Atlanta, Georgia 30326, USA
Telephone +1(404) 995 7500
Facsimile +1(404) 995 7501
Emailmoatl-reservations @mohg.com

Annual Report 2015

Sales and Reservations Offices

Mandarin Oriental
Hotel Group
Sales Offices
Hong Kong
5/F, 281 Gloucester Road,
Causeway Bay, Hong Kong
Telephone +852 2895 9278
Facsimile +852 2837 3518
Australia
Suite 108, 1 Cassins Avenue
North Sydney, NSW 2060
Australia
Telephone +61(2) 8920 1871
Facsimile +61(2) 8920 2542
Japan
2-1-1 Nihonbashi Muromachi
Chuo-ku, Tokyo 103-8328 Japan
Telephone +81(3) 3231 2920
Facsimile +81(3) 3231 2925
Singapore
5 Raffles Avenue
Marina Square, Singapore 039797
Telephone +65 6339 8811
Facsimile +65 6339 0597
Dubai
PO Box 500717, Office No. 5
Floor No. 7, Al Thuraya Tower No. 2
Dubai Media City, Dubai
United Arab Emirates
Telephone +971(4) 428 0721
Facsimile +971(4) 429 3236
France21 rue Cambon, 75001 Paris, France
Telephone +33(1) 7098 7053
Facsimile +33(1) 7098 7304

Germany
8th floor, Dreieichstrasse 59
60594 Frankfurt, Germany
Telephone +49(69) 610 631
Facsimile +49(69) 610 635
United Kingdom
Kings Court, 2-16 Goodge Street
London W1T 2QA
United Kingdom
Telephone +44(0) 20 7908 7889
Facsimile +44(0) 20 7908 7880
United States
900 North Kingsbury #1131
Chicago, IL 60610, USA
Telephone +1(312) 661 1887
Facsimile +1(312) 962 8853
1625 S Federal Highway, Suite 406
Fort Lauderdale, FL 33062, USA
Telephone +1(954) 941 6151
Facsimile +1(954) 489 9256
3249 Breckenridge Way
Riva, MD 21140, USA
Telephone +1(410) 956 2842
Facsimile +1(443) 458 1324
315 South Beverly Drive, Suite 215
Beverly Hill, CA 90212, USA
Telephone +1(424) 777 3953
Facsimile +1(310) 670 6648
250 West 57th Street, Suite 1917
New York, NY 10107, USA
Telephone +1(212) 207 8880
Facsimile +1(212) 207 8886

Representative Offices
China
Room 529, China World Office 1
No. 1 Jian Guo Men Wai Avenue
Chaoyang District
Beijing 100004, China
Telephone +86(10) 6505 2806
Facsimile +86(10) 6505 5205
Chengdu Square One Centre
Office 1109, 11/F, Square One
No. 18 Dongyu Street
Jinjiang District
Chengdu 610016, China
Telephone +86(28) 6466 3823
Facsimile +86(28) 6466 3999
389 Tianhe Road, Tianhe District
Guangzhou 510620, China
Telephone +86(20) 3808 8733
Facsimile +86(20) 3808 8889
Room 1109B, Bund Center
222 Yan An Road East
Huang Pu District
Shanghai 200002, China
Telephone +86(21) 6335 1800
Facsimile +86(21) 6335 2567

103

104 Mandarin Oriental International Limited

Sales and Reservations Offices Continued

Reservations Offices

Europe & Middle E ast

Asi a-Pacific

Austria
Tollfree 00 800 2828 3838

Australia
Tollfree 1 800 123 693
China
Tollfree 4001 203 323

BahrainTollfree 800 00 403
Belgium
Tollfree 00 800 2828 3838

Hong Kong
Telephone +852 2881 1288
Facsimile +852 2577 7543

FranceTollfree 00 800 2828 3838

Indonesia
Tollfree 001 803 65 6520

Germany
Tollfree 00 800 2828 3838

Japan
Tollfree 00531 650 487
Tollfree 0120 663 230

Italy
Tollfree 00 800 2828 3838

Malaysia
Tollfree 00 800 2828 3838
New ZealandTollfree 00 800 2828 3838
Singapore
Telephone +65 6222 4722
Facsimile +65 6227 1087
TaiwanTollfree 00 800 2828 3838

Netherlands
Tollfree 00 800 2828 3838
Saudi Arabia
Tollfree 800 865 6043
Spain
Tollfree 00 800 2828 3838
Switzerland
Tollfree 00 800 2828 3838
United Arab Emirates
Tollfree 800 065 0539
United Kingdom
Tollfree 00 800 2828 3838
For other European countries
Telephone +1(817) 567 9774

United States, C a na da& Centr a l A mer ic a
MexicoTollfree 001 800 526 6566
USA / Canada
Tollfree 1 800 526 6566

South A mer ic a
Argentina
Tollfree 0800 444 2659
BrazilTollfree 0800 891 3578

Mandarin Oriental International Limited
mandarinoriental.com