Annual Report 2023

Mandarin Oriental Hotel Group is an international hotel investment and management groupwith luxury hotels, resorts and residences in sought-after destinations around the world. Havinggrown from its Asian roots 60 years ago into a global brand, the Group now operates 38 hotels,nine residences and 23 exclusive homes in 25 countries and territories, with each property reflecting
the Group’s oriental heritage, local culture and unique design. Mandarin Oriental regularly receives
international recognition and awards for outstanding service and quality management, and has
a strong pipeline of hotels and residences under development. The Group has equity interests ina number of its properties and adjusted net assets worth approximately US$4.6 billion as at
31st December 2023.
Mandarin Oriental continues to drive its reputation as an innovative leader in luxury hospitality,
seeking selective opportunities to expand the reach of the brand, with the aim to maximise
profitability and long-term shareholder value.
The parent company, Mandarin Oriental International Limited, is incorporated in Bermuda andhas a primary listing in the standard segment of the London Stock Exchange, 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 memberof the Jardine Matheson Group.

Contents

1

Corporate Overview

3

Corporate Information

4

Highlights

6

Chairman’s Statement

8Group Chief Executive’s Review

12

Operating Summary

14

Development Portfolio

16

International Brand Recognition

18

Sustainability

31

Financial Review

36

Directors’ Profiles

38

Financial Statements

100

Independent Auditor’s Report

107

Report of the Valuers

108

Five Year Summary

109

Responsibility Statements

110

Corporate Governance141

Shareholder Information

142

Mandarin Oriental Hotel Group Contact Addresses

2 Mandarin Oriental International Limited

Corporate Information

Directors
Ben Keswick Chairman
John Witt Managing Director
James Riley Former Group Chief Executive(stepped down on 31st July 2023)

Laurent Kleitman Group Chief Executive(joined the Board on 1st September 2023)

Matthew Bishop Chief Financial Officer
Jinqing Cai
Adam Keswick
Archie Keswick
Y.K. Pang(stepped down on 31st March 2024)

Richard Solomons

Mandarin Oriental Hotel GroupInternational Limited
Directors
John Witt Chairman
James Riley Former Group Chief Executive(stepped down on 31st July 2023)

Laurent Kleitman Group Chief Executive(joined the board on 1st September 2023)

Matthew Bishop Chief Financial Officer
Graham Baker
Kieren Barry
Matthew Bland
Francesco Cefalu(joined the board on 1st April 2023)

Company Secretary
Jonathan Lloyd
Registered Office
Jardine House
33-35 Reid Street
Hamilton
BermudaPaul Clark(retired on 30th April 2023)

Joanna Flint
Amanda Hyndman(joined the board on 1st May 2023)

Christoph Mares
Vincent MarotPaul Massot(retired on 31st March 2023)

Anne O’Riordan
Y.K. Pang(stepped down on 31st March 2024)

Corporate Secretary
Jonathan Lloyd

Annual Report 2023

3

Highlights

Mandarin Oriental International Limited
Underlying profit increased to US$81 million, from US$8 million in 2022
Strong operating and financial performance driven by record rates
Management fees grew by 30%, with strong recovery by hotels in Asia
Increased development pipeline with two new hotel openings and eight new management
contracts announced
Final dividend at US¢3.50 per share, resulting in total dividends of US¢5.00 per share

Results
Year ended 31st December
2023
2022
US$m
US$m

Change%1,890.2

1,568.1

21

558.1

454.1

23

177.6

111.4

59

81.0

7.6

966

Revaluation loss on investment properties(486.7)(104.1)(368)

Gain on sale of a subsidiary/asset disposals

41.3

47.0

(12)

(365.4)(49.5)

(638)

US¢

US¢

%

6.41

0.60

968

(28.91)(3.92)

(638)

5.00

–

n/a

US$

US$

%

Net asset value per share

2.34

2.61

(10)

Adjusted net asset value per share 4

3.67

3.87

(5)

Net debt/shareholders’ funds

8%

11%

Net debt/adjusted shareholders’ funds 4

5%

8%

Combined total revenue of hotels under management1
Revenue
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)2
Underlying profit attributable to shareholders3

Loss attributable to shareholders

Underlying earnings per share3
Loss per share
Dividends per share

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 34 to the financial statements. Management considers this to be a key
measure which provides additional information to enhance understanding of the Group’s underlying business performance.

4

The Group’s investment properties are carried at fair value on the basis of valuations carried out by independent valuers at
31st December 2023. The other freehold and leasehold interests are carried at amortised cost in the consolidated balance sheet.
Both the adjusted net asset value per share and net debt/adjusted shareholders’ funds at 31st December 2023 have included themarket value of the Group’s freehold and leasehold interests.

4 Mandarin Oriental International Limited

Combined total revenue

Revenue

US$m

US$m

by geographical area

by geographical area

1,890.2

566.5

638.0

558.1

272.2

219.9
454.1

1,568.1

141.4

462.1

1,325.1
636.1

255.6
1,053.5
354.0

316.9

275.0
996.6

49.6

132.4

104.8

73.0

831.0
593.0

348.6

278.6
340.4

76.2
238.2

2019

2020

239.7

183.7

170.4

189.5

96.9

529.1

288.6

46.7
137.8

20.7
66.1

2021

2022

2023

2019

America

Asia

2020

2021

2022

America

Asia

Europe, the Middle East and Africa (EMEA)

2023

Europe, the Middle East and Africa (EMEA)

Underlying EBITDA and net interest expense

Net debt/adjusted shareholders’ funds

US$m

US$m
5,936.1

177.6

5,170.9

4,965.7

4,896.7
4,636.6

154.5

111.4

40.7
18.9

17.2

15.9

2019

20.1

18.9

5.1%
300.4

2021

2022

2023

2019

9.8%

10.4%

506.2

517.5

2020

2021

7.7%
375.8

2022

4.9%
225.2

2023

(74.2)

2020

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

Adjusted shareholders’ funds
Net debt

Annual Report 2023

5

Chairman’s Statement

Overview
2023 was a year of significant growth and progress for Mandarin Oriental. The Group grew its Management
Business, with two new openings and the announcement of eight new hotel and residences projects. Our colleagues
continued to provide the exceptional service for which the brand is legendary and secured record room rates, whichtranslated into strong operating and financial performance.

2023 Financial performance
Underlying profit increased to US$81 million, from US$8 million in 2022, with underlying earnings per shareat US¢6.41, compared with US¢0.60 in 2022. Non-trading losses of US$446 million primarily comprised a
non-cash revaluation of the Causeway Bay site under development, resulting in a loss attributable to shareholders
of US$365 million.
Net debt fell to US$225 million at the end of 2023, from US$376 million at the end of 2022, reflecting significantly
higher operating cashflow from the business, net of ongoing capital investment, as well as proceeds from disposals.
Gearing as a percentage of adjusted shareholders’ funds was 5%, compared to 8% at the end of 2022.
The Directors recommend a final dividend of US¢3.50 per share. This, together with the interim dividend ofUS¢1.50 per share declared, will result in total dividends of US¢5.00 per share.

Year in review
In 2023, Mandarin Oriental, with its distinctive portfolio of hotels, was able to satisfy consumers’ continuing
robust appetite for luxury leisure travel. The Group’s legendary levels of service underpinned an increase in rates,
and it continued to build occupancy, which translated into substantial improvements in Revenue Per Available
Room (‘RevPAR’) across almost all hotels.
Hotels in Asia benefitted from the return of travel demand from Chinese mainland following the removal ofrestrictions at the beginning of 2023, generating substantially higher management fees. Two of the Group’s
key owned hotels in the region – Hong Kong and Tokyo – delivered notably better performance than in 2022.
In Europe, the Middle East and Africa (‘EMEA’), hotels reported solid growth over 2022 and gained market
share, particularly in resort destinations. In America, RevPAR performance remained broadly stable, with easing
domestic leisure demand partially offset by higher demand from corporate and group travellers.

Sustainability
We believe the long-term success of our business hinges on doing the right things for our planet and our people.
The Group remains on track to achieve its 2030 environmental targets and has made particular progress in
reducing energy and waste intensity, and in expanding the scope of responsible procurement. Mandarin Oriental’ssustainability commitments also undertake to create positive impacts for the communities in which its hotels
operate. This year, the ‘MOgiving’ initiative was launched in all the Group’s hotels, to empower colleagues tocontribute to their local communities.

6 Mandarin Oriental International Limited

Governance
The Group has continued to evolve its governance in 2023, to ensure that its board and committees have the rightexpertise and independence to support the delivery of the Group’s strategic priorities. In 2023, Richard Solomons
was appointed as Independent Non-Executive Chair of the Audit Committee and Jinqing Cai, an Independent
Non-Executive Director, was appointed as a member of the Committee. The Audit Committee now has a majority
of independent members, whose expertise and understanding of the luxury and hospitality sectors will strengthen
the Committee.

PeopleIn September 2023, Laurent Kleitman succeeded James Riley as Group Chief Executive. On behalf of the Board, I
would like to thank James for his contribution to the Group and welcome Laurent, who has joined us with many
years of experience in building iconic, luxury consumer brands.
Our colleagues play an instrumental role in defining the brand and creating the legendary guest experience forwhich Mandarin Oriental is renowned. I would like to take this opportunity to express my gratitude to them forthe unwavering commitment they show to our guests, which underpins the long-term success of the Group.

Outlook
Mandarin Oriental delivered a strong set of results in 2023. Despite some geopolitical and macroeconomic
uncertainties entering 2024, the Group remains optimistic about its future growth as it continues to invest
in its core strengths of brand desirability, a strong management contract pipeline, continued delivery of innovationand service excellence and an unwavering commitment to people and the environment.

Ben Keswick
Chairman
7th March 2024

Annual Report 2023

7

Group Chief Executive’s Review

I am delighted to have joined Mandarin Oriental and am pleased to share my initial views of the Group and theprogress we have made across several fronts over the past year.
Having been with the Group for a few months and visited most of our properties around the world, met with manyof our owners and partners, and spent time listening to and learning from our thousands of colleagues, it is clear tome that Mandarin Oriental is not only a strong business today but also has significant opportunities ahead.
Since my appointment in September 2023, my team and I have been reviewing our strategy to ensure that theGroup is able to build on the right foundations to accelerate growth. Strategic thinking and changes are currently
underway, with a greater focus on significantly scaling up the Management Business globally, further elevating thebrand’s desirability, to become the reference point in luxury hospitality, and enriching our proposition to guests andowners. I am very convinced that the Mandarin Oriental brand, together with the exceptional operational expertiseof our teams centrally and around the world, has the potential to take a larger share of the global luxury hospitality
market in the coming years. Our understanding of excellence, our long-standing service tradition, ourinterpretation of luxury and our creativity are some of the many assets that we are building upon.
Our dual Asian origin, blending the vibrancy and modernity of Hong Kong – The Mandarin – with the refinementof Bangkok – The Oriental –, makes us the most distinctive and authentic luxury hospitality brand in the world.
And today, 50 years after these two iconic hotels were brought together, we have created a formidable Group: fromthe strength of our growing Management Business to the enormous potential of our brand, from the quality of ouroperators and 15,000 colleagues to the strength of our partners, Mandarin Oriental has solid foundations fromwhich we will scale up, while retaining our unique sense of high-end luxury.
I look forward to sharing our full new strategic plan in more detail later this year.
Looking back to 2023, we had occasion to celebrate many significant achievements, starting in February withthe rebranding of Emirates Palace Mandarin Oriental, Abu Dhabi. This is our third hotel in the Middle East andcomplements Mandarin Oriental Jumeira, Dubai and Mandarin Oriental, Doha, reinforcing our brand presence inthe region. Reflecting our unwavering dedication to elevating the guest experience, Mandarin Oriental, Singapore
re-opened its doors to guests in September after a transformative renovation. In October, we celebrated the 60th
anniversary of one of our historic hotels, Mandarin Oriental, Hong Kong, with Oscar-winning brand ambassador
Michelle Yeoh and other distinguished guests showcasing the contemporary luxury and Oriental heritage thatdifferentiate the brand. And finally, as we concluded 2023, we opened the magnificent and iconic Mandarin
Oriental Savoy, Zurich after an extensive renovation.

2023 Performance
Summary of performance
The Group manages 38 hotels and nine residences globally, of which 25 properties are managed and 13 properties
are owned or partially owned. In 2023, the Management Business delivered strong operating performance andimproved profitability. Combined total revenue for hotels under management was US$1.9 billion in 2023, 21%
above 2022. This increase was driven primarily by a 29% increase in RevPAR. The improvement in RevPAR was
primarily due to a gradual recovery in occupancy across all geographies, a continuation of high rates in Europe,
the Middle East and Africa (‘EMEA’), and a solid rebound in rates in Asia. Food & Beverage (‘F&B’) revenue also
increased by 18% year-on-year, contributing to the strong top-line outperformance in 2023.
In EMEA, most hotels gained market share in 2023 compared to 2022. Average RevPAR was US$645, up 14%
from 2022. While average rates remained fairly stable in 2023 compared to the prior year, occupancy recovered to
pre-pandemic levels. RevPAR performance was notably better than 2022 in Bodrum, Abu Dhabi and Marrakech,
predominantly driven by robust leisure demand.

8 Mandarin Oriental International Limited

In Asia, RevPAR was US$213, up 75% from 2022. The progressive return of domestic and some outbound travel
demand from Chinese mainland at the start of the year contributed to a strong pick-up in both occupancy and rates
within the region. Within Chinese mainland, our hotels in Beijing, Hong Kong, Macau, Shanghai and Shenzhen
generated strong year-on-year improvements in RevPAR. In the rest of Asia, Tokyo, Bangkok and Kuala Lumpur
also delivered considerable RevPAR improvements. Despite substantial RevPAR growth in 2023 compared to 2022,
RevPAR for the region remained slightly below pre-pandemic levels as occupancy continued to recover.
In the Americas, RevPAR was US$408, up 3% from 2022. Domestic leisure demand eased marginally fromthe strong levels seen in 2022 but was compensated by a steady continuing recovery in corporate transient andgroup segments.

Management BusinessWith the openings of two new hotels, the Group continued to execute its strategy of scaling up the Management
Business. This growth in scale, combined with RevPAR improvement, resulted in a 30% increase in hotelmanagement fees and a 55% improvement in EBITDA for the Management Business compared to 2022.
Most hotels delivered higher fees, with hotels in Asia in particular seeing a robust rebound from 2022.
The sale of branded residences, such as The Residences at Mandarin Oriental Mayfair – luxury apartments situatedin the heart of one of London’s most stylish neighbourhoods – and Mandarin Oriental Residences, Fifth Avenue
in the heart of Manhattan, remains a strategic focus and contributed some 10% of the total fees earned from theManagement Business.

Owned hotel performance
Our 13 owned properties reported a combined EBITDA 63% higher than in 2022, and most properties maintained
or improved their earnings. Of note were the materially improved contributions produced by Hong Kong andTokyo, both of which were severely impacted by stringent travel restrictions for the majority of 2022, and theearly part of 2023. London and Geneva also delivered considerably improved results driven by better RevPAR andF&B performance. The exceptions with lower earnings in 2023 were Singapore and Miami. After undergoing an
extensive renovation for six months, Mandarin Oriental, Singapore has re-opened with a transformed and elevatedguest experience with an enhanced appeal to leisure travellers. Against the backdrop of easing domestic leisuredemand in America, Miami reported a slight drop in average rates, partially offset by improved occupancy andF&B performance.
Financial performance
As a result of strong top-line performance, EBITDA for 2023 was US$178 million, a 59% increase from the prioryear. Underlying profit substantially improved from US$8 million in 2022 to US$81 million in 2023.

A year in review
The Group’s long-term growth strategy is to grow Mandarin Oriental brand’s desirability and expand theManagement Business through the signing of management contracts in key destinations, whilst retaining someownership of brand-defining properties.

Management Business
The Group’s Management Business made good progress in 2023. In August, we introduced Mandarin Oriental’scontemporary luxury to Greece with the opening of our beachfront getaway in Costa Navarino. In December, we
opened our third property in Switzerland – Mandarin Oriental Savoy, Zurich, following an extensive renovationof this historic property, which dates back to 1838.

Annual Report 2023

9

Group Chief Executive’s Review Continued

In addition to these openings, we underpinned the future growth of our portfolio with the signing of eight hotel
and residences projects, all of which will be managed by the Group:
Luxury residences in the heart of Madrid’s most exclusive neighbourhood, Salamanca;
A scenic beachfront resort in Mallorca;
A hotel and residences in Athens with contemporary design and unobstructed views of the Aegean Sea;
A hotel and residences in Bankside – the Group’s third property in London;
A transformative redevelopment of Mandarin Oriental, Miami, in a larger hotel and residences complex
in the unique Brickell Island location;
A secluded resort in Porto Cervo, Sardinia, overlooking the Gulf of Pevero;
A high-end boutique resort in Setouchi, Japan that consists of three distinctive properties around theSeto Inland Sea; andA full renovation and rebranding of the historic Gellért Hotel in Budapest.
Overall, at the end of 2023, the Group has a pipeline of 28 hotels (14 of which have a residences component) andtwo standalone residences to open over the next five years. And I remain very optimistic about announcing new
strategic projects in 2024.

Owned assets
As part of our regular review of the Group’s assets, in 2023, we decided to sell our owned properties in Jakarta
and Paris. The disposal of our Jakarta property was completed in June 2023, with the hotel management
contract retained. The Group has also signed an option to sell the Paris hotel property, securing a long-term
hotel management contract with the new owner. We expect to complete this transaction in the first half of 2024.
We are making good progress with the redevelopment of our Causeway Bay site in Hong Kong and have begun
leasing activities in line with our expectation to complete construction of the building in the first half of 2025.
We have updated our valuation for the project to purely reflect residual, value-in-use estimates, in line with normal
market practice as the development project progresses toward completion.

Brand
In 2023, we continued to strengthen the desirability of the Mandarin Oriental brand. The Group focussed onincreasing the awareness of the brand amongst our target audience, and investing behind our award-winning‘I’m A Fan’ advertising campaign, which has featured over 50 celebrities who are genuine fans of Mandarin
Oriental. We also celebrated a key milestone for Mandarin Oriental, with the 60th anniversary of our flagshiphotel in Hong Kong, which has been at the forefront of luxury hospitality since it opened its doors in 1963.
During the period we have built awareness and engagement of Mandarin Oriental through extensive media
coverage in both lifestyle publications and social channels, focussing on the Group’s core brand pillars ofcraftsmanship and design; innovative dining; holistic wellness; and our legendary service which are at the heartof our Oriental heritage. These focusses have been further strengthened by the attainment of many global awards
for excellence, solidifying the Group’s reputation for delivering the highest quality. Significant awards in 2023
included Best Luxury Hotel Brand in the annual Luxury Travel Intelligence ranking; 29 Michelin stars won by 18
of our global restaurants; the World’s Best Hotel Spa Brand by the World Spa Awards, and the placement of 20 of
our properties in Condé Nast Traveller’s Readers Choice Awards, more than in any previous year.
Further, we have forged partnerships with prestigious like-minded brands. These included the hosting of Louis
Vuitton’s summer pop-up store and co-branded beach bar at Mandarin Oriental, Bodrum, and the development of
a dedicated showcase suite for Vacheron Constantin in Dubai.

10 Mandarin Oriental International Limited

Transformation
Modernisation of the Management Business remains a strategic focus, with the key aims of supporting growth inscale, enriching the customer experience, delivering improved operating efficiency, and elevating our colleagues
value proposition.
In the past year, we continued to advance several transformation initiatives across the organisation in support ofthis strategic objective. In particular, the Group has embarked on the Guest Experience Programme which will
greatly improve our ability to recognise, understand and engage our guests across Mandarin Oriental. A redesignof Fans of M.O. will enable us better to attract and retain both top guests and local fans. We are establishing abespoke relationship management service to build brand-level loyalty with ultra-high-net-worth guests. Internally,
we have made encouraging progress in driving operational efficiency through modernising our systems andprocesses required to support evolving business needs.

People & culture
The Group’s focus on recruiting and developing the right talent, as well as providing an engaging colleague
experience, remains central to our People and Culture strategy. In the past year, the Group has recruited 176
Rising Fans into the new graduate programme. More broadly, we achieved notable improvements in retention,with a reduction in voluntary turnover from 25% to 22%. Our efforts were acknowledged in the Group’s latest
Colleague Engagement Survey, which indicated improvement across all drivers of sustainable engagement andexceeded both the ‘Travel & Leisure’ norm and the ‘High-Performance’ norm.
Our HR transformation journey, The People Project, is a strategic initiative that aims to put the colleague
experience at the centre, elevate the role of our people managers, and simplify, harmonise and automate our
HR processes. The initiative is a major step towards enabling an engaged workforce through a compelling work
experience, laying a solid foundation for the organisation to build on as it scales up.

Sustainability
I am delighted to share that the Group’s commitment to sustainability was recognised in 2023 by the Global
Sustainable Tourism Council. In line with our belief in contributing positively to local communities, we launched‘MOgiving’ within all our hotel properties, to empower our colleagues to create positive social impact locally.
We continue to make progress against our other sustainability targets, about which further information will be
published in our forthcoming Sustainability Report 2023.

The year ahead
In 2023, Mandarin Oriental delivered improved operational performance and continued to lay the foundation forstrong future growth. In early 2024, we completed the rebranding of Mandarin Oriental Al Faisaliah, Riyadh, and in
the coming 12 months we are focussed on delivering several planned openings, including Muscat in Oman – a uniquebeachfront urban resort, Mayfair in London – an exclusive boutique hotel in the heart of the capital’s fashion andshopping district, Qianmen in Beijing – an elegant hotel that offers an authentic experience within a traditional Hutong
quarter, and a standalone residences project on Fifth Avenue in New York. I am confident that we will be in a position toannounce several further strategic projects in key locations in the course of 2024, which will enable the brand to expand
its footprint in highly sought-after destinations and continue to improve the financial performance of the Group.
As we continue to grow, we will remain attentive to cultivating and raising the desirability of the Mandarin Oriental
brand and maintaining and uplifting the quality of Mandarin Oriental guest experiences at every opportunity.

Laurent Kleitman
Group Chief Executive
7th March 2024
Annual Report 2023

11

Operating Summary

Total portfolio RevPAR
US dollar

Constant currency
2023
US$

2022
US$

% Change

213

119

79

660

570

16

America

408

397

3

Total

396

314

26

Asia
Europe, the Middle East
and Africa

2023
US$

2022
US$

% Change

218

119

83

704

570

24

America

406

397

2

Total

414

314

32

Asia
Europe, the Middle East
and Africa

Occupancy is calculated based on the number of occupied rooms out of the total number of available rooms in which
the hotel is in operation during the period. The like-for-like RevPAR presented in the table above includes all hotels
that were in the Group’s portfolio and operating for the entire year of both 2022 and 2023. Any new openings,
closures or disposals during the period are excluded.

Group’s subsidiary hotels RevPAR
ASIA
Mandarin Oriental, Hong Kong 100% ownership

Mandarin Oriental, Tokyo 100% leasehold

2023

2022

% Change

Available rooms

447

494

(10)

Average occupancy (%)

59.9

29.8

Average room rate (US$)

495

RevPAR (US$)

297

12 Mandarin Oriental International Limited

2023

2022

% Change

Available rooms

179

179

–

101

Average occupancy (%)

71.8

50.5

42

339

46

Average room rate (US$)

839

485

73

101

194

RevPAR (US$)

603

245

146

EUROPE, THE MIDDLE EAST AND AFRICAAMERICA

Mandarin Oriental Hyde Park, London 100% ownership

Mandarin Oriental, Boston 100% ownership

2023

2022

% Change

Available rooms

181

181

–

Average occupancy (%)

67.1

60.3

Average room rate (US$)

1,573

RevPAR (US$)

1,056

2023

2022

% Change

Available rooms

148

148

–

11

Average occupancy (%)

63.4

56.6

12

1,445

9

Average room rate (US$)

670

702

(5)

871

21

RevPAR (US$)

425

397

7

Mandarin Oriental, Munich 100% ownership
2023

2022

% Change

73

73

–

Average occupancy (%)

67.9

65.8

3

Average room rate (US$)

1,130

1,041

9

767

685

12

2023

2022

% Change

Available rooms

135

135

–

Average occupancy (%)

57.2

60.2

(5)

Average room rate (US$)

1,499

1,284

17

857

773

11

2023

2022

% Change

Available rooms

178

178

–

Average occupancy (%)

65.4

59.1

11

Available rooms

RevPAR (US$)

Mandarin Oriental, Paris 100% ownership

RevPAR (US$)

Mandarin Oriental, Geneva 100% ownership

Average room rate (US$)

766

666

15

RevPAR (US$)

501

394

27

Annual Report 2023

13

Development Portfolio

The following 28 hotels and 16 Residences at Mandarin Oriental are expected to open in the next five years.
Asia
Mandarin Oriental, Bai Nom
A new resort with branded residences in Phu Yen province, Vietnam offering 72 suites and villas, including 25 Residences. The property will spread out
across a 29-hectare site with guest accommodation located directly on the beach and dotted through the hills.

Mandarin Oriental Qianmen, Beijing
72 courtyard suites located in a traditional hutong quarter, providing a rare opportunity to experience living in an authentic Beijing residential district,close to Tiananmen Square.

Mandarin Oriental Tianfu, Chengdu
A 267-room hotel located in Tianfu, a modern business district south of Chengdu, the capital city of Szechuan province in China.

Mandarin Oriental, Da Nang
A luxury waterfront resort comprising 60 villas and 22 Residences at Mandarin Oriental, ideally located on a spectacular beach in one of Vietnam’s mostpopular leisure destinations.

Mandarin Oriental, Hangzhou
A 194-room hotel in the new Westlake 66 luxury commercial and retail complex, located close to the West Lake, a UNESCO World Heritage Site andone of China’s primary leisure destinations, with easy access to the city’s principal business hubs.

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

Mandarin Oriental, Maldives
A picturesque private island resort comprising 120 stand-alone villas, including 10 Residences at Mandarin Oriental, with panoramic views of
the Indian Ocean.

Mandarin Oriental, Nanjing
A 95-room hotel located in a premier mixed-use development on the Qinhuai River, in close proximity to historic landmarks including the Gate of China,
which forms part of one of the longest ancient city walls in the world.

Mandarin Oriental, Phuket
A 105-room beachfront resort located on the island’s west coast in picturesque Laem Singh Bay on Millionaire’s Mile, with panoramic views of
the Andaman Sea.

Mandarin Oriental, Saigon
A 228-room hotel located in a mixed-use development in the heart of Ho Chi Minh City, close to key landmarks.

Mandarin Oriental, Setouchi
A collection of three unique boutique properties, branded as Mandarin Oriental, Setouchi. These resorts, totalling 164 rooms, are nestled strategically aroundthe captivating Seto Inland Sea. Each of the trio embodies its distinct character, environment, and purposefully curated experiences.

Europe, the Middle East and Africa
Mandarin Oriental, Athens
A new hotel and accompanying residences on the Athenian coastline. The beach front development will comprise of 123 rooms and suites in addition to
17 Residences at Mandarin Oriental. The development is within easy reach of the city’s famous attractions.

Mandarin Oriental Gellert, Budapest
A re-branding of the historic Gellért Hotel in Budapest, currently closed for renovation. This 143-room Art Nouveau architectural gem is located on the Buda
side of the city and just a short walk to the Liberty Bridge, connecting Buda with Pest.

Mandarin Oriental Shepheard, Cairo
A re-branding of the celebrated Shepheard Hotel in Downtown Cairo, currently closed for renovation. This 269-room property is a heritage landmark in
the city, with stunning views of the Nile and Gezira island.

Mandarin Oriental Cristallo, Cortina
A re-branding of the historic Hotel Cristallo in Cortina d’Ampezzo, Italy, which will re-open as Mandarin Oriental Cristallo, Cortina, after a comprehensive
renovation. This 84-room historic hotel enjoys impressive views of the Dolomites and will be the Group’s first alpine resort.

Mandarin Oriental Downtown, Dubai
A 259-room hotel and 266 Residences at Mandarin Oriental, located on Sheikh Zayed Road, with views over downtown Dubai and direct access to the area’s
business and leisure attractions.

Mandarin Oriental Etiler, Istanbul
A 144-room hotel and 236 luxurious Residences at Mandarin Oriental, located within three standalone towers in the prestigious Etiler district of Istanbul.

14 Mandarin Oriental International Limited

Europe, the Middle East and Africa continued
Mandarin Oriental, Kuwait
A new 169-room hotel in the heart of the financial district of Kuwait City. Located in an iconic 80-storey tower, the property is designed by the award-winningarchitects, Foster + Partners.

Mandarin Oriental Bankside, London
A contemporary standalone property, expected to have 171 guestrooms and 70 Residences at Mandarin Oriental. Situated on London’s South Bank andperfectly positioned to access both the City of London and the West End.

Mandarin Oriental Mayfair, London
A 50-room boutique hotel and 77 Residences at Mandarin Oriental, located on Hanover Square in the heart of London’s Mayfair district.

Mandarin Oriental Residences, Madrid
A new development in the heart of Madrid, located on the intersection of Hermosilla Street and Nuñez de Balboa Street. The new Mandarin Oriental
Residences, Madrid will feature 27 exceptional apartments.

Mandarin Oriental Punta Negra, Mallorca
A new beach resort in one of the most sought-after locations on the island of Mallorca, occupying an iconic peninsula. Surrounded by natural beauty,
the resort spreads over 3 hectares and offers 131 guestrooms, suites and bungalows just steps from the waterfront.

Mandarin Oriental, Muscat
A 150-room resort and 156 Residences at Mandarin Oriental, located on the beach in a prime city location, with views over the Arabian Sea.

Mandarin Oriental, Porto Cervo
A new 83-room hotel located in the north-east of Sardinia, in the heart of Costa Smeralda. The hotel will offer a perfect blend of accessibility and seclusion,
providing breathtaking views and access to a private beach.

Mandarin Oriental, Tel Aviv
A 226-room hotel and 230 Residences at Mandarin Oriental, in an unrivalled waterfront location overlooking one of the city’s pristine beaches.

Mandarin Oriental, Vienna
A 138-room hotel and 25 Residences at Mandarin Oriental, housed in a heritage building within the Ringstrasse in District One of Vienna, within easy
walking distance of the city’s major attractions.

America
Mandarin Oriental, Boca Raton
A 163-room hotel and 88 Residences at Mandarin Oriental, 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, Grand Cayman
A 92-room beachfront resort and 89 Residences at Mandarin Oriental, situated on 67 acres at St James Point, on the southern shore of the island.

Mandarin Oriental, Honolulu
A luxury 125-room hotel and 99 Residences at Mandarin Oriental, located on the Hawaiian island of Oahu, in the heart of the Ala Moana District.

Mandarin Oriental Residences, Fifth Avenue (Coming Soon)
65 luxurious residences located on Fifth Avenue New York, housed in an elegant 1920’s building on the corner of Fifth Avenue and 54th Street.

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 2023

15

International Brand Recognition

Mandarin Oriental continues to be recognised as one of
the world’s most esteemed luxury hotel brands. In 2023,
the Group received numerous international awards andaccolades from leading publications, travel associations
and related platforms. Key achievements included theGroup’s recognition as one of the ‘Best Hotel Brands’
by Travel + Leisure and ‘World’s Best Luxury Hotel
Brands’ by Luxury Travel Intelligence.

Mandarin Oriental, Hong Kong

In 2023, the innovation of 18 restaurants across theGroup were honoured in the Michelin guides, with29 stars granted, eight of which received the highly
coveted two-star rating. The Group’s continued
commitment to excellence in wellness was also
highlighted, including Forbes awarding 15 hotels
with ‘Five Star Spa’ status and ‘World’s Best Hotel
Spa Brand’ in World Spa Awards 2023.

Boss Hunting.com, Australia

Mandarin Oriental Hotel Group
Mandarin Oriental portfolio is so synonymous with
contemporary luxury that it’s easy to forget the story
began way back in 1960 with the construction of
The Mandarin in Hong Kong. This glittering property
is still the jewel in the crown, and the levels of service
and attention to detail continue to influence the restof the group – and rival hotel brands worldwide.
Condé Nast Traveller, UK

Mandarin Oriental, Bangkok
One thing in Bangkok hasn’t changed, the Mandarin
Oriental hotel. It remains sublime, an oasis of calmthat has set the standard as one of the greatest hotels
in the world. Dinner on the balcony by the bustling
Chao Phraya River brings together all the skills of thisgreat culinary nation.
Country Life, UK

16 Mandarin Oriental International Limited

Mandarin Oriental, Hong Kong – Offering full-turbo
excellence across any metric one cares to judge hotelsby (e.g. location, dining, facilities — you name it) the‘secret sauce’ of the OG Mandarin, a property which
now lends its name to some of the most sumptuous
luxury accommodations around the globe, is in
its service.

Mandarin Oriental, Tokyo
It’s one of the most luxurious hotels in Tokyo, andalmost 20 years on, still one of the finest. Rising highabove the historic Nihonbashi financial district,
Mandarin Oriental, Tokyo is one of those rare hotels
with the ability to occupy a place in your soul longafter you’ve left. You can tell it’s special from themoment you draw near the premises, when a veritable
army of staff emerges to greet you and take you up to
the 38th-floor lobby for your first experience of those
perfectly framed eastern and western views.
Harpers Bazaar, UK

Emirates Palace Mandarin Oriental,
Abu Dhabi
Best for an ultra-luxury stay in one of the grandest
hotels in the UAE. An absolutely majestic hotel, thisproperty spread across 222 acres truly deserves thetitle of a ‘palace’ in its name. With staff from various
Mandarin Oriental properties globally having beenbrought in, the transition to MO has been smoothwith similar levels of service and attention to detailthat the brand is reputed for worldwide.
Business Traveller, Middle East

Mandarin Oriental, Costa Navarino

Mandarin Oriental Ritz, Madrid

Spliced into a hillside of the Peloponnese peninsula,
the first of the luxury brand’s openings in Greece has
its phasers set to stun. Make like a Greek and worshipthe near-eternal sun from the poolside Ormos Beach
Club, a lounge overlooking the Ionian Sea. Open sinceAugust, Mandarin Oriental, Costa Navarino combines
contemporary elegance, superb service, and warm Greek
hospitality in a postcard-perfect setting in Navarino
Bay, on the southwest coast of the Peloponnese.

This Belle Époque Grande Dame, originally opened
by legendary hotelier César Ritz, is now enjoying a newlease of life under the auspices of Mandarin Orientalgroup, who have meticulously restored it to its former
glory. Among the hotel’s many highlights are the crystal
canopy ceiling in the Palm Court, elegant afternoon
tea and ultra-polished service. Attention to detail isimpressive throughout, as is the sense of place foundin the many nods to the country’s rich artistic heritage.
Service is exemplary, with many of the ultra-polished
old guard from previous incarnations of the hotelremaining. Facilities are excellent, delivering all you
could require.

Forbes, US

Mandarin Oriental, Lago di Como
Set on the lake’s share, the hotel is a beacon of serenity
and frictionless leisure time. The minute you’rewelcomed through the security gates, down thewinding, garden-edged pathways and into the quiet
reception area, you’re enveloped into an unmistakableclam. With a foothold firmly in Eastern luxury,
Mandarin Oriental’s take an Italian opulence is subtle.

The Telegraph, UK

Mandarin Oriental, Milan
Mandarin Oriental, Milan mixes timeless Milanesedesign with the brand’s signature Eastern charm andlegendary hospitality.

Vogue Living, Australia

Forbes, US

Mandarin Oriental Hyde Park, London

Mandarin Oriental, Paris

Mandarin Oriental nicely bridges the line between the
hotel and the palace. Think turrets, dormer windows,
Ashlar stone and red brick, all part of the foundationsof one of London’s most famous facades. Add in theluxury hotel group’s signature attention to detail means
it feels like a royal experience when you’re in residence.

Mandarin Oriental, Paris is the epitome of luxury
and elegance for wealthy and discerning guests. Thismagnificent hotel offers a unique experience with its
stunning décor, impeccable service, and prime locationin the heart of Paris.
Ipremium, France

Signature Travel and Luxury Magazine, Australia

Mandarin Oriental, New YorkAt the foot of Central Park, Mandarin Oriental,
New York has the Big Apple’s best shopping, sightseeing
and dining on its doorstep. Yet its opulent spa,
destination restaurant and spectacular skyline views
make it a peaceful retreat from the city streets.
Country & Town House, UK

Annual Report 2023

17

Sustainability

Sustainability update
Sustainability is about doing the right thing by ourselves, by our colleagues, by our families, and by the planet.
Mandarin Oriental is a relatively small player on the world stage, but from the strength of our brand, we use our
voice to advocate for change along the value chain. This enables us to influence other key players in the market
and the industry and bring our stakeholders and partners along with us on our sustainability journey. Staying
true to our guiding principles – delivering service excellence to our guests, supporting the development of ourcolleagues – we continue to serve the communities in which we operate, acting with responsibility for our planet.
In 2023, the Group was recognised by the Global Sustainable Tourism Council (‘GSTC’) for achieving
GSTC-Committed status, reinforcing its commitment to sustainable tourism practices and adherence tointernational accredited standards. The attainment of GSTC-Committed status encompasses corporate offices
and all managed branded properties worldwide and signifies Mandarin Oriental’s dedication to incorporating
the GSTC Criteria into its policy, plan, and operations. Additionally, 11 of the Group’s hotels achieved GSTC
Certification as awarded by GSTC-Accredited Certification Bodies. The Group will actively pursue GSTC
Certification in 2024, aligning each of its hotels with the highest social and environmental standards within
the industry.
Sharing the global concern for climate change, the Group has continued to explore decarbonisation opportunities
and ensure steady progress towards our 2030 environmental targets with property-led initiatives to reduce energy,
switch to renewables, conserve water, and reduce waste. As we work towards our targets and weigh up moreenvironmentally responsible practices across our operations, we aim to demonstrate how better efficiencies cancontribute to long-term profitability. Energy audits in our hotels at three-year intervals provide insights to hotel
operations, which inform recommended strategies and efficiency projects. Minimising food waste is a stand-out
challenge across hospitality, and the Group has partnered with Winnow’s award-winning AI-powered systemthrough a successful trial in our kitchens (spanning four properties representing each major operating region),with a planned roll-out across all properties commencing in 2024.
The Group has made considerable progress in achieving its sustainability goals through the appointment ofinternationally recognised LRQA as our third-party auditor to help verify each hotel’s compliance for key
commitments. We have continued our hard work of eliminating 99% of single-use plastics across all operations
excluding supplier packaging, although we continue to work closely with our suppliers to eliminate single-use
plastics. We estimate our efforts avoid more than 930 metric tons of plastic waste yearly. The Group has upheld
responsible sourcing commitments, verifying 100% responsibly procured coffee, tea, cocoa, vanilla, paper, sugar
and avoiding endangered seafoods.
The Group provided additional paid leave for volunteering in 2023, with every employee eligible for one paid
day a year for charitable causes, to support the communities in which we operate and empower colleagues tocontribute to causes close to their hearts. The result was more than 500 social impact initiatives contributing
over 52,000 volunteer hours to our communities by the dedicated and caring efforts of our colleagues worldwide.
Over the past year, we have made enhancements in our Environmental, Social, and Governance (‘ESG’) Policies
as published on our Mandarin Oriental website, and continue to disclose climate-related financial risks in our
second Task Force on Climate-Related Financial Disclosures. Mandarin Oriental’s annual sustainability progress,
initiatives, achievements, and best practices are covered in more detail in the Group’s annual Sustainability Report.

18 Mandarin Oriental International Limited

The following table shares some of the Group’s sustainability highlights as well as the corresponding United Nations
Sustainable Development Goals (‘UN SDGs’).

FOR THE PLANET
We place great importance on operating sustainably overthe long term as we grow our portfolio of hotels, residences,and exclusive homes around the world. We have madecommitments towards ‘eliminating single-use plastics’and established a programme for responsible procurementthat we intend to steadily grow. Our respect for nature andfor the people who work in the supply chain has been an
important factor in driving these initiatives. Environmental
targets for 2030 have been determined for each hotel
through a Group-wide inventory management plan withconsideration of unique locations, utility types used, andon-site renewable sources.

a) Energy audits in our hotels at three-year intervals provide
insights to hotel operations, which inform recommended
strategies and efficiency projects. 18 energy audits were
performed between 2022 to 2023 in line with guidancefrom the American Society of Heating, Refrigeratingand Air-conditioning Engineers (‘ASHRAE’) Procedures
for Commercial Energy Audits. Results from theseaudits include:• Average estimated savings of energy budget: 8%• Average estimated savings of energy consumption: 11%• Average estimated ROI: 2.27 yearsb) Actively eliminated single-use plastics where possible
across our hotels with verification.
c) Achieved 100% LRQA-verified responsibly sourced coffee,
tea, cocoa, vanilla, sugar and paper. The Group is also
striving towards 100% sourcing cage-free eggs (liquidand shelled), which we anticipate will be achieved by
Q2 2024 (currently at 94% verified rate).
d) Avoided serving 19 types of endangered seafood species
which are listed on Mandarin Oriental’s Endangered
Seafood Avoid List, aligned with the latest WWF
Endangered Seafood Guide.
e) Innovative digital processes continued to significantly
reduce paper usage across operations.
f)

The Group has been actively expanding our sustainability
programme to encompass a good balance of environmental,social and governance components and deepening ourcommitments and goals. Environmental Policy, Human
Rights Policy, Diversity and Inclusion Policy, Modern
Slavery Statement and Supplier Code of Conduct were
published to actively communicate our ESG commitmentson our company website.

g) Winnow Vision’s award-winning AI-powered system wastrialled in some of our kitchens (spanning four properties
representing each major operating region), with a plannedroll-out across all properties starting in 2024. Winnow
reports an estimated annualised total reduction at thefour pilot hotels of US$207,000 net savings after Winnow
cost, 66 tonnes in food waste weight reduced and289 tonnes in CO2e offset.

Annual Report 2023

19

Sustainability Continued

FOR GUESTS AND COLLEAGUES
We foster a culture of inclusivity and empowerment,
where colleagues feel comfortable in being themselves
and in voicing their ideas. We are also well known for
our wellness philosophy and the holistic care of thebody, mind and spirit. We offer sustainably sourced
in-room and spa amenities across our portfolio,
complimentary fitness classes, in-room wellness
videos and signature spa treatments for strong
healthy bodies and to promote mindfulness.

a) Ongoing implementation of WeCare programme ofenhanced health and safety protocols across our portfolio.
b) Roll out of the annual sustainability training, which wascompleted by all colleagues in two formats: eLearningand classroom sessions. The topic was on waste
management.
c) 24 Mandarin Oriental colleagues completed an eLearning
course via GIFT.ed, on sustainability. The course provided
sustainability champions at the hotels with sustainability
related topics regarding sustainable economics, supply
chain and resource use.
d) Organised a series of ‘Inner Strength-Outer Strength’
activities on Global Wellness Day to boost colleagues’
physical health and mental resilience.
e) Continued to support a cultural shift that proactively
encourages Diversity and Inclusion (‘D&I’). Ongoingactions are focussed on raising awareness and education
particularly with senior leadership and executives,
listening and engaging with colleagues on the topic
and weaving D&I into the workplace experience.
f)

20 Mandarin Oriental International Limited

Continued to build a diverse and equitable team in
fostering a culture of inclusivity, empowerment, andequal opportunity for all. There are currently four female
General Managers and nine female Hotel Managers whoare passionate ambassadors of Mandarin Oriental.

FOR COMMUNITIESWe contribute positively to the local communities
we belong to. That means supporting on-the-groundinitiatives that enhance and benefit our immediatesociety. Each one of our colleagues are committed
to identifying impactful ways to support their local
communities and actively engage in initiatives.

a) US-based FANtastic Match donated over US$45,000 to
US colleague charitiesb) 18 years of support for Asian Cultural Council’s Mandarin
Oriental Fellowship for Cultural Heritage Preservationc) In recognising the groupwide ‘MOgiving’ initiative, allcolleagues are offered one-paid day towards volunteeringin 2023.
d) Collectively Mandarin Oriental has clocked over 52,000
hours. In-kind donations of US$196,000 and cash
contributions of US$413,000 were raised, in support ofdiverse social segments in various communities.
e) Over 500 community initiatives conducted by colleagues
in support of local causes chosen by our colleagues.
Initiatives include blood donation drives, mental healthawareness, environment clean-ups, food and otherin-kind donation, and training opportunities for people
with disabilities and special needs.
Some highlights:i)

Mandarin Oriental, Milan has participated for thelast 5 years in ‘Progetto Riparto da ME’ – a program
aimed at accompanying inmates from the Milan
Bollate prison in a path aimed at reintegration
into the world of work, offering orientation, training
opportunities and helping to create throughawareness, a climate and working conditions forthis to happen.

ii) Mandarin Oriental, Macau, supported three students
with mild intellectual disabilities by offering operational
internship opportunity to gain life skills and developinterpersonal relationship.
iii) Mandarin Oriental, Hong Kong, hosted a cocktail
event with Mekong Club with a sharing session by
an industry keynote speaker promoting the insights
and knowledge on human trafficking. Hotel teamcontributed 88 hours and US$2,200 to make theevent a success.
iv) Mandarin Oriental Bosphorus, Istanbul donated
TRY250 (approx. US$8.25) for every booked roomnight to Disaster and Emergency Management
Authority (‘AFAD’) of Turkey in support of post-disasterhumanitarian assistance, a total of US$167,000 was
contributed in 2023.

Annual Report 2023

21

Sustainability Continued

TCFD
Climate change has far-reaching implications that affect us all. To Mandarin Oriental, sustainability is doing theright thing by ourselves, by our colleagues, by our families, and by the planet. We actively monitor and pursue
action to reduce greenhouse gas emissions, and manage climate-related risks and opportunities. This report presents
our climate-related disclosures in alignment with the Task Force on Climate-Related Financial Disclosures(‘TCFD’) framework.
Our disclosure is consistent with TCFD’s All Sector Guidance with two areas pending further advancement –scenario analysis and Scope 3 assessment.
We have undertaken a portfolio-wide sustainability risk assessment in line with the intermediate scenario of
RCP 4.5 (warming between 2°C and 3°C) and will consider further climate scenarios in the next iteration ofthis assessment.
The complexities and uncertainties in Scope 3 measurement pose challenges to deriving meaningful andcomparable figures. We played an active role as an Advisory Group member to advance the Net Zero
Methodology for Hotels, which provides guidance on an industry-accepted approach to Scope 3 assessment.
We have started developing an action plan for assessing and addressing Scope 3 emissions, which includes a
Scope 3 mapping exercise in 2024 to understand the type of data, resources, and enhancements in current
systems and processes required.
TCFD recommendation

Recommended disclosures

Location

Governance
Disclose the organisation’s
governance around climate-relatedrisks and opportunities.

a.

Describe the board’s oversight of climate-related risks
and opportunities.

TCFD, Annual Report,
page 23b.

Describe management’s role in assessing and managing
climate-related risks and opportunities.

TCFD, Annual Report,
page 23

Strategy
Disclose the actual and potential
impacts of climate-related risks andopportunities on the organisation’s
businesses, strategy, and financial
planning where such information
is material.

a.

Describe the climate-related risks and opportunities theorganisation has identified over the short, medium, and long term.

TCFD, Annual Report,
page 24b.

Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial planning.

TCFD, Annual Report,
page 27c.

Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios, including
a 2°C or lower scenario.

TCFD, Annual Report,
page 28

Risk Management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.

a.

Describe the organisation’s processes for identifying andassessing climate-related risks.

TCFD, Annual Report,
page 29b.

Describe the organisation’s processes for managing
climate-related risks.

TCFD, Annual Report,
page 29c.

Describe how processes for identifying, assessing, andmanaging climate-related risks are integrated into theorganisation’s overall risks management.

TCFD, Annual Report,
page 29a.

Disclose the metrics used by the organisation to assessclimate-related risks and opportunities in line with its strategy
and risk management process.

TCFD, Annual Report,
page 30b.

Disclose Scope 1, Scope 2, and if appropriate, Scope 3 GHG
emissions and the related risks.

TCFD, Annual Report,
page 30c.

Disclose the targets used by the organisation to manage
climate-related risks and opportunities and performanceagainst targets.

TCFD, Annual Report,
page 30

Metrics and Targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where suchinformation is material.

22 Mandarin Oriental International Limited

Governance
Board’s oversight of climate-related risks and opportunities
The Board of Directors oversees and provide guidance on the Company’s sustainability and climate-relatedrisks and opportunities.
Information on sustainability and climate-related risks and opportunities are reviewed by the Mandarin
Oriental Audit Committee before they are reported to the Board.
The Group Risk Management Committee meets quarterly and advises the Mandarin Oriental Audit Committee
on key climate-related risks and opportunities for their awareness and action.
The Group Risk Management Committee delegates the responsibility of reviewing the operation andeffectiveness of the Company’s internal risk control systems and procedures to the Functional Audit Committee.
The Functional Audit Committee meets biannually and monitors and manages climate-related risks andopportunities across the Company.
The Sustainability Executive Advisory Panel (‘EAP’) meets quarterly to review the Company’s plans, initiatives
and performance against targets relating to sustainability and climate-related matters.
The EAP provides regular updates on sustainability strategy and performance to the Group Risk Management
Committee and the Committee advises the EAP on action to be taken for key climate-related risks andopportunities.
Senior management representatives who sit on the Board, Mandarin Oriental Audit Committee, Group Risk
Management Committee and Audit Committee participate in EAP meetings and facilitate the integrationof key climate-related risks and opportunities into the Company’s sustainability strategy considerations.
Management’s role in assessing and managing climate-related risks and opportunities
The EAP considers climate-related issues, risks and opportunities and integrate them into the Company’ssustainability strategy and approach. It also provides both resources and mechanisms for accountability.
Greenview, a leading provider of sustainability programmes and data management for the hospitality andtourism sector, sits on the EAP as technical advisor.
The execution of the Company-wide sustainability strategy, including climate strategy, is coordinated by the
Sustainability Department, which is led by the Group Director of Sustainability and Director of Sustainability,
Global Development. The Department monitors hotels’ sustainability progress and verifies their compliancetoward commitments.
Sustainability matters cut across functional departments and the Company has put in place a governancestructure that facilitates extensive and effective collaboration.
The Sustainability Leadership Council translates thematic priorities into workstreams and targeted action items
for implementation by the Working Groups.
Working Groups address sustainability issues that are specific to each core function, while Task Forces address
challenges that could transverse multiple functional departments.
In addition, the Diversity and Inclusion (D&I) Council which reports directly to the EAP, is comprised ofboth Group- and property-level colleagues, and focusses on enhancing employee engagement and driving
D&I-relevant performance.
Each property has a designated Sustainability Champion, supported by a Sustainability Committee. Theyleverage on Company-wide resources and tools to implement location-specific sustainability initiatives,
including climate-related mitigation and adaptation measures as necessary
An annual budget is reviewed and allocated for executing the Company’s sustainability strategy.
The EAP regularly assesses hotels’ performance against Company-wide sustainability targets which are disclosed
in our annual sustainability reports. They include targets that relate to energy and carbon reductions, renewableenergy use and waste reduction.
Sustainability performance is considered in the performance bonuses of top management personnel, including
all hotel General Managers.
Annual Report 2023

23

Sustainability Continued

Mandarin Oriental International Limited: Board of Directors(includes Group Chief Executive, Chief Financial Officer)

Mandarin Oriental Audit Committee(includes Group Chief Executive, Chief Financial Officer)

Group Risk Management Committee(includes Chief Financial Officer, Chief Operating Officer, Chief Technical Services Officer)

Sustainability Executive Advisory Panel

Functional Audit
Committee(includes Group Chief Executive,Chief Financial Officer, Chief Operating Officer,
Chief Technical Services Officer, Group Director of Sustainability,
Group Director of Engineering Operations)(includes Group Directorof Engineering Operations)Sustainability Department

Diversity and Inclusion(‘D&I’) Council

Sustainability
Leadership Council

Task Forces

Working Groups

Delegate/
Oversee

ReportMonitor/
Review

Sustainability Champions
and Committees

Strategy
Climate-related risks and opportunities identified over the short, medium and long-term
A sustainability risk assessment was conducted by Greenview for our portfolio. It considered risks associated withclimate, water, socioeconomic factors, biodiversity and regulations for each of our properties. Both acute (floods,
droughts and cyclones) and chronic (change in long term precipitation, temperature and sea level rise) physicalclimate risks, as well as transition climate risks were assessed. Assessing climate-related risks and opportunities inall geographical locations where the Company operates in allows us to identify the material risks and opportunities
which may have significant financial impact on our portfolio.
Transition climate risks were assessed to have a larger impact in the short and medium term, while physical risks
were more significant in the long term. The following time horizons are used:
Short term: Less than 3 years
Medium term: 3-7 years
Long term: More than 7 years

24 Mandarin Oriental International Limited

Impact

Transition Risks••

Environmental, social and governance regulations thatare relevant to locations where we operate are tracked via
Greenview’s Global Policy ESG Tracker.

Increasing costs directly
or indirectly from carbon
pricing policies (e.g. tax)

Increased operational costs
due to energy prices, rawmaterial prices and higher
compliance costs•

Energy and emissions targets are set for every property.

••

Increased requirements
associated with green
building policies

Increased energy efficiency
and other green building-related
requirements

Properties undergo regular energy audits (generally every
three years) to identify and inform owners of necessary
improvement projects for implementation.

•

Increased reporting anddisclosure requirements•

New hotel developments will prioritise low-carbon initiatives(e.g. reducing gas usage) with consideration for inclusionof energy and emission targets in owner’s agreements.

•

Increased pricing ofenergy (originating fromfossil fuels)

•

•

•

Actions

Tightening regulations on
climate-related disclosuresand emissions reporting(e.g. ISSB1-aligned
climate reporting)

Short and medium term

ImpactPhysical Risks
Acute
From increased severity of
extreme weather events suchas cyclones and floods••

Cyclone risk:
High for 15% of
the portfolio•

Increased capital costs fromdamaged properties•

Actions•

Reduced revenue fromproperty closures andreduced travel demand

Emergency Response Plans and Business Continuity
Plans are tested and audited periodically for the safetyof staff and guests.

•

Insurance coverage has been revised to include
climate risks.

•

Increased insurance premiums••

Reduced revenue and higher
costs from negative impacts on
workforce (e.g. health, safety,
absenteeism)

Sustainability risk assessment results are used to informmitigation and adaptation action plans.

•

Every year, all properties implement at least one
environmental efficiency project that demonstrates
measurable improvements in energy, water or waste.

•

Properties located in water stressed regions prioritise
implementation of water reduction initiatives.

•

We have a preference to work with suppliers that prioritisesustainability per our Supplier Code of Conduct.

Drought risk:
High or extremely highfor a fifth of the portfolio

Short and medium term
Chronic
Changes in precipitation
patterns, extreme variability
in weather pattern, and sea
level rise•

Precipitation andtemperature changes:
High/very high long-term
impact on a third of
the portfolio•

Sea level rise:High vulnerability fora tenth of the portfolio

Long term

1•

Increased insurance premiums•

Reduced availability of
insurance in locations withhigh physical climate risks•

Increased operational costs due
to increased heating and coolingneeds, as well as increased
water prices in locations withhigh water scarcity•

Increased capital costs due todamage to facilities•

Reduced revenue from reduced
travel demand•

Increased cost of supplies anddisruptions to availability

The International Sustainability Standards Board (‘ISSB’) is tasked to develop standards for a global baseline of sustainability disclosures focussed
on the needs of investors and the financial markets.

Annual Report 2023

25

Sustainability Continued

ImpactOpportunities
Energy Source/Resilience
Use of renewable energy andadoption of efficiency measures•

Reduced exposure to future
fossil fuel price increases•

We are steadily increasing renewable electricity use
towards our target.

•

Reduced exposure andsensitivity to changes inpricing of GHG emissions•

We are exploring the feasibility of a centralised renewableenergy purchase strategy to accelerate our renewableenergy usage under optimal terms and pricing.

•

Reduced operational costs
from increased efficiency ofenergy and water use•

Our hotels promote green transportation modes, including
the use of Electric Vehicles (‘EV’) in transport fleets and theprovision of EV charging stations.

•

Increased operational
resilience under changing
climate conditions•

Increased revenue throughleadership position insustainable luxury hospitality•

We uphold our sustainability programme to the internallyrecognised gold standard for sustainable tourism – GSTC
Criteria. The Company is GSTC-committed and has 11
certified hotels as of 2023. By 2025, we aim to be 100%
GSTC certified.

•

Staff and guests are engaged for feedback to improve oursustainability programme and sustainable offerings.

•

We are piloting energy modelling in the building designphase to better gauge energy use and identify energy
efficiency opportunities.

•

Our Responsible Hotel Development Guideline provides
directions for addressing sustainability in design andconstruction.

•

Some of our properties have pursued alignment withsustainable building certificates (e.g., Leadership in
Energy and Environmental Design (‘LEED’)).

Short, medium and long term

Products and Services
Shift in consumer preferences
toward sustainable options

Actions

Short, medium and long term

Resource Efficiency
Move towards highly efficientand climate resilient buildings•

Reduced operating costs
through efficiency gains•

Reduced costs from
implementation of mitigation
measures against extreme
weather events

Short, medium and long term•

Increased market value of
properties that are highly
rated as energy efficient
and/or climate resilient

26 Mandarin Oriental International Limited

Impact on businesses, strategy and financial planningImpact on business and strategy
Mandarin Oriental sets property-level environmental targets (energy, water and waste) which are developed throughassessing property-specific data and what is practically achievable based on the property’s specific circumstances(e.g. building and equipment) and planned efficiency improvement projects. Audits are carried out at regular intervals
to identify the efficiency improvement projects to be prioritised.
In 2023, we modelled our decarbonisation pathway to assess our emissions trajectory against our carbon target andthe Science-based Target (‘SBT’) aligned 1.5°C pathway. The model took into account each property’s historicalenergy usage for electric and non-electric sources, and forecasted future emissions based on efficiency improvementsfrom planned projects (such as heating, ventilation, and air conditioning (‘HVAC’) upgrades, renovations andequipment changes) as well as current and projected renewable energy use. This is in line with the recommendationsof the Hotel Net Zero Methodology to model the portfolio’s baseline and decarbonisation pathways and study
opportunities for energy efficiency and set scenarios for future use of renewable energy.
The results showed that we are well on track to meet our current target of halving emissions intensity by 2030. There is,however, a gap to aligning with the more ambitious 1.5°C pathway. The gap would require higher renewable energy
targets than what is currently forecasted to be practicable. Presently, renewable energy sources are not widely available
across some regions of the world (e.g. APAC) as the grid has not reached this readiness level. The cost of renewableenergy procurement is also a challenge. To address this, Mandarin Oriental is exploring the formulation of a centralised
renewable energy purchase strategy to accelerate our renewable energy usage under optimal terms and pricing.
To align with the Science-based Targets Initiative (‘SBTi’) would also require us to address Scope 3 emissions.
We recognise that this is increasingly important under the backdrop of tightening regulations, such as ISSB’s
launch of sustainability and climate-related disclosure standards (IFRS S1 and S2). These standards are increasingly
adopted by jurisdictions worldwide and would require reporting of Scope 1, 2 and 3 emissions. We recognise that
this is increasingly important under the backdrop and after in-depth discussions across the EAP, we have identified
an initial roadmap to addressing Scope 3.
In 2024, we will assess data requirements and what resources would be necessary to bridge any gap in current
capabilities and processes. We would also identify material categories across the 15 internationally-recognised
Scope 3 categories. In 2025 and beyond, we will build our Scope 3 measurement capabilities in preparation forreporting and strengthen engagement with stakeholders, with a focus on major suppliers to start, to collectively
reduce Scope 3 emissions.
As a GSTC-Committed company, we align our sustainability programme with the framework of GSTC Criteria
to address all key sustainability issues for our sector. Many of our existing targets and initiatives which address
waste and sustainable sourcing are in synergy with reducing emissions and addressing climate change-related issues.
They include:
Reduce waste intensity by 50 % by 2030 (from 2012 baseline)
Elimination of 99% of single-use plastics, excluding supplier packaging
100% responsibly sourced coffee, tea, vanilla, cocoa and sugar
100% sustainably sourced paper
Increase sourcing of sustainably certified seafood
As of 2023, 11 of our hotels have received GSTC Certification. We aim to have our entire portfolio GSTC certified
by 2025.

Annual Report 2023

27

Sustainability Continued

Impact on financial planning
Operating Cost: To advance our 2030 Environmental Targets, we allocate a budget for each hotel to undertake atleast one efficiency initiative annually. Through these initiatives, we seek to achieve measurable improvements inthe priority areas identified for each hotel, which are informed by sustainability risk assessment results. Enhancing
operational efficiencies will reduce associated operating expenses and reduced exposure and sensitivity to changes
in carbon tax rates.
Indirect Cost: We invest more deeply in insurance coverage and preventive maintenance programmes to minimise
exposure to climate-related physical risks, particularly in regions where the likelihood of more frequent and severe
extreme weather events is higher.
Revenues: We endeavour to maintain a strong competitive position by continually enhancing our sustainability
performance and sustainable offerings to cater to increased consumer preference for sustainable products andservices. We continue to refine our sustainable offerings through market research and active engagement of guests
for feedback.
Acquisitions/Divestments and Access to Capital: The Company considers climate-related risks in acquisition anddivestment decisions, as well as sustainable financing opportunities (e.g. sustainability-linked loans) to leverage onin the implementation of our sustainability strategy.

Resilience of strategy, taking into account different scenarios, including a 2 degree celsius or lower scenario
Our sustainability risk assessment was conducted in accordance with the RCP 4.5 scenario. This scenario correlateswith the intermediate pathway where temperature increase ranges from 2°C to 3°C. This temperature scenario waschosen as it is one of the most plausible pathways. Please refer to the tables under the Strategy section for moredetails on our key sustainability and climate risk findings and opportunities identified in response.
In our decarbonisation pathway modelling exercise, we analysed the Company’s emissions trajectory against our target
to halve carbon intensity by 2030, as well as the more ambitious 1.5°C pathway. In the coming year, we intend to carryout the next sustainability risk assessment with consideration of other recommended temperature scenarios alongsidepublicly accessible transition scenarios. This move aims to integrate the findings of the sustainability risk assessment
and decarbonisation pathway model and enhance our capacity to effectively address climate change challenges.

28 Mandarin Oriental International Limited

Risk management
Process for identifying and assessing climate-related risks
Mandarin Oriental undertakes sustainability risk assessments to identify property-level physical and transition
climate risks. Hotels perform overall risk assessment at the property-level annually. As part of this assessment, thephysical climate risk of Mandarin Oriental’s key assets is evaluated based on the likelihood, financial and reputational
impact, and the speed at which the risk materialises, to then determine the inherent risk exposure in a scale. Transition
risks are also monitored by keeping abreast of key sustainability related policy changes. Environmental, social andgovernance regulations for the locations that we operate in are identified via Greenview’s Global Policy ESG Tracker.
Mitigation measures have been in place to reduce the risk exposure for further monitoring at the residual level.
We will continue to refine our process to improve identification and assessment of climate-related risks.

Processes for managing climate-related risks
Climate-related risks are managed under Mandarin Oriental’s Risk Management Framework, which is based on
ISO 31000 and COSO principles. The framework includes four main steps: risk identification, risk assessment, risktreatment, and risk reporting and monitoring. This process is informed by the portfolio-wide sustainability risk
assessment conducted by our third-party consultant and a comprehensive risk assessment by our insurers.
Risks are accepted if they fall within the Company’s risk tolerance level, but if they surpass this threshold, they are
mitigated or eliminated. Climate-related risks may be accepted if mitigated to an appropriate level. Strategies for
mitigating these risks include comprehensive insurance coverage for natural disasters, increased adoption of clean
renewable energy, and the implementation of energy and water efficiency projects, as detailed in the ‘Impact on
Business and Strategy’ section.

Integration into overall risk management
Mandarin Oriental Audit Committee mandates that the Company conducts its business in accordance with theGroup Risk Management Policy. To oversee adherence and reinforce enforcement of this policy, we have establisheda Group Risk Management Committee (‘GRMC’) vested with the authority to ensure the Company’s risk
management objectives are achieved. The GRMC comprises key members from various executive functions,
including Finance, Operations, IT, Legal, and Engineering, and convenes at least biannually.
The Functional Audit Committee evaluates the Company’s primary climate risks, uncertainties, and potential
alterations to the risk profile. It assesses the functionality and efficacy of the Company’s internal control systems(financial, operational, and compliance), along with the procedures employed for monitoring and mitigating theserisks. Regular identification and analysis of climate risks, as well as the review of climate risk management processes,
are conducted through the Functional Audit Committee, with inputs from sustainability and climate risk assessments
conducted by our third-party consultant and insurers.

Annual Report 2023

29

Sustainability Continued

Metrics and targets
Metrics used
Mandarin Oriental uses the metrics below in relation to climate-related risks and opportunities.
EnergyMetrics used

2023 Performance

Total Energy Consumption (GJ)

1,871,590

Total Energy Consumption per square metre (MJ/m )1,422

Percentage of Renewable Energy Use2

8%2

Total GHG Emissions (Scope 1 and 2) (metric tons kg CO2e)203,660

Total GHG Emissions per square metre (kg CO2e/m )

155

2

Water
Metrics used

2023 Performance

Total Water Consumption (m )5,172,150

3

Total Water Consumption per square metre (Litres/m )
2

3,931

Waste
Metrics used

2023 PerformanceNon-diverted Waste per square metre (kg/m )8.32

Waste Diversion Rate

40%

2

GHG emissions
Mandarin Oriental’s GHG reporting scope covers all 35* hotels that were fully operational in 2023.
Greenhouse Gas Emissions†2023 Performance

Total GHG Emissions (metric tons CO2e)203,660

Scope 1 Emissions (metric tons CO2e)

25,080

Scope 2 Emissions (metric tons CO2e)

178,580

GHG Emissions per square metre(kg CO2e)

155* Properties excluded: Mandarin Oriental, Singapore (under renovation in 2023); Mandarin Oriental, Costa Navarino and Mandarin†

Oriental Savoy, Zurich (opened within 2023).
GHG emissions are based on market-based calculations.

Targets used and performance against targets
To assess and manage relevant climate-related risks and opportunities, Mandarin Oriental set the following 2030
Environmental Targets:

2
32030 Targets

2023 Achievement

50% GHG intensity reduction 3

29% reduction

15% renewable energy use

8%Either produced onsite or procured
Baseline year 2012

30 Mandarin Oriental International Limited

Financial Review

Results

Management BusinessOverall
In 2023, Mandarin Oriental delivered much improved
operating performance and profitability compared tothe prior year, driven by growth in revenue.
The growth in top-line performance was achieved in all
regions, with hotels in Asia recording a notable reboundin both rates and occupancy. Rate performance in
EMEA was strong with the vast majority of our hotels
reporting an improvement over record rates in 2022,
demonstrating the competitiveness of our portfolio in theregion. Overall, combined total revenue from all hotels
under management in 2023 was US$1,890 million,
21% up from 2022.
The Group’s consolidated revenue, consisting ofrevenues from subsidiary hotels, and management
and residences branding fees from the Management
Business, was US$558 million, 23% higher than 2022,with all subsidiary hotels delivering higher revenues.
The Group uses underlying 1 earnings before interest,
tax, depreciation, and amortisation (‘EBITDA’) to
analyse operating performance. In 2023, the Group
achieved underlying EBITDA of US$178 million,
59% higher than 2022. Underlying EBITDA bybusiness activity is shown below:
2023
US$m

2022
US$m

53

34

– Subsidiary hotels

102

45

– Share of results of associate and   joint venture hotels

24

32Management Business
Owned Hotels

1

126

77

Property Development(1)–

Underlying EBITDA

178

111

2023
US$m

2022
US$m

Revenue*

94

68

Underlying EBITDA fromManagement Business

53

34

Less: depreciation and amortisation

(9)

(9)

Underlying operating profit

44

25

Net financing income

3

–

Tax

(6)

(8)

Underlying profit attributable
to shareholders

41

17*Includes management fees from subsidiary hotels

Revenue in the Management Business consists ofhotel and residences management fees, and residences
branding fees. The Group’s strategic focus remains thegrowth of the Management Business, by accelerating
the development pipeline over time.
In 2023, total hotel management fees were
US$78 million, representing a 30% increase
compared to 2022. Growth of management fees in
Asia and Europe was exceptionally strong, with all
hotels except Singapore contributing higher fees.
The hotel in Singapore was under renovation forsix months in 2023, and if we exclude this, hotels
in Asia would have achieved a 97% increase in fee
income compared to 2022.
Residences branding fees, generally earned when
individual residences are sold, or certain development
milestones are achieved, were more than triple the fees
earned in 2022. This outperformance in branding fees
was mainly driven by Mayfair in London and Fifth
Avenue in New York.
As a result of increased hotel management feesand branding fees, underlying EBITDA of theManagement Business was US$53 million, a 55%
improvement from 2022.

The Group uses ‘underlying profit’ in its internal financial reporting to distinguish between ongoing business performance and non-trading
items, as more fully described in note 34 to the financial statements. Management considers this to be a key measure which provides
additional information to enhance understanding of the Group’s underlying business performance.
Annual Report 2023

31

Financial Review Continued

Owned Hotels
Following the sale of the Jakarta hotel in June 2023,
the Group has an equity interest in 13 hotel properties.
In 2023, the Group’s Owned Hotels reported a
combined EBITDA of US$126 million, a 63% increase
compared to 2022. Most properties maintained or
improved their earnings, with Hong Kong and Tokyo
achieving a strong rebound in performance as thosemarkets exited COVID restrictions at the end of 2022.
EBITDA in 2022 included US$5 million of
government financial support and US$3 million ofother income primarily from insurance proceeds.

Underlying EBITDA fromsubsidiary hotels

2023
US$m

2022
US$m

487

401

102

Overall, subsidiary hotels reported an underlying profit
of US$45 million, compared to an underlying loss of
US$17 million in 2022, primarily driven by strong
recovery of operating performance of Hong Kong,
Tokyo, and continued strength in earnings from
London, Paris and Munich.

Associate and joint venture hotels
The Group’s share of results from associate and joint
venture hotels was as follows:

Subsidiary hotels
The Group’s results from its subsidiary hotels wereas follows:

Revenue

Depreciation and amortisation for subsidiary hotels,
which is a non-cash item, was lower in 2023. Net
financing charges were also lower due to higher interest
income from short-term deposits. Tax for the year was
US$5 million, compared to US$1 million in 2022.

2023
US$m

2022
US$m

Underlying EBITDA from associate
and joint venture hotels

24

32

Less: depreciation and amortisation

(15)

(16)

45

Underlying operating profit

9

16

(9)

(5)

Less: depreciation and amortisation

(43)

(49)

Net financing charges

Underlying operating profit/(loss)

59

(4)

Tax

–

(1)

Net financing charges

(9)

(12)

Tax

(5)

(1)

Underlying profit attributable
to shareholders–

10

Underlying profit/(loss) attributable
to shareholders

45

(17)

In 2023, subsidiary hotels delivered a revenue of
US$487 million and an EBITDA of US$102 million,
significantly higher than the revenue of US$401
million and the EBITDA of US$45 million in 2022.

The majority of associate and joint venture hotels
delivered improved revenue and EBITDA in 2023,
offset by lower contributions from Singapore due toits closure for renovation, and Miami due to softer
local leisure demand in America leading to a marginal
decrease in rates.
As a result, the Group made no profit in aggregate
from its associate and joint venture hotels in 2023,
compared to a profit of US$10 million in 2022.

32 Mandarin Oriental International Limited

Underlying earnings attributable to shareholders
The underlying profit attributable to shareholders is
as follows:

2023
US$m

2022
US$m

Operating activities

141

56

(17)

Investing activities
Capital expenditure on
existing properties

(14)

(13)

–

10

Redevelopment of the Causeway
Bay site

(71)

(30)

45

(7)

Net proceeds from asset disposals

76

131

Property Development

(5)

(2)

Total underlying profit attributable
to shareholders

Net repayment from associates
and joint ventures

47

2

81

8

Others(7)(3)

Financing activities
Net repayment of borrowings

(190)

(116)

Dividends

(19)

–

Other

(6)

(6)

Net (decrease)/increase in cash

(43)

21

Cash and cash equivalents
at 1st January

226

213

Management Business

2023
US$m

2022
US$m

41

17

45

Cash flow
The Group’s consolidated cash flows are summarised
as follows:

Owned Hotels– Subsidiary hotels– Share of results of associate and   joint venture hotels

In light of much improved operating performance fromthe vast majority of the hotels, both the Management
Business and subsidiary hotels achieved excellent
growth in profitability with total underlying profit of
US$81 million in 2023, compared to US$8 million
in 2022.

Non-trading items
2023
US$m

Changes in fair value ofinvestment properties
Gain on sale of a subsidiary/
asset disposals
Total

(487)

2022
US$m

(104)

41

47

(446)

(57)

In 2023, the Group recorded a net non-trading lossof US$446 million, predominantly due to a 17%
non-cash reduction (US$488 million) in the fairvalue of the Causeway Bay site under development,
valued at US$1,972 million at the end of 2023.
The valuation methodology for the project was
updated to the residual value method, in line withnormal market practice as the development projectprogresses toward completion. This loss was partially
offset by a US$41 million net gain realised from thesale of the Jakarta hotel in June. In 2022, a non-trading
loss of US$57 million was recognised also primarily in
relation to the Causeway Bay site under development,
which represented a 3% decrease in the valuation of
the site.

7(8)Cash and cash equivalents
at 31st December

190

226

Gross debt at 31st December

(415)

(602)

Closing net debt at 31st December

(225)

(376)

Effect of exchange rate changes

The Group’s cash inflow from operating activities was
US$141 million in 2023, substantially higher than the
US$56 million in 2022, predominantly due to better
earnings achieved by Owned Hotels and higher fee
income from the Management Business.
In investing activities, the Group generated a net cash
inflow of US$31 million, mostly due to the sale of the
Jakarta hotel for US$76 million and repayments ofloans from the Madrid hotel of US$64 million. Thiswas partially offset by the continued investment in theGroup’s existing hotel properties of US$14 million, themajority of which was spent on the renovation of the
Geneva hotel, and investment in the Causeway Bay site
under development in Hong Kong of US$71 million,
as well as additional loans provided to the Miami hotelof US$17 million. The Group is committed to investing
another US$351 million in the Causeway Bay site
under development which is expected to be completed
in the first half of 2025, with a mix of external debt
and existing cash reserves.

Annual Report 2023

33

Financial Review Continued

Dividends
A final dividend of US¢3.50 per share has been
proposed to the Board. This, together with the interim
dividend of US¢1.50 per share declared, will result in
total dividends of US¢5.00 per share.

The Group, excluding associates and joint ventures,
had committed borrowing facilities totalling
US$1,074 million, of which US$415 million was
drawn at 31st December 2023. The principal amounts
due for repayment are as follows:

Treasury activities
The Group manages its exposure to financial risk using
a variety of techniques and instruments. The main
objective is to manage foreign exchange and interest
rate risks and to provide a degree of certainty in respectof costs. At the end of 2023, the Group had fixed or
capped interest rates on 51% of its gross borrowings.
In respect of specific hotel financing, borrowings arenormally taken in local currency to hedge partially theinvestment and the projected income. At 31st December
2023, the Group’s net assets were denominated in thefollowing currencies:
Shareholders’ funds/
net assets

Hong Kong dollar

US$m

%

US$m

%

1,923

65

2,863

62

Euro

418

14

597

13

United Kingdom Sterling

209

7

418

9

United States dollar

234

8

298

6

Singapore dollar

64

2

264

6

Thai baht

16

1

94

2

Swiss franc

62

2

62

1

Others
Total

34

1

41

1

2,960

100

4,637

100

*See supplementary information section below.

2

Adjusted
shareholders’ funds/
net assets*

Facilities
committed
US$m

Facilities
drawn
US$m

Unusedfacilities
US$mWithin one year

754

414

340

Between one and two years

320

1

319

Between two and three years

–

–

–

Between three and four years

–

–

–

Between four and five years

–

–

–

Beyond five years
Total

–

–

–

1,074

415

659

At 31st December 2023, consolidated net debt was
US$225 million, and gearing was 8%, lower thanconsolidated net debt of US$376 million and gearingof 11% at 31st December 2022. Reduced net debt was
primarily driven by the proceeds from the sale of the
Jakarta hotel (US$76 million), repayment of loans
from the Madrid hotel (US$64 million), and improved
operating cash inflows, partially offset by investmentin the Causeway Bay site under development, as well as
ongoing hotel capital expenditure. Gearing was 5% ofadjusted shareholders’ funds2 at 31st December 2023,
lower than the prior year of 8%.
The Group’s liquidity position remains robust with
US$659 million of committed, undrawn facilities
in addition to its cash balances of US$190 million.
The average tenor of the Group’s borrowings was
0.9 years compared to 1.8 years in 2022. In February
2024, the Group has refinanced bank facilities of
US$409 million for three to five years.

Adjusted shareholders’ funds take into account the fair market value of the Group’s freehold and leasehold interests (which are accounted
for at amortised cost).

34 Mandarin Oriental International Limited

Interest coverPrincipal risks and uncertainties

EBITDA is used as an indicator of the Group’s
ability to service debt and finance its future capital
expenditure, although there are no cash-based
covenants in the Group’s debt facilities. Interest cover3
in 2023 was 7.1 times, higher than the 4.9 times
interest cover in 2022.

A review of the principal risks and uncertainties facing
the Group is set out on pages 134 to 140.

Supplementary information
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 amortised cost model, the Directors
continue to review on an annual basis the fair market
values in conjunction with independent appraisers.
The fair market value of both freehold and leasehold
land and buildings 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 shown in thetable below.
The decrease in 2023 adjusted shareholders’ funds
was primarily due to the total loss attributable toshareholders of US$365 million, mainly due to the
17% decrease in valuation of the Causeway Bay site
under development, partially compensated by the net
gain on sale of the Jakarta hotel.
2023

3

Accounting policies
The Directors continue to review the developments
in International Financial Reporting Standards andtheir impact on the Group’s accounting policies.
The accounting policies adopted are consistent withthose of the previous year, except that the Group
has adopted the IFRS 17 – Insurance Contracts,
Disclosure of Accounting Policies – Amendments to
IAS 1 and IFRS practice Statement 2, Amendment to
IAS 12 – Deferred Tax related to Assets and Liabilities
arising from a Single Transaction, and Amendment
to IAS 12 – International Tax Reform – Pillar Two
Model Rules. This is more fully detailed in the note 1‘Basis of preparation’ in the financial statements. The
adoption of the standard and amendments does nothave a material effect on the financial statements.

Matthew Bishop
Chief Financial Officer
7th March 2024

2022

Per share
US$m
US$

US$m

Per share
US$

Shareholders’ funds/
net assets

2,960

2.34

3,294

2.61

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

1,677

1.33

1,603

1.26

Adjusted shareholders’funds/net assets

4,637

3.67

4,897

3.87

Interest cover is calculated as underlying EBITDA (including the Group’s share of underlying EBITDA from associates and joint ventures)
before the deduction of amortisation/depreciation of right-of-use assets and net of actual lease payments, divided by net financing charges(including the Group’s share of net financing charges from associates and joint ventures) before the deduction of capitalised interest andexcluding interest on lease liabilities.
Annual Report 2023

35

Directors’ Profiles

Ben Keswick Chairman
Ben Keswick joined the Board as Managing Director
in April 2012 and held the position until June 2020.
He has been Chairman since 2013. He was also
managing director of Jardine Matheson from 2012
to 2020. He has held a number of executive positions
since joining the Jardine Matheson group in 1998,
including finance director and then chief executive
officer of Jardine Pacific between 2003 and 2007,
and group managing director of Jardine Cycle &Carriage until March 2012. He is executive chairmanof Jardine Matheson and chairman of DFI RetailGroup and Hongkong Land. He is also chairmanof Jardine Cycle & Carriage and a commissioner of
Astra. He has an MBA from INSEAD.
John Witt* Managing Director
John Witt rejoined the Board as Managing Director
in June 2020, having previously served as the Chief
Financial Officer between 2000 and 2010. He has beenwith the Jardine Matheson group since 1993 and has
held a number of senior positions, including groupfinance director of Jardine Matheson from 2016 to2020 and the chief financial officer of Hongkong Land.
John is chairman of Jardine Matheson Limited, groupmanaging director of Jardine Matheson and managing
director of DFI Retail Group and Hongkong Land.
He is also a director of Jardine Pacific, as well as
a commissioner and chairman of the executive
committee of Astra. John is a Chartered Accountant
and has an MBA from INSEAD.

* Executive Director
36 Mandarin Oriental International Limited

Laurent Kleitman* Group Chief Executive
Laurent Kleitman joined the Board as Group Chief
Executive in September 2023. His career is centredon building and leading iconic brands, including in
high-end luxury segment, as well as growth strategies
focussed on customer-centric innovation andexperience. He was previously President and Chief
Executive of Parfums Christian Dior, the largest
luxury fashion beauty business of LVMH, before
which he was President of the Consumer Beauty
division of Coty in New York and held global andregional leadership roles at Unilever in UK, Europe
and Asia.
Matthew Bishop* Chief Financial Officer
Matthew Bishop joined the Board as Chief Financial
Officer in 2021. A Chartered Accountant, he joined
the Jardine Matheson group in 2009 and held anumber of senior finance positions across the group,
including most recently group treasurer of Jardine
Matheson since January 2019. He was previously adiplomat with the Foreign & Commonwealth Officein Beijing and London.
Jinqing Cai
Jinqing Cai joined the Board in 2021. She is a memberof the Audit Committee of the Company. She is thepresident, Greater China at Kering, vice chairman of
Teach for China and an independent non-executive
director of Xiaomi Corporation. Jinqing was former
president and chairman of Christie’s China.

Adam Keswick
Adam Keswick joined the Board in 2012. Having
joined Jardine Matheson in 2001, he was appointed to
the Jardine Matheson board in 2007 and was deputy
managing director from 2012 to 2016. Adam is adirector of DFI Retail Group and Hongkong Land.
He is also a director of Ferrari NV, Schindler 1 andYabuli China Entrepreneurs Forum and vice chairmanof the supervisory board of Rothschild & Co.
Archie Keswick
Archie Keswick joined the Board in 2019. Having
joined the Jardine Matheson group in 2007, he held anumber of senior executive positions within the group,
including most recently CEO, Pizza Hut Vietnam andthe general manager of The Landmark Mandarin
Oriental, Hong Kong.

Richard Solomons
Richard Solomons joined the Board in 2021. He is the
Chairman of the Audit Committee of the Company.
He is the non-executive chairman of Rentokil Initial plc
and the chair of its nomination committee. He is also
the non-executive chairman of HBG Limited, as wellas the chair of its advisory committee and remunerationcommittee. Richard was previously the chief executive
officer of InterContinental Hotels Group plc and a
non-executive director of Aston Martin Lagonda
Global Holdings plc and Marks and Spencer Group plc.

Y.K. Pang
Y.K. Pang joined the Board in 2016. He is a memberof the Audit Committee of the Company. He is deputy
managing director and chairman of Hong Kong ofJardine Matheson, and chairman of Jardine Pacific.
He has held a number of senior executive positions in
the Jardine Matheson group, which he joined in 1984,
including chief executive of Hongkong Land between
2007 and 2016. Y.K. is also deputy chairman of
Jardine Matheson Limited, and a director of Gammon,
Hongkong Land and Jardine Matheson (China).
He is chairman of the Hong Kong Tourism Boardand the Hong Kong Management Association, anda member of the Council and General Committee ofthe Hong Kong General Chamber of Commerce andthe Employers’ Federation of Hong Kong. Y.K. will beretiring from the Board and the Audit Committee of
the Company on 31st March 2024.

1

Adam Keswick will be retiring from the board of Schindler on 19th March 2024.
Annual Report 2023

37

Consolidated Profit and Loss Accountfor the year ended 31st December 2023

2023

2022

Note

Underlying
business
performance
US$m

Non-trading
items
US$m

2

558.1

Cost of sales

Total
US$m

Underlying
business
performance
US$m

Non-trading
items
US$m

Total
US$m

–

558.1

454.1

–

454.1

(308.7)–(308.7)(302.7)–(302.7)Gross profit

249.4

–

249.4

151.4

–

151.4

Selling and distribution costs(35.6)–(35.6)(27.0)–(27.0)

Administration expenses(116.7)–(116.7)(109.2)–(109.2)

5.2

(0.4)

4.8

5.7

–

5.7

Revenue

Other operating income/(expense)
Change in fair value ofinvestment properties

12–(486.7)(486.7)–(104.1)(104.1)Gain on sale ofa subsidiary/asset disposals

8

–

43.8

43.8

–

40.6

40.6

Operating (loss)/profit

3

102.3

(443.3)(341.0)20.9(63.5)(42.6)

Financing charges(17.6)–(17.6)(16.7)–(16.7)

Interest income

7.7

–

7.7

2.3

–

2.3

Net financing charges

4

(9.9)

–

(9.9)

(14.4)–(14.4)

Share of results of associates
and joint ventures

5

(0.3)

(0.6)

(0.9)

9.7

–

9.7

92.1

(443.9)(351.8)

16.2(63.5)(47.3)(11.0)(2.5)(13.5)

(8.5)

6.4

(2.1)

81.1

(446.4)(365.3)

7.7(57.1)(49.4)

81.0(446.4)(365.4)

7.6(57.1)(49.5)

0.1

–

0.1

0.1

–

0.1

81.1

(446.4)(365.3)

7.7(57.1)(49.4)

US¢

US¢

US¢

US¢

– basic

6.41(28.91)

0.60(3.92)– diluted

6.41(28.91)

0.60(3.92)(Loss)/profit before tax
Tax

6(Loss)/profit after tax
Attributable to:Shareholders of the Company

7&8

Non-controlling interests(Loss)/earnings per share

38 Mandarin Oriental International Limited

7

Consolidated Statement of Comprehensive Income
for the year ended 31st December 2023

Note

Loss for the year

2023
US$m

2022
US$m

(365.3)(49.4)

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

16

(2.5)

(2.1)

Revaluation surplus of right-of-use assets before transfer to investment properties

11

–

79.8

Tax on items that will not be reclassified

6

0.4

0.3

(2.1)

78.0

– net gain/(loss) arising during the year

34.0

(58.2)– transfer to profit and loss

33.5

–

(15.1)

16.6

1.3

(2.4)

0.4

0.7

54.1

(43.3)

52.0

34.7(313.3)(14.7)(314.2)(14.7)

0.9–(313.3)(14.7)

Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences

Cash flow hedges– net (loss)/gain arising during the year
Tax relating to items that may be reclassified
Share of other comprehensive income of associates and joint ventures

Other comprehensive income for the year, net of tax
Total comprehensive expense for the year

6

Attributable to:Shareholders of the Company
Non-controlling interests

Annual Report 2023

39

Consolidated Balance Sheetat 31st December 2023

Note

2023
US$m

2022
US$m

Net assets
Intangible assets

9

43.7

45.7

Tangible assets

10

618.6

916.3

Right-of-use assets

11

229.1

242.4

Investment properties

12

2,060.3

2,472.6

Associates and joint ventures

13

155.8

203.8

Other investments

14

14.0

14.0

Deferred tax assets

15

14.0

14.2

Pension assets

16

0.6

3.0

Non-current debtors

17

Non-current assets

10.9

12.2

3,147.0

3,924.2

5.0

5.0

17

80.3

90.5

1.7

6.8

Cash and bank balances

18

178.8

226.2

265.8

328.5

Assets classified as held for sale

19

331.9

–

597.7

328.5

Current creditors

20(158.0)(159.1)

Current borrowings

21(414.9)(2.2)

Current lease liabilities

22

(5.8)

(5.9)

StocksCurrent debtors
Current tax assets

Current assets

Current tax liabilities(22.1)(18.4)(600.8)(185.6)(24.1)–

Current liabilities(624.9)(185.6)

Net current (liabilities)/assets(27.2)

142.9

Liabilities directly associated with assets classified as held for sale19

Long-term borrowings

21

(0.6)

(599.8)Non-current lease liabilities

22(110.6)(123.5)

Deferred tax liabilities

15(42.0)(41.6)

Pension liabilities

16

–

(0.1)

Non-current creditors

20

Non-current liabilities

(1.1)

(4.5)

(154.3)(769.5)2,965.5

3,297.6

63.2

63.2

Total equity
Share capital

24

Share premium

25

500.9

500.7

Revenue and other reserves

2,396.3

2,730.2

Shareholders’ funds

2,960.4

3,294.1

5.1

3.5

2,965.5

3,297.6

Non-controlling interests

Approved by the Board of Directors
Laurent Kleitman
Matthew Bishop
Directors
7th March 2024
40 Mandarin Oriental International Limited

Consolidated Statement of Changes in Equity
for the year ended 31st December 2023

SharecapitalUS$m

Sharepremium
US$m

Capitalreserves
US$m

Revenue
reserves
US$m

Asset
revaluation
reserves
US$m

Hedging
reserves
US$m

63.2

500.7

258.9

(428.8)3,023.2

15.4(138.5)

3,294.1

3.5

3,297.6

Total comprehensive
income–––(367.6)–(13.7)

67.1(314.2)0.9(313.3)

Dividends paid by
the Company

–

–

–

(19.0)–––(19.0)–(19.0)

Unclaimed dividend
forfeited

–

–

–

0.1

–

–

–

0.1

–

0.1

Subsidiarydisposed of

–

–

0.2

(0.6)

–

–

(0.2)

(0.6)

0.7

0.1

Transfer

–

0.2

(0.2)

–

–

–

–

–

–

–

63.2

500.9

258.9

(815.9)3,023.2

1.7(71.6)

2,960.4

5.1

2,965.5

63.2

500.5

259.1

(377.7)2,943.4

0.9(80.6)

3,308.8

3.5

3,312.3

Total comprehensive
income–––(51.1)

79.8

14.5(57.9)(14.7)–(14.7)

Transfer

–

0.2

(0.2)

–

–

–

–

–

–

–

63.2

500.7

258.9

(428.8)3,023.2

15.4(138.5)

3,294.1

3.5

3,297.6

Attributable to Attributable to
Exchange shareholders of non-controlling
reserves the Company
interests
US$m
US$m
US$m

Total
equityUS$m2023
At 1st January

At 31st December
2022
At 1st January

At 31st December

Revenue reserves as at 31st December 2023 included cumulative fair value losses on the investment property underdevelopment of US$1,207.8 million (2022: US$720.2 million).

Annual Report 2023

41

Consolidated Cash Flow Statement
for the year ended 31st December 2023

Note

2023
US$m

2022
US$m

3

(341.0)(42.6)

51.1

58.2

Operating activities
Operating loss
Depreciation, amortisation and impairment
Other non-cash items

28a

440.3

63.5

Movements in working capital

28b

(2.8)

(1.1)

8.5

2.1

Interest and other financing charges paid

(17.6)(15.6)Tax paid

(2.6)

(8.0)

135.9

56.5

5.3

–

141.2

56.5

Purchase of tangible assets(13.7)(12.8)

Additions to investment properties(71.0)(30.2)

Purchase of intangible assets

(6.4)

(6.1)

Additions to right-of-use assets

–

(0.2)

–

4.0

(0.1)

(0.2)

Interest received

Dividends and interest from associates and joint venture
Cash flows from operating activities
Investing activities

Refund on Munich expansion

28c

Purchase of other investments
Purchase of an associate

28d

–

(1.0)

Advance to associates and joint ventures28e(20.7)(2.4)

Repayment of loans to associates and joint ventures

28f

67.2

4.2

Sale of a subsidiary

28g

75.6

–

8

–

131.4

30.9

86.7

Net proceeds from asset disposals
Cash flows from investing activities
Financing activities
Drawdown of borrowings

21

58.1

23.0

Repayment of borrowings

21(247.9)(139.5)

Principal elements of lease payments

28h

(6.2)

(5.7)

Dividends paid by the Company

27(19.0)–Cash flows from financing activities(215.0)(122.2)

Net (decrease)/increase in cash and cash equivalents(42.9)

21.0

Cash and cash equivalents at 1st January

226.2

212.8

7.0

(7.6)

190.3

226.2

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

42 Mandarin Oriental International Limited

28i

Notes to the Financial Statements

General information
Mandarin Oriental International Limited (the ‘Company’) is incorporated in Bermuda and has a primary listing in thestandard segment of the London Stock Exchange, with secondary listings in Bermuda and Singapore.

1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’),
including International Accounting Standards (‘IAS’) and Interpretations as issued by the International AccountingStandards Board (‘IASB’).
At 31st December 2023, the current liabilities of the Group exceeded its current assets by US$27.2 million. Included in
the current liabilities were the current portion of long-term bank loans of US$414.9 million due to mature within 2024.
In February 2024, the Group has refinanced bank facilities of US$409.2 million to enable the Group to meet its obligations
as and when they fall due. Accordingly, the financial statements have been prepared on a going concern basis.
The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies.
Details of the Group’s material accounting policies are included in note 34.
The Group has adopted the following standard and amendments for the annual reporting period commencing
1st January 2023.
IFRS 17 ‘Insurance Contracts’ (effective from 1st January 2023)
The standard covers recognition, measurement, presentation and disclosure for insurance contracts. The Group has assessed
its performance guarantees provided to third-party hotel owners and concluded that current arrangements do not include
significant insurance risk. They remain within the scope of the Group’s existing revenue recognition accounting policies.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 (effective from 1st January 2023)
The amendments require entities to disclose material rather than significant accounting policies. The amendments define
what is ‘material accounting policy information’ and explain how to identify when accounting policy information is material.
Material accounting policy information is information that, when considered together with other information included
in an entity’s financial statements, can reasonably be expected to influence decisions that the primary users of general
purpose financial statements make on the basis of those financial statements. IASB further clarifies that immaterial
accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting
information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making Materiality
Judgements to provide guidance on how to apply the concept of materiality to accounting policy disclosures.
The material accounting policies following the adoption of IAS 1 are included in note 34.
Amendment to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction(effective from 1st January 2023)
The amendment requires deferred tax to be recognised on transactions that, on initial recognition, give rise to equalamounts of taxable and deductible temporary differences. They typically apply to transactions such as leases oflessees and decommissioning obligations and require the recognition of additional deferred tax assets and liabilities.
On adoption of the amendment, there is no impact on the Group’s consolidated financial statements.
Amendment to IAS 12 – International Tax Reform – Pillar Two Model Rules (effective for annual reporting period
commencing on or after 1st January 2023)
The amendment provides a temporary mandatory exception from deferred tax accounting in respect of Pillar Two
income taxes and certain additional disclosure requirements. The Group is within the scope of the OECD Pillar Twomodel rules, and has applied the amendment from 1st January 2023.
Pillar Two legislation has been enacted or substantially enacted in certain jurisdictions in which the Group operates.
The legislation will be effective for the Group’s annual reporting period commencing 1st January 2024. Since the Pillar
Two legislation was not effective at 31st December 2023, the Group has no related current tax exposure.
Annual Report 2023

43

Notes to the Financial Statements Continued

1 Basis of preparation continued
The Group is in scope of the enacted or substantively enacted legislation and has performed an assessment of the Group’s
potential exposure to Pillar Two incomes taxes when the legislation comes into effect. The assessment of the potential
exposure to Pillar Two income taxes is based on the latest financial information for the year ended 31st December 2023of the constituent entities in the Group. Based on the assessment, the effective tax rates in most of the jurisdictions inwhich the Group operates are above 15%. However, there are a limited number of jurisdictions where the effective
tax rate is slightly below or close to 15%. The Group does not expect a material exposure to Pillar Two income taxes
in those jurisdictions.
Apart from the above, there are no other standard or amendments which are effective in 2023 and relevant to the Group’s
operations, that have a significant impact on the Group’s results, financial position and accounting policies.
The Group has not early adopted any standard, interpretation or amendments that have been issued but not yet effective(refer note 35).
The principal operating subsidiaries, associates and joint ventures have different functional currencies in line with theeconomic 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 2.

2 Segmental information and revenue
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
has three (2022: three) distinct business activities: Hotel ownership, Hotel & Residences branding and management, andProperty development which form the basis of its operating and reportable segments. The Property development segment
represents the redevelopment of The Excelsior, Hong Kong as a commercial building following the closure of the hotel on
31st March 2019 (the ‘Causeway Bay site under development’). The redevelopment is expected to complete in 2025.
In addition, The Group is operated on a worldwide basis in three (2022: three) regions: Asia, Europe, the Middle East
and Africa (‘EMEA’), and America. The Group’s segmental information for non-current assets is set out in note 23.
2023
US$m

2022
US$m

Hotel ownership

486.8

400.9

Hotel & Residences branding and management

94.5

68.5

Less: intra-segment revenue(23.2)(15.3)

558.1

454.1

Asia

219.9

141.4

EMEA

288.6

239.7

Analysis by business activity

Analysis by geographical area

49.6

73.0

558.1

454.1

Recognised at a point in time

163.7

140.8

Recognised over time

375.8

295.2

539.5

436.0

America

From contracts with customers

From other sources
Rental income

44 Mandarin Oriental International Limited

18.6

18.1

558.1

454.1

2 Segmental information and revenue continued
Contract balances
Setup costs in order to secure long-term hotel management contracts are capitalised under intangible assets and amortised
in profit and loss when the related revenue is recognised. Management reviews the capitalised costs on a regular basis andexpects the setup costs to be recoverable.
Contract liabilities primarily relate to the advance consideration received from customers relating to gift cards andadvance customer deposits for hotel services.
Contract liabilities are further analysed as follows:
2023
US$m

2022
US$m

– gift cards

10.1

10.9

– advance customer deposits and other

9.8

7.7

19.9

18.6

2023
US$m

2022
US$m

Gift cards

6.4

10.8

Advance customer deposits and other

5.5

9.6

11.9

20.4

Gift
cards
US$m

Advancecustomer
deposits
and other
US$m

Total
US$m

Contract liabilities (refer note 20)

Revenue recognised in relation to contract liabilities
Revenue recognised in the current year relating to carried-forward contract liabilities:

Revenue expected to be recognised on unsatisfied contracts with customers
Timing of revenue to be recognised on unsatisfied performance obligations:

2023
Within one year

3.9

16.8

20.7

Between one and two years

4.2

–

4.2

Between two and three years

1.3

–

1.3

Between three and four years

0.5

–

0.5

Between four and five years

0.2

–

0.2

10.1

16.8

26.9

Within one year

4.2

9.6

13.8

Between one and two years

4.5

–

4.5

2022

Between two and three years

1.4

–

1.4

Between three and four years

0.6

–

0.6

Between four and five years

0.2

–

0.2

10.9

9.6

20.5

Annual Report 2023

45

Notes to the Financial Statements Continued

3 EBITDA (earnings before interest, tax, depreciation and amortisation)
	  and operating loss from subsidiaries
2023
US$m

2022
US$m

Hotel ownership

101.9

45.3

Hotel & Residences branding and management

52.5

33.8

Property development

(1.0)

–

153.4

79.1

(486.7)(104.1)(0.4)–

Analysis by business activity

Underlying EBITDA from subsidiaries
Non-trading items (refer note 8)– change in fair value of investment properties– change in fair value of other investments

43.8

40.6

(443.3)(63.5)EBITDA from subsidiaries(289.9)15.6

Underlying depreciation and amortisation from subsidiaries(51.1)(58.2)

Operating loss

(341.0)(42.6)

Hotel ownership

145.4

85.9

Hotel & Residences branding and management

52.4

33.8

Property development(487.7)(104.1)

EBITDA from subsidiaries(289.9)15.6

Hotel ownership

102.4

36.7

Hotel & Residences branding and management

44.3

24.8

Property development(487.7)(104.1)

Operating loss

(341.0)(42.6)

Asia

41.5

(8.7)

EMEA

108.5

82.8

– gain on sale of a subsidiary/asset disposals

Analysis by business activity

Analysis by geographical area

America
Underlying EBITDA from subsidiaries

46 Mandarin Oriental International Limited

3.4

5.0

153.4

79.1

3 EBITDA (earnings before interest, tax, depreciation and amortisation)
	  and operating loss from subsidiaries continued
2023
US$m

2022
US$m

Rental income (refer note 10)

18.6

18.1

Amortisation and impairment of intangible assets (refer note 9)

(5.5)

(6.0)

Depreciation of tangible assets (refer note 10)(38.9)(45.3)

Amortisation/depreciation of right-of-use assets (refer note 11)

(6.7)

(6.9)

(226.5)(216.9)– defined benefit pension plans (refer note 16)

(2.7)

(3.2)

– defined contribution pension plans

(2.2)

(1.8)

(231.4)(221.9)Net foreign exchange gain

0.1

0.3

Expenses relating to low value leases

(0.2)

(0.4)

Expenses relating to short-term leases

(1.0)

(1.0)

Expenses relating to variable lease payments not included in lease liabilities

(5.6)

(3.4)

– audit

(1.9)

(1.9)

– non-audit services

(0.2)

(0.2)

(2.1)

(2.1)

The following items have been credited/(charged) in arriving at operating loss:

Employee benefit expense– salaries and benefits in kind

Auditors’ remuneration

Annual Report 2023

47

Notes to the Financial Statements Continued

4 Net financing charges
2023
US$m

2022
US$m

– bank loans(15.3)(13.3)– interest on lease liabilities

(1.7)

(1.9)

Commitment and other fees

(0.6)

(1.5)

Financing charges(17.6)(16.7)

Interest income

7.7

2.3

Net financing charges(9.9)(14.4)

Interest expense

5 Share of results of associates and joint ventures
EBITDA
US$m

Depreciation
andamortisation
US$m

Operatingprofit/(loss)
US$m

Net
financingcharges
US$m

Tax
US$m

Net
profit/(loss)
US$m

23.8(15.2)

8.6

(8.9)

0.2

(0.1)

2023
Analysis by business activity
Hotel ownership

0.4

(0.5)

(0.1)

(0.1)

–

(0.2)

24.2

(15.7)

8.5

(9.0)

0.2

(0.3)

(0.6)

–

(0.6)

–

–

(0.6)

23.6

(15.7)

7.9

(9.0)

0.2

(0.9)

Asia

10.4

(10.1)

0.3

(3.3)

0.1

(2.9)

EMEA

5.5

(3.6)

1.9

(3.3)

0.1

(1.3)

America

8.3

(2.0)

6.3

(2.4)

–

3.9

24.2

(15.7)

8.5

(9.0)

0.2

(0.3)

(0.6)

–

(0.6)

–

–

(0.6)

23.6

(15.7)

7.9

(9.0)

0.2

(0.9)

32.3

(15.4)

16.9

(5.6)

(1.0)

10.3

–

(0.5)

(0.5)

(0.1)

–

(0.6)

32.3

(15.9)

16.4

(5.7)

(1.0)

9.7

Asia

19.2

(10.4)

8.8

(2.4)

(1.1)

5.3

EMEA

4.0

(3.4)

0.6

(1.1)

0.1

(0.4)

America

9.1

(2.1)

7.0

(2.2)

–

4.8

32.3

(15.9)

16.4

(5.7)

(1.0)

9.7

Other

Non-trading items– closure costs

Analysis by geographical area

Non-trading items– closure costs

2022
Analysis by business activity
Hotel ownership
Other

Analysis by geographical area

48 Mandarin Oriental International Limited

6 Tax
2023
US$m

2022
US$m

– current tax(11.8)(12.0)– deferred tax (refer note 15)

(1.7)

9.9

(13.5)(2.1)

Tax (charged)/credited to profit and loss is analysed as follows:

Analysis by business activity
Hotel ownership

(7.2)

5.3

Hotel & Residences branding and management

(6.3)

(7.4)

(13.5)

(2.1)

Asia

(8.3)

(0.2)

EMEA

(4.3)

(5.2)

America

(0.9)

3.3

(13.5)

(2.1)

56.2

9.0

– change in fair value of other investments

0.1–– gain on sale of a subsidiary

9.3–– other items

3.8

1.8

– change in fair value of investment properties(80.3)(17.1)– other items

(5.2)

(3.5)

Tax losses and temporary differences not recognised(4.1)(11.9)

Utilisation of previously unrecognised tax losses and temporary differences

7.9

14.3

Recognition of previously unrecognised tax losses and temporary differences

4.1

(0.4)

– disposal of Mandarin Oriental, Washington D.C.

–

10.7

– other items–

0.1

Withholding tax

(4.6)

(3.8)

Under-provision in prior years

(0.5)

(1.3)

Analysis by geographical area

Reconciliation between tax expense and tax at the applicable tax rate*:
Tax at applicable tax rate
Income not subject to tax

Expenses not deductible for tax purposes

Deferred tax liabilities written backChange in tax rates

(0.2)

–

(13.5)(2.1)

Tax relating to components of other comprehensive income is analysed as follows:Remeasurements of defined benefit plans

0.4

0.3

Cash flow hedges

1.3

(2.4)

1.7

(2.1)

Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates.
In 2023, current tax included a non-trading capital gain tax charge of US$2.5 million in relation to the sale of 96.9%
ownership stake in P.T. Jaya Mandarin Agung, the owning company of Mandarin Oriental, Jakarta (refer note 31).
In 2022, current tax included a non-trading capital gain tax charge of US$4.3 million and deferred tax included a
non-trading tax credit of US$10.7 million in relation to the sale of Mandarin Oriental, Washington D.C. (refer note 8).
Share of tax credit of associates and joint ventures of US$0.2 million (2022: share of tax charge of US$1.0 million) is
included in share of results of associates and joint ventures (refer note 5).
* The applicable tax rate for the year was 16% (2022: 16%) and represents the weighted average of the rates of taxation prevailing in the

territories in which the Group operates.
Annual Report 2023

49

Notes to the Financial Statements Continued

7 (Loss)/earnings per share
Basic loss per share is calculated using loss attributable to shareholders of US$365.4 million (2022: US$49.5 million) andthe weighted average number of 1,263.8 million (2022: 1,263.7 million) shares in issue during the year.
Diluted loss per share is calculated using loss attributable to shareholders of US$365.4 million (2022: US$49.5 million)
and the weighted average number of 1,263.8 million (2022: 1,263.8 million) shares in issue after adjusting for thenumber 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.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2023
2022

Weighted average number of shares for basic loss per share calculation

1,263.8

1,263.7–

0.1

1,263.8

1,263.8

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 loss per share calculation

Additional basic and diluted loss/earnings per share are also calculated based on underlying profit attributable toshareholders. A reconciliation of loss/earnings is set out below:
2023
Basic
Diluted(loss)/earnings (loss)/earnings
per shareper share
US$m
US¢
US¢

Loss attributable to shareholders(365.4)

Non-trading items (refer note 8)

446.4

Underlying profit attributable
to shareholders

81.0(28.91)(28.91)

2022
Basic
Diluted(loss)/earnings (loss)/earnings
per shareper share
US$m
US¢
US¢

(49.5)(3.92)(3.92)

0.60

0.60

57.1
6.41

6.41

7.6

8 Non-trading items
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
2023
US$m

2022
US$m

(486.7)(104.1)

Change in fair value of other investments

(0.4)

–

Gain on sale of a subsidiary (refer note 31) /asset disposals*

41.3

47.0

(445.8)(57.1)

Change in fair value of investment properties

Share of results of associates and joint ventures– closure costs

(0.6)

–

(446.4)(57.1)* In September 2022, the Group completed the sale of Mandarin Oriental, Washington D.C., including tangible assets and stocksof US$90.8 million, for gross proceeds of US$139.0 million. After taking into account the selling expenses and sales related taxesof US$ 7.6 million, the net proceeds were US$131.4 million. As a result, the Group has recognised a post-tax, non-trading gain of
US$47.0 million which included a net tax credit of US$6.4 million.

50 Mandarin Oriental International Limited

9 Intangible assets
Goodwill
US$m

Computersoftware
US$m

Development
project
contract costs
US$m

Total
US$m

2023
23.9

30.2

28.0

82.1

Amortisation and impairment–(21.3)(15.1)(36.4)Net book value at 1st January

23.9

8.9

12.9

45.7

–

0.1

(0.1)

–

Additions

–

4.5

1.9

6.4

Disposals

(2.8)

–

–

(2.8)

Classified as held for sale

–

(0.1)

–

(0.1)

Amortisation and impairment charge

–

(4.4)

(1.1)

(5.5)

Net book value at 31st December

21.1

9.0

13.6

43.7

Cost

21.1

34.2

28.0

83.3

Cost

Exchange differences–(25.2)(14.4)(39.6)

21.1

9.0

13.6

43.7

23.9

29.2

28.2

81.3

Amortisation and impairment–(19.2)(15.4)(34.6)Net book value at 1st January

23.9

10.0

12.8

46.7

Exchange differences

–

(0.1)

–

(0.1)

Additions

–

3.4

1.7

5.1

Amortisation and impairment charge

–

(4.4)

(1.6)

(6.0)

Net book value at 31st December

23.9

8.9

12.9

45.7

Cost

23.9

30.2

28.0

82.1

–

(21.3)(15.1)(36.4)

23.9

8.9

12.9

45.7

Amortisation and impairment

2022
Cost

Amortisation and impairment

Management has performed an impairment review of the carrying amount of goodwill at 31st December 2023.
For the purpose of impairment review, goodwill acquired has been allocated to the hotel and is reviewed for impairment
based on the hotel forecast operating performance and cash flows. Cash flow projections for the impairment review are
based on value-in-use calculation using the updated hotel forecasts (including the following year’s hotel budget) withassumptions updated for the prevailing market conditions, and are discounted appropriately. Key assumptions usedfor value-in-use calculation include an average annual growth rate of 2% to forecast cash flows over a five-year period,
after which the growth rate is assumed to be up to 2% in perpetuity. Individual growth assumptions vary across theGroup’s geographical locations, and are based on management expectations for each market’s development. A pre-tax
discount rate of 8% is applied to the cash flow projections. The discount rate used reflects business specific risks
relating to the business life-cycle and geographical location. On the basis of the review, management concluded thatno impairment exists.
The amortisation charges are all recognised in arriving at operating profit and are included in cost of sales, selling anddistribution costs, administration expenses and other operating expense.
The amortisation periods for intangible assets are as follows:
Computer software
Development project contract costs

3 to 5 years
20 to 40 years

Annual Report 2023

51

Notes to the Financial Statements Continued

10 Tangible assets

Freeholdproperties
US$m

Properties onleaseholdland &
leaseholdimprovements
US$m

Plant &
machinery
US$m

Furniture,equipment &motor vehicles
US$m

Total
US$m

736.3

353.4

116.4

218.0

1,424.1

2023
Cost
Depreciation and impairment(81.7)(189.2)(81.5)(155.4)(507.8)Net book value at 1st January

654.6

164.2

34.9

62.6

916.3

Exchange differences

25.9

6.3

0.4

1.4

34.0

Additions

0.3

0.6

2.1

10.1

13.1

Disposals

–

–

(0.2)

(0.6)

(0.8)

Reclassification

–

10.3

–

(10.3)–(279.9)(6.6)(15.7)(2.9)(305.1)(8.6)(11.0)(5.2)(14.1)(38.9)Net book value at 31st December

392.3

163.8

16.3

46.2

618.6

Cost

470.5

342.4

87.0

228.0

1,127.9Classified as held for sale (refer note 19)
Depreciation charge(78.2)(178.6)(70.7)(181.8)(509.3)

392.3

163.8

16.3

46.2

618.6

Cost

915.4

370.7

131.2

300.0

1,717.3

Depreciation and impairment(121.8)(191.8)(88.5)(217.0)(619.1)

Net book value at 1st January

793.6

178.9

42.7

83.0

1,098.2

Exchange differences(48.6)

(3.7)

(2.8)

(3.4)

(58.5)

3.4

1.0

0.3

8.1

12.8

(84.1)

–

(0.2)

(6.0)

(90.3)

Depreciation and impairment

2022

Additions
Disposals (refer note 8)
Transfer to investment properties

–

(0.6)

–

–

(0.6)

(9.7)

(11.4)(5.1)(19.1)(45.3)Net book value at 31st December

654.6

164.2

34.9

62.6

916.3

Cost

736.3

353.4

116.4

218.0

1,424.1

Depreciation and impairment(81.7)(189.2)(81.5)(155.4)(507.8)

654.6

164.2

34.9

62.6

916.3

Depreciation charge

Rental income from properties and other tangible assets amounted to US$18.6 million (2022: US$18.1 million)(refer note 3).
The maturity analysis of the undiscounted lease payments to be received after the balance sheet date are as follows:
2023
US$m

2022
US$m

Within one year

15.3

14.5

Between one and two years

13.1

10.1

Between two and five years

32.5

26.2

Beyond five years

16.3

20.8

77.2

71.6

At 31st December 2023, the carrying amount of hotel properties pledged as security for bank borrowings amounted to
US$355.4 million (2022: US$342.6 million) (refer note 21).
52 Mandarin Oriental International Limited

11 Right-of-use assets
Leasehold
land
US$m

Properties
US$m

Total
US$m

133.3

199.9

333.2

(9.6)

(81.2)(90.8)

123.7

118.7

242.4

(0.1)

(6.7)

(6.8)

Additions

–

0.1

0.1

Disposals

(0.2)

–

(0.2)

–

0.3

0.3

2023
Cost
Amortisation/depreciation and impairment
Net book value at 1st January
Exchange differences

Remeasurement
Amortisation/depreciation charge

(0.2)

(6.5)

(6.7)

Net book value at 31st December

123.2

105.9

229.1

Cost

133.0

189.1

322.1

(9.8)

(83.2)(93.0)

123.2

105.9

229.1

Cost

143.6

228.2

371.8

Amortisation/depreciation and impairment(12.4)(86.1)(98.5)Net book value at 1st January

131.2

142.1

273.3

–

(17.5)(17.5)

Additions

0.2

0.6

0.8

Revaluation surplus before transfer to investment properties

79.8

–

79.8

Transfer to investment properties(87.1)–(87.1)

Amortisation/depreciation charge

(0.4)

(6.5)

(6.9)

Net book value at 31st December

123.7

118.7

242.4

Cost

133.3

199.9

333.2

Amortisation/depreciation and impairment

2022

Exchange differences

Amortisation/depreciation and impairment(9.6)(81.2)(90.8)

123.7

118.7

242.4

At 31st December 2023, the carrying amount of leasehold land pledged as security for bank borrowings amounted to
US$121.8 million (2022: US$122.2 million) (refer note 21). None of the other right-of-use assets have been pledged at
31st December 2023 and 2022.
The typical lease term associated with the right-of-use assets are as follows:
Leasehold land
Properties

20 to 895 years
2 to 30 years

Annual Report 2023

53

Notes to the Financial Statements Continued

12 Investment properties
Under
development
leaseholdcommercial
property
US$m

Completedleaseholdresidential
property
US$m

Total
US$m

2,384.9

87.7

2,472.6

Exchange differences

(5.3)

(0.2)

(5.5)

Additions

79.9

–

79.9

(Decrease)/increase in fair value(487.6)0.9(486.7)

At 31st December

1,971.988.4

2,060.3

2,462.0–

2,462.0

Exchange differences

0.6

–

0.6

Additions

26.4

–

26.4

–

0.6

0.6

2023
At 1st January2022
At 1st January

Transfer from tangible assets
Transfer from right-of-use assets

–

87.1

87.1

Decrease in fair value(104.1)–(104.1)

At 31st December

2,384.9

87.7

2,472.6

In 2022, an own-use property, including tangible assets of US$0.6 million and right-of-use assets of US$87.1 million,
was transferred to a completed residential investment property following a change of its future use determined by
the management.
The Group measures its investment properties at fair value. The fair values of the Group’s investment properties have been
determined on the basis of valuations carried out by independent valuers who hold a recognised relevant professional
qualification and have recent experience in the location and segment of the investment properties valued.
The Group employed Jones Lang LaSalle to value its under development commercial property in Hong Kong which isheld under leases with unexpired lease terms of more than 20 years. The valuation, which conforms to the International
Valuation Standards issued by the International Valuation Standards Council and the HKIS Valuation Standards issued
by the Hong Kong Institute of Surveyors, was derived using the residual method. The Report of the Valuers is set out on
page 107.
The valuations are comprehensively reviewed by the Group.

54 Mandarin Oriental International Limited

12 Investment properties continued
Fair value measurements of completed residential property using no significant unobservable inputs
Fair value of the completed residential property is generally derived using the direct comparison method. This valuation
method is based on comparing the property to be valued directly with other comparable properties, which have recently
transacted. However, given the heterogeneous nature of real estate properties, appropriate adjustments are usually required
to allow for any qualitative differences that may affect the price likely to be achieved by the property under consideration.

Fair value measurements of under development commercial property using significant
unobservable inputs
In 2022, the fair value of the under development commercial property was derived using the direct comparison method
and the residual method with equal weighting. In 2023, there has been a change in the valuation methodology from anequal weighting of the direct comparison method and the residual method to fully weighted on the residual method.
Due to a lack of recent comparable transactions which reflect the current market conditions, it is considered that theprevious comparable site transactions used in the direct comparison method have become outdated. As a result, the directcomparison method was not considered appropriate and does not form part of the basis for assessment of value of the site
at 31st December 2023. As such, the fair value of the under development commercial property was derived using theresidual method. The change in the valuation methodology to reflect residual, value-in-use estimates, is in line with themarket practice as the development of the site progresses toward completion.
The residual method assesses the value of the asset by reference to its development potential, by deducting development
costs together with developer’s profit and risk from the estimated capital value of the proposed development assuming
completion as at the date of valuation.
Information about fair value measurements of the Group’s under development commercial property using significant
unobservable inputs at 31st December:
Range of significant unobservable inputs
Prevailing market rent
per month/
Average unit priceUS$

Fair value
US$m

Valuation method

1,971.9

Residual*Prevailing market rent
per month of 8.2 to10.4 per square foot2.55 to 3.95

2,384.9

Direct comparison

Average unit price of
3,951.6
per square footn/aResidual*Prevailing market rent
per month of 8.3 to
10.0 per square foot2.45 to 3.85

Capitalisation rate%

2023
Hong Kong

2022
Hong Kong* In using the residual method to make fair value measurements of the under development commercial property, unobservable inputs

relating to the estimated costs to complete the development and the developer’s estimated profit and margin for risk have been used.

Prevailing market rents are estimated based on independent valuers’ view of recent lettings. Capitalisation rates are
estimated by independent valuers based on the risk profile of the property being valued.

Annual Report 2023

55

Notes to the Financial Statements Continued

12 Investment properties continued
Fair value measurements of under development commercial property using significant
unobservable inputs continued
An increase/decrease to prevailing market rent will increase/decrease valuations, while an increase/decrease tocapitalisation rate will decrease/increase valuations. Sensitivity analyses have been performed on the under development
commercial property (which contributed 96% of the total investment properties balance at 31st December 2023), toassess the impact on the valuation of changes in the two significant unobservable inputs: prevailing market rent permonth and capitalisation rate. The impact of any reasonably possible change in the assumptions for other investment
properties would not be material. The Group believes the changes in assumptions in the table below capture a reasonable
range of variations in these key valuation assumptions.
Change inassumption%(Increase)/decrease in valuation
Increase in
Decrease inassumption
assumption
US$m
US$m

Prevailing market rent per month

5.00

110.0

(115.2)

Capitalisation rate

0.10

(83.2)

83.2

The maturity analysis of the undiscounted lease payments to be received in respect of the completed residential property
after the balance sheet date are as follows:
2023
US$m

2022
US$m

Within one year–

0.6

Between one and two years–

0.6

Between two and five years

–

0.5

–

1.7

The Group’s operating lease in respect of the completed residential property is for a term of three years. The lease wasterminated during the year.

13 Associates and joint ventures
2023
US$m

2022
US$m

6.9

2.2

Associates
Listed associate – OHTL PLC (‘OHTL’)
Unlisted associates

42.8

49.7

Share of attributable net assets

49.7

51.9

Notional goodwill

5.5

5.5

Goodwill on acquisition

2.1

2.1

57.3

59.5

Amounts due from associates

58.7

38.4

116.0

97.9

(29.9)(25.7)

6.1

5.9(23.8)(19.8)

63.6

125.7

39.8

105.9

155.8

203.8

Joint ventures
Share of attributable net liabilities of unlisted joint ventures
Goodwill on acquisition

Amounts due from joint ventures

56 Mandarin Oriental International Limited

13 Associates and joint ventures continued
Amounts due from associates are interest free, unsecured and have no fixed terms of repayment, except for a convertible
loan of US$2.0 million (2022: US$2.0 million) which bears interest at 4% per annum and will mature on 15th June 2024
and a loan of US$20.3 million (2022: nil) which bears interest at 5% per annum and is repayable on 31st December 2024.
The Group is expected to extend the repayment to 2025 upon its maturity and accordingly the loan is classified under
non-current assets.
Amounts due from joint ventures are unsecured, bear interest at rates ranging from approximately 1.15% to 5.00%(2022: 1.15% to 5.00%) per annum and are repayable within two years (2022: two to three years), except for amounts of
US$31.9 million (2022: US$30.7 million) with no fixed terms of repayment.
The Group’s share of the carrying value of hotel properties (including properties, plant and equipment, and leaseholdland) owned by the Group’s associates and joint ventures amounted to US$218.8 million (2022: US$186.0 million) andUS$107.5 million (2022: US$106.5 million) respectively.
Associates

Joint ventures

2023
US$m

2022
US$m

2023
US$m

2022
US$m

At 1st January

97.9

88.3

105.9

113.2

Exchange differences

(0.1)

–

4.4

(7.3)

Share of results after tax andnon-controlling interests

0.4

10.1

(1.3)

(0.4)

Share of other comprehensive income/(expense)
after tax and non-controlling interests

1.5

0.3

(1.1)

0.4

Movements of associates andjoint ventures during the year:

–

1.0

–

–

Interest received

(1.0)

–

(4.3)

–

Advance to associates and joint ventures(refer note 28e)

20.3

2.0

0.4

0.4

Repayment of loans to associates andjoint ventures (refer note 28f)

(3.0)

(3.8)

(64.2)(0.4)

At 31st December

116.0

97.9

39.8

105.9

Fair value of listed associate

187.2

186.7

n/a

n/a

Acquisition of an associate (refer note 28d)

Annual Report 2023

57

Notes to the Financial Statements Continued

13 Associates and joint ventures continueda) 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 2023 and 2022:
Country of incorporation andprincipal place of business/place of listing% of ownership interest
2023
2022

Name of entity

Nature of business

OHTL

Owner of Mandarin Oriental,
BangkokThailand/Thailand

47.6%

47.6%

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

Singapore/Unlisted

50.0%

50.0%

At 31st December 2023, the fair value of the Group’s interest in OHTL, which is listed on the Thailand Stock Exchange,
was US$187.2 million (2022: US$186.7 million) and the carrying amount of the Group’s interest was US$12.4 million(2022: US$7.7 million).
Summarised financial information for material associates
Summarised balance sheet at 31st December
2023
US$m

OHTL
2022
US$m

Marina Bay Hotel
2023
2022
US$m
US$m

2023
US$m

2022
US$m

106.7

113.2

181.8

105.1

288.5

218.3

Cash and cash equivalents

6.0

8.0

12.9

48.1

18.9

56.1

Other current assets

3.8

3.9

7.1

4.8

10.9

8.7

Total current assets

9.8

11.9

20.0

52.9

29.8

64.8

Financial liabilities*(43.8)(57.8)(60.1)–(103.9)(57.8)

Other non-current liabilities*(21.5)(21.2)–(1.8)(21.5)(23.0)

Total non-current liabilities(65.3)(79.0)(60.1)(1.8)(125.4)(80.8)

Financial liabilities*(33.2)(37.9)(13.9)(12.5)(47.1)(50.4)

Other current liabilities*

(3.5)

(3.7)

(2.6)

(6.5)

(6.1)

(10.2)

Total current liabilities(36.7)(41.6)(16.5)(19.0)(53.2)(60.6)Net assets

14.5

4.5

125.2

137.2

139.7

141.7

Non-current assets

Total

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.

58 Mandarin Oriental International Limited

13 Associates and joint ventures continueda) Investment in associates continued
Summarised financial information for material associates continued
Summarised statement of comprehensive income for the year ended 31st December
2023
US$m

OHTL
2022
US$m

Marina Bay Hotel
2023
2022
US$m
US$m

2023
US$m

Total
2022
US$m

Revenue

72.4

54.8

41.2

73.8

113.6

128.6

Depreciation and amortisation

(8.4)

(9.4)

(9.2)

(7.6)

(17.6)(17.0)

Interest expense

(3.6)

(3.3)

(0.8)

0.4

(4.4)

(2.9)

Profit/(loss) from underlying
business performance

11.5

4.2

(17.0)

12.5

(5.5)

16.7

Income tax (charge)/credit

(1.8)

–

1.9

(2.4)

0.1

(2.4)

Profit/(loss) after tax

9.7

4.2

(15.1)

10.1

(5.4)

14.3

Other comprehensive income

0.3

0.2

3.1

1.1

3.4

1.3

Total comprehensive income/(expense)

10.0

4.4

(12.0)

11.2

(2.0)

15.6

The information contained in the summarised balance sheet and statement of comprehensive income reflects theamounts presented in the financial statements of the associates adjusted for differences in accounting policies between
the Group and the associates, and fair value of the associates at the time of acquisition.
Reconciliation of the summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interests
in its material associates for the year ended 31st December:
OHTL

Marina Bay Hotel
2023
2022
US$m
US$m

2023
US$m

2022
US$m

0.1

137.2

126.0

141.7

126.1

9.7

4.2

(15.1)

10.1

(5.4)

14.3

Other comprehensive income

0.3

0.2

3.1

1.1

3.4

1.3

Net assets at 31st December

14.5

4.5

125.2

137.2

139.7

141.7

Effective interest in associates (%)

47.6

47.6

50.0

50.0

Group’s share of net assets in associates

6.9

2.2

62.6

68.6

69.5

70.8

Notional goodwill*

5.5

5.5

–

–

5.5

5.5

Carrying value

12.4

7.7

62.6

68.6

75.0

76.3

Fair value

187.2

186.7

n/a

n/a

187.2

186.7

2023
US$m

2022
US$m

Net assets at 1st January

4.5

Profit/(loss) for the year

Total

* OHTL repurchased some of its own shares in 2013 which were subsequently cancelled in 2016. 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 recognised and the Group’s
effective interest increased to 47.6%.

The Group has interests in a number of individually immaterial associates. The following table analyses, in aggregate,
the share of profit and other comprehensive expense and carrying amount of these associates.
2023
US$m

2022
US$m

Share of profit

3.3

3.0

Share of other comprehensive expense

(0.2)

(0.4)

Share of total comprehensive income

3.1

2.6

Carrying amount of interests in these associates

41.0

21.6

Annual Report 2023

59

Notes to the Financial Statements Continued

13 Associates and joint ventures continueda) Investment in associates continued
Contingent liabilities relating to the Group’s interest in associates

Financial guarantee in respect of facilities made available to an associate

2023
US$m

2022
US$m

–

20.3

The guarantee in respect of facilities made available to an associate was stated at its contracted amount. The associate fully
repaid the bank loan and cancelled the facilities during the year.

b) 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 2023 and 2022:
Name of entity

Nature of business

Ritz Madrid, S.A.
(‘Ritz Madrid’)

Owner of Mandarin Oriental
Ritz, MadridCountry of incorporation andprincipal place of businessSpain% of ownership interest
2023
2022

50.0%

50.0%

Summarised financial information for material joint venture
Summarised balance sheet at 31st December
Ritz Madrid
2023
US$m

2022
US$m

246.4

243.1

Cash and cash equivalents

8.3

8.0

Other current assets

5.3

3.9

Total current assets

13.6

11.9

Financial liabilities*†(265.7)(251.4)

Other non-current liabilities*(46.3)(36.4)

Total non-current liabilities(312.0)(287.8)Other current liabilities*(7.8)(18.5)Net liabilities(59.8)(51.3)

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.
†

Including shareholders’ loans from joint venture partners of US$127.2 million (2022: US$251.4 million).

60 Mandarin Oriental International Limited

13 Associates and joint ventures continuedb) Investment in joint ventures continued
Summarised financial information for material joint venture continued
Summarised statement of comprehensive income for the year ended 31st December
Ritz Madrid
2023
US$m

2022
US$m

Revenue

49.9

41.5

Depreciation and amortisation

(7.1)

(6.8)

Interest expense(11.5)(2.3)

Loss after tax

(6.2)

(0.9)

Other comprehensive (expense)/income

(2.3)

0.8

Total comprehensive expense

(8.5)

(0.1)

The information contained in the summarised balance sheet and statement of comprehensive income reflects theamounts presented in the financial statements of the joint venture adjusted for differences in accounting policies
between the Group and the joint venture, fair value of the joint venture at the time of acquisition, and eliminationof interest on shareholders’ loan.
Reconciliation of the summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interests
in its material joint venture for the year ended 31st December:
Ritz Madrid
2023
US$m

2022
US$m

Net liabilities at 1st January(51.3)(51.2)

Loss for the year

(6.2)

(0.9)

Other comprehensive (expense)/income

(2.3)

0.8

Net liabilities at 31st December(59.8)(51.3)

Effective interest in joint venture (%)

50.0

50.0

Group’s share of net liabilities in joint venture(29.9)(25.7)

Goodwill on acquisition

6.1

5.9

Shareholders’ loans

63.6

125.7

Carrying value

39.8

105.9

The Group has no other joint ventures other than Ritz Madrid.
Commitments and contingent liabilities in respect of joint venture
There were no commitments and contingent liabilities relating to the Group’s interest in its joint venture at 31st December
2023 and 2022.

14 Other investments
2023
US$m

2022
US$m

14.0

14.0

Investment measured at fair value through profit and loss
– unlisted investments

Movements of these investments which were valued based on unobservable inputs during the year are disclosed innote 36.
Annual Report 2023

61

Notes to the Financial Statements Continued

15 Deferred tax assets/(liabilities)
Accelerated tax
depreciation
US$m

Fair value
gains/(losses)
US$m

Losses
US$m

Employeebenefits
US$m

Provisions
and other
temporarydifferences
US$m

At 1st January(36.2)

(1.7)

12.9

(1.3)

(1.1)

(27.4)

Exchange differences

(1.1)

(0.1)

0.3

(0.1)

–

(1.0)

Disposals

0.3

–

–

0.2

–

0.5

–

–

–

–

(0.1)

(0.1)

(0.7)

–

(2.0)

(0.2)

1.2

(1.7)

–

1.3

–

0.4

–

1.7

At 31st December(37.7)

(0.5)

11.2

(1.0)

–

(28.0)

Deferred tax assets

1.2

–

11.2

0.3

1.3

14.0

Deferred tax liabilities(38.9)

(0.5)

–

(1.3)

(1.3)

(42.0)(37.7)

(0.5)

11.2

(1.0)

–

(28.0)(46.1)

0.6

12.0

(1.9)

(1.0)

(36.4)

Exchange differences

2.0

0.1

(0.9)

0.1

(0.1)

1.2

Credited to profit and loss

7.9

–

1.8

0.2

–

9.9

(Charged)/credited to othercomprehensive income

–

(2.4)

–

0.3

–

(2.1)

At 31st December(36.2)

(1.7)

12.9

(1.3)

(1.1)

(27.4)

Deferred tax assets

1.1

–

12.9

0.2

–

14.2

Deferred tax liabilities(37.3)

(1.7)

–

(1.5)

(1.1)

(41.6)(36.2)

(1.7)

12.9

(1.3)

(1.1)

(27.4)

Total
US$m

2023

Classified as held for sale(Charged)/credited to profit and loss
Credited to othercomprehensive income

2022
At 1st January

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.
The recognition of deferred tax assets on tax losses of US$11.2 million (2022: US$12.9 million) is based on management’s
review of future taxable profit that will be available against which the tax losses can be utilised, referencing to individual
hotel forecast operating performance.
Deferred tax assets of US$60.7 million (2022: US$76.8 million) arising from unused tax losses of US$264.0 million(2022: US$338.0 million) have not been recognised in the financial statements. Included in the unused tax losses,
US$245.0 million have no expiry date and the balance will expire at various dates up to and including 2031.
Deferred tax assets of US$3.0 million (2022: US$3.2 million) have not been recognised in relation to temporary
differences in subsidiaries.
The Group has no unrecognised deferred tax liabilities arising on temporary differences associated with investments
in subsidiaries at 31st December 2023 and 2022.

62 Mandarin Oriental International Limited

16 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 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 recognised in the consolidated balance sheet are as follows:
2023
US$m

2022
US$m

Fair value of plan assets

41.5

46.7

Present value of funded obligations(40.9)(43.7)

0.6

3.0

Present value of unfunded obligations
Net pension assets

–

(0.1)

0.6

2.9

0.6

3.0

–

(0.1)

0.6

2.9

Analysis of net pension assets
Pension assets
Pension liabilities

Annual Report 2023

63

Notes to the Financial Statements Continued

16 Pension plans continued
The movement in the net pension assets is as follows:
Fair valueof planassets
US$m

Present
value ofobligation
US$m

Total
US$m

At 1st January

46.7(43.8)

2.9

Translation differences

(0.1)

0.1

–

Current service cost

–

(2.5)

(2.5)

Past service cost – plan amendments

–

(0.3)

(0.3)

Interest income/(expense)

2.2

(2.0)

0.2

Administration expenses

(0.1)

–

(0.1)

2023

2.1

(4.8)

(2.7)

48.7

(48.5)

0.2

2.1

–

2.1

– change in financial assumptions

–

(1.6)

(1.6)

– experience losses

–

(2.9)

(2.9)

– demographic assumption changes

–

(0.1)

(0.1)

Remeasurements– return on plan assets, excluding amounts   included in interest income

2.1

(4.6)

(2.5)

Contributions from employers

3.9

–

3.9

Contributions from plan participants

0.7

(0.7)

–

(12.9)

12.9–

Transfer to other plans

0.2

(0.2)

–

Disposals

(1.2)

0.2

(1.0)

At 31st December

41.5(40.9)

0.6

53.5(46.7)

6.8

–

(3.0)

(3.0)

Interest income/(expense)

1.2

(1.0)

0.2

Administration expenses

(0.4)

–

(0.4)

0.8

(4.0)

(3.2)

54.3

(50.7)

3.6

Benefit payments

2022
At 1st January
Current service costRemeasurements– return on plan assets, excluding amounts   included in interest income

(7.0)

–

(7.0)

– change in financial assumptions

–

5.5

5.5

– experience losses

–

(0.9)

(0.9)

– demographic assumption change

–

0.3

0.3

(7.0)

4.9

(2.1)

Contributions from employers

1.4

–

1.4

Contributions from plan participants

0.6

(0.6)

–

Benefit payments

(2.5)

2.5

–

Transfer from other plans

(0.1)

0.1

–

At 31st December

46.7(43.8)

2.9

64 Mandarin Oriental International Limited

16 Pension plans continued
The weighted average duration of the defined benefit obligation at 31st December 2023 is 4.6 years (2022: 4.4 years).
Expected maturity analysis of undiscounted pension benefits at 31st December is as follows:
2023
US$m

2022
US$m

Within one year

8.6

14.8

Between one and two years

6.3

4.7

Between two and five years

15.6

15.2

Between five and ten years

24.5

22.5

Between ten and fifteen years

15.1

15.0

Between fifteen and twenty years

9.9

9.0

5.5

6.3

85.5

87.5

Beyond twenty years

The principal actuarial assumptions used for accounting purposes at 31st December are as follows:
Hong Kong
2023
%

2022
%

Discount rate

4.30

5.20

Salary growth rate

4.00

4.00

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 inassumption%(Increase)/decrease on
defined benefit obligation
Increase in
Decrease inassumption
assumption
US$m
US$m

Discount rate

1.00

1.8

(1.9)

Salary growth rate

1.00

(1.6)

1.5

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 as when calculating the pension liability recognised within the balance sheet.

Annual Report 2023

65

Notes to the Financial Statements Continued

16 Pension plans continued
The analysis of the fair value of plan assets at 31st December is as follows:
2023
US$m

2022
US$m

– Asia-Pacific

8.0

8.9

– Europe

7.7

9.2– North America

18.4

21.0

– Global

4.0

4.8

38.1

43.9

– Asia-Pacific

0.4

0.4

– Europe

1.0

0.5– North America

2.6

1.7

– Global

0.6

0.2

4.6

2.8

Total investments

42.7

46.7

Cash and cash equivalents

1.4

2.5

Benefits payable and other

(2.6)

(2.5)

41.5

46.7

Equity investments

Investment funds

As at 31st December 2023, 89.2% of equity investments and 89.4% of investment funds were quoted on active markets(2022: 89.6% and 96.6% respectively).
The strategic asset allocation is derived from the asset-liability modelling (‘ALM’) review, done triennially to ensure
the plans can meet future funding and solvency requirements. The last ALM review was completed in 2021. The next
ALM review is scheduled for 2024.
As at 31st December 2023, the Hong Kong plans had assets of US$41.5 million (2022: US$46.7 million).
The Group maintains an active and regular contribution schedule across all the plans. The contribution to all its plans
in 2023 were US$3.9 million and the estimated amount of contributions expected to be paid to all its plans in 2024
is US$3.7 million.

66 Mandarin Oriental International Limited

17 Debtors
2023
US$m

2022
US$m

42.4

37.6

Trade debtors– third parties

2.9

4.2

45.3

41.8

(1.6)

(2.3)

43.7

39.5

– third parties

46.4

62.4

– associates and joint ventures

3.8

3.1

50.2

65.5

– associates and joint ventures– provision for impairment

Other debtors

(2.7)

(2.3)

47.5

63.2

91.2

102.7

10.9

12.2

– trade debtors

43.7

39.5

– other debtors

36.6

51.0

– provision for impairment

Non-current– other debtors
Current

80.3

90.5

91.2

102.7

Asia

52.6

54.0

EMEA

31.9

34.4

America

6.7

14.3

91.2

102.7

Analysis by geographical area

Analysis by fair value
Trade debtors

43.7

39.5

Other debtors*

32.1

47.7

75.8

87.2

* Excluding prepayments.

Derivative financial instruments are stated at fair value. Other debtors are stated at amortised cost. The fair values ofshort-term debtors approximate their carrying amounts.

Annual Report 2023

67

Notes to the Financial Statements Continued

17 Debtors continued
Trade and other debtors
The average credit period on provision of services varies among Group businesses and is generally not more than 30 days.
Other debtors are further analysed as follows:
2023
US$m

2022
US$m

Derivatives financial instruments (refer note 29)

2.4

17.4

Deferred consideration on sale of a subsidiary

3.2–

Other amounts due from third parties

16.1

14.5

Other amounts due from associates and joint ventures

3.8

3.1

VAT recoverable

1.3

6.0

Rental and other deposits

3.5

3.6

Other receivables

1.8

3.1

Financial assets

32.1

47.7

Prepayments

15.4

15.5

47.5

63.2

No debtors and prepayments have been pledged as security.

Impairment of trade debtors
Before accepting any new customer, the individual Group business assesses the potential customer’s credit quality andsets credit limits by customer using internal credit scoring systems. These limits and scoring are reviewed periodically.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation,and default or delinquency in payment are considered indicators that the debtor is impaired. An allowance for impairmentof trade debtors is made based on the estimated irrecoverable amount determined by reference to past default experience.
The Group applied the simplified approach to measure expected credit loss, that is a lifetime expected loss allowancefor trade debtors. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. Changes in certain macroeconomic information such as GDP and inflation rate,
are relevant for determining expected credit loss rates.
The expected loss rates are based on the historical payment profiles of sales and the corresponding historical credit losses.
The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors andindustry trends affecting the ability of the customers to settle the receivables.
The loss allowances for trade debtors at 31st December 2023 and 2022 were determined as follows:
Below
30 days

Between
31 and60 days

Between
61 and120 daysMore than
120 days

Total

–

13%

–

15%

4%

31.9

5.3

2.0

6.1

45.3

–

0.7

–

0.9

1.6

2023
Expected loss rate
Gross carrying amount – trade debtors (US$m)
Loss allowance (US$m)
2022
Expected loss rate
Gross carrying amount – trade debtors (US$m)
Loss allowance (US$m)

68 Mandarin Oriental International Limited

–

–

–

38%

6%

31.4

3.1

1.2

6.1

41.8

–

–

–

2.3

2.3

17 Debtors continued
Impairment of trade debtors continued
Movements in the provisions for impairment are as follows:
Trade debtors

Other debtors

2023
US$m

2022
US$m

2023
US$m

2022
US$m

At 1st January

(2.3)

(3.5)

(2.3)

(1.8)

Exchange difference

(0.1)

0.2

–

–

Classified as held for sale

0.1

–

–

–

Additional provisions

(0.3)

(0.3)

(1.2)

(1.0)

Unused amounts reversed

0.8

0.9

0.8

0.2

Amounts written off

0.2

0.4

–

0.3

At 31st December

(1.6)

(2.3)

(2.7)

(2.3)

Trade debtors and other debtors are written off when there is no reasonable expectation of recovery. Indicators that there
is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment planwith the Group.

18 Cash and bank balances
2023
US$m

2022
US$m

Deposits with banks and financial institutions

70.4

104.9

Bank balances

107.9

120.6

0.5

0.7

178.8

226.2

Euro

15.9

44.9

Cash balances

Analysis by currency
Hong Kong dollar

14.7

11.0

Indonesian rupiah

0.8

4.8

Japanese yen

14.1

6.8

Swiss franc

3.0

4.9

United Kingdom sterling

16.4

39.8

United States dollar

100.5

103.5

Other

13.4

10.5

178.8

226.2

The weighted average interest rate on deposits with banks and financial institutions at 31st December 2023 was 4.4%(2022: 1.2%) per annum.

Annual Report 2023

69

Notes to the Financial Statements Continued

19 Assets classified as held for sale
2023
US$m

2022
US$m

Intangible assets

0.1–

Tangible assets

305.1

–

Deferred tax assets

0.1–

Current assets*

26.6

–

Total assets

331.9

–

Current liabilities(24.1)–* Included cash and bank balances of US$11.5 million (refer note 28i).

In December 2023, the Group has announced that it has, pursuant to a preliminary sale agreement, signed an option tosell its interests in Mandarin Oriental, Paris (the ‘Paris hotel’) to SLH Hotels Srl, the owner of Mandarin Oriental, Milan,
for US$227.0 million (€205.0 million). The two retail units at the main entrance of the Paris hotel are not included in thesale and were being actively marketed for sale at 31st December 2023.
The Group will retain a long-term management agreement to manage and brand the Paris hotel.
The Group’s acceptance of the offer for its interests in the Paris hotel is subject to completion of a consultation processwith the relevant Works Council. Subject to that process and to the statutory right of pre-emption by the City of Paris,
among other conditions, it is anticipated that final documentation will be signed and completion of the sale of the Paris
hotel will take place on or after 31st March 2024.

20 Creditors
2023
US$m

2022
US$m

Trade creditors

12.7

21.2

Accruals

97.8

82.3

Rental and other refundable deposits

3.8

4.6

Other creditors

24.0

33.5

Financial liabilities

138.3

141.6

Contract liabilities (refer note 2)

19.9

18.6

Rental income received in advance

0.9

3.4

159.1

163.6

Non-current
Current

1.1

4.5

158.0

159.1

159.1

163.6

Analysis by geographical area
Asia

91.4

64.8

EMEA

39.3

59.5

America

28.4

39.3

159.1

163.6

70 Mandarin Oriental International Limited

20 Creditors continued
Derivative financial instruments are stated at fair value. Other creditors are stated at amortised cost. The fair values ofthese creditors approximate their carrying amounts.
At 31st December 2023, non-current creditors included an amount of US$1.1 million (2022: US$4.5 million) due toa service provider of a joint outlet. The amount is repayable to the service provider according to the terms of the joint
outlet agreement.
Provision for reinstatement and restoration costs comprised the estimated costs, to be incurred by the Group as lessees, indismantling and removing the underlying assets, restoring the sites on which they are located or restoring the underlying
assets to the condition required by the terms and conditions of the leases. The expected costs of US$0.8 million(2022: US$0.8 million) were included in accruals at 31st December 2023.

21 Borrowings
2023

2022

Carrying
amount
US$m

Fair
value
US$m

Carrying
amount
US$m

Fair
value
US$m

–

–

2.2

2.2

– bank loans

414.9

414.9

–

–

Total current borrowings

414.9

414.9

2.2

2.2

0.6

0.6

599.8

599.8

415.5

415.5

602.0

602.0

Short-term borrowings– other borrowings
Current portion of long-term borrowings

Long-term borrowings– bank loans

The Group has borrowing facilities of US$754.4 million due to mature within 2024. In February 2024, the Group has
refinanced bank facilities of US$409.2 million for three to five years.
The fair values are estimated using the expected future payments discounted at market interest rate from 2.1% to 5.9%(2022: 1.2% to 5.7%) per annum. This is in line with the definition of ‘observable current market transactions’ under
the fair value measurement hierarchy. The fair value of current borrowings approximates their carrying amount, as theimpact of discounting is not significant.
2023
US$m

2022
US$m

Secured

414.9

599.8

Unsecured

0.6

2.2

415.5

602.0

Borrowings of US$414.9 million (2022: US$599.8 million) were secured against the tangible fixed assets and right-of-use
assets of certain subsidiaries at 31st December 2023. The book value of these tangible fixed assets and right-of-use assets
at 31st December 2023 was US$477.2 million (2022: US$464.8 million).

Annual Report 2023

71

Notes to the Financial Statements Continued

21 Borrowings continued
The borrowings at 31st December are further summarised as follows:
Fixed rate borrowings
Weighted
averageinterest rates%

Weighted
average period
outstanding
Years

Hong Kong dollar

4.5

United Kingdom sterling

3.0

US$m

Floating rateborrowings
US$m

Total
US$m

0.2

160.0

191.3

351.3

0.3

50.9

13.3

64.2

210.9

204.6

415.5

2023

2022
Hong Kong dollar

4.0

1.1

224.5

278.3

502.8

Swiss franc

1.5

–

–

2.2

2.2

United Kingdom sterling

3.0

1.3

48.2

48.8

97.0

272.7

329.3

602.0

The weighted average interest rates and period of fixed rate borrowings are stated after taking into account hedging
transactions (refer note 29).
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:
2023
US$m

2022
US$m

204.6

329.3

210.9

64.1

– Between one and two years

–

208.6

– Between two and three years––– Between three and four years––– Between four and five years––– Beyond five years

–

–

210.9

272.7

415.5

602.0

Floating rate borrowings
Fixed rate borrowings– Within one year

72 Mandarin Oriental International Limited

21 Borrowings continued
The movements in borrowings are as follows:
Long-term
borrowings
US$m

Short-termborrowings
US$m

Total
US$m

599.8

2.2

602.0

Exchange differences

3.2

0.1

3.3

Drawdown of borrowings

58.1

–

58.1

Repayment of borrowings(245.6)(2.3)(247.9)At 31st December

415.5

–

415.5

At 1st January

727.8

2.5

730.3

Exchange differences(11.7)(0.1)(11.8)

2023
At 1st January

2022

Drawdown of borrowings

23.0

–

23.0

Repayment of borrowings(139.3)(0.2)(139.5)

At 31st December

599.8

2.2

602.0

2023
US$m

2022
US$m

129.4

153.7

Exchange differences(7.2)(18.8)

Additions

0.1

0.6

Lease payments

(7.9)

(7.6)

Interest expense

1.7

1.9

Remeasurement

0.3

–

–

(0.4)

At 31st December

116.4

129.4

Non-current

110.6

123.5

22 Lease liabilities
At 1st January

Modification of lease terms and other

Current

5.8

5.9

116.4

129.4

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The leaseagreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
The Group is not exposed to any residual guarantees in respect of the leases entered into at 31st December 2023 and 2022.
There is no lease contract entered but not commenced at 31st December 2023 and 2022.

Annual Report 2023

73

Notes to the Financial Statements Continued

23 Segmental information for non-current assets
Set out below is an analysis of the Group’s non-current assets, excluding amounts due from associates and joint ventures,
other investments, deferred tax assets, pension assets and derivative financial instruments, by reportable segment.
2023
US$m

2022
US$m

Analysis by geographical area
Asia

2,492.6

2,928.3

EMEA

404.7

696.7

America

102.2

109.0

2,999.5

3,734.0

24 Share capital
Ordinary shares in millions
2023

2022

2023
US$m

2022
US$m

1,500.0

1,500.0

75.0

75.0

1,263.7

1,263.6

63.2

63.2

0.1

0.1

–

–

1,263.8

1,263.7

63.2

63.2

2023
US$m

2022
US$m

500.7

500.5

0.2

0.2

500.9

500.7

Authorised
Shares of US¢5.00 eachIssued and fully paid
At 1st January
Issued under share-based long-term
incentive plans
At 31st December

25 Share premium
At 1st January
Transfer from capital reserves
At 31st December

74 Mandarin Oriental International Limited

26 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. 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. No conditional share awards were granted in 2023 and 2022
under the 2014 Plan.
ii) 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:
2023
Weighted average
exercise price
US$

Optionsin millions

2022
Weighted average
exercise price
US$

Optionsin millions

At 1st January

1.57

0.5

1.59

1.0

Exercised

1.57

(0.5)

1.61

(0.5)

–

–

1.57

0.5

At 31st December

The average share price during the year was US$1.70 (2022: US$1.92) per share.
Outstanding options at 31st December:
Ordinary shares in millions
Expiry date2023
of which exercisable

Exercise price
US$

2023

2022

1.57

–

0.5

–

0.5

Annual Report 2023

75

Notes to the Financial Statements Continued

27 Dividends
Interim dividend in respect of 2023 of US¢1.50 (2022: nil) per share

2023
US$m

2022
US$m

19.0

–

A final dividend in respect of 2023 of US¢3.50 (2022: nil) per share amounting to a total of US$44.2 million (2022: nil)is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the 2024
Annual General Meeting. The amount will be accounted for as an appropriation of revenue reserves in the year ending
31st December 2024.

28 Notes to consolidated cash flow statementa) Other non-cash items
2023
US$m

2022
US$m

486.7

104.1

Fair value loss on other investments

0.4–

Gain on modification of lease terms

–

(0.4)

Gain on sale of a subsidiary/asset disposals(43.8)(40.6)

Other

(3.0)

0.4

440.3

63.5

2023
US$m

2022
US$m

Increase in stocks

(0.9)

(0.2)

Increase in debtors(17.0)(21.2)

Increase in creditors

16.3

18.5

(Decrease)/increase in pension obligations

(1.2)

1.8

(2.8)

(1.1)

Fair value loss on investment propertiesb) Movements in working capitalc) The Group withdrew from the expansion project of Mandarin Oriental, Munich in 2021 and received cash refund
on deposits of land and related costs of US$4.0 million in 2022.
d) In January 2022, the Group acquired an additional interest in Stay One Degree Limited (‘S1D’) which increased
shareholding from 16.7% to 22.4% for a consideration of US$1.0 million.
e) During 2023, the Group provided shareholder loan to Mandarin Oriental, Miami of US$20.3 million (2022: nil)and Mandarin Oriental Ritz, Madrid of US$0.4 million (2022: US$0.4 million). In 2022, the Group also provided
convertible loan of US$2.0 million to S1D.
f) During 2023, the Group received repayments on its shareholder loans previously provided to Mandarin Oriental
Ritz, Madrid of US$64.2 million (2022: US$0.4 million) and Mandarin Oriental, Miami of US$3.0 million(2022: US$3.8 million).

76 Mandarin Oriental International Limited

28 Notes to consolidated cash flow statement continuedg) Sale of a subsidiary
Net cash inflow for the sale of a subsidiary, P.T. Jaya Mandarin Agung (refer note 31), is summarised as follows:
2023
US$m

2022
US$m

Non-current assets

4.8–

Currents assets

5.2–

Non-current liabilities

(0.6)

–

Current liabilities

(4.0)

–

Non-controlling interests

0.4–

Net assets

5.8–

Cumulative exchange translation difference

33.1

–

Profit on disposal before tax

43.8

–

Sales proceeds (net of selling expenses)

82.7

–

Adjustment for deferred payments

(3.2)

–

Cash and cash equivalents of a subsidiary disposed of

(3.9)

–

Net cash inflow

75.6

–

The revenue and loss after tax in respect of the subsidiary disposed of during the year amounted to US$6.0 million and
US$0.6 million, respectively.
h) Cash outflows for leases
2023
US$m

2022
US$m

(14.7)(12.4)– operating activities

(8.5)

(6.7)

– financing activities

(6.2)

(5.7)

(14.7)(12.4)

2023
US$m

2022
US$m

Cash and bank balances (refer note 18)

178.8

226.2

Cash and cash equivalents of subsidiaries classified as held for sale(refer note 19)

11.5

–

190.3

226.2

Lease rentals paid
The above cash outflows are included ini) Analysis of balances of cash and cash equivalents

Annual Report 2023

77

Notes to the Financial Statements Continued

29 Derivative financial instruments
The fair values of derivative financial instruments at 31st December are as follows:
2023

2022

Positive
fair value
US$m

Negative
fair value
US$m

Positive
fair value
US$m

Negative
fair value
US$m

–

–

8.0

–

Designated as cash flow hedges– forward foreign exchange contracts– interest rate swaps

2.4

–

9.4

–

2.4

–

17.4

–

Forward foreign exchange contracts
There was no outstanding forward foreign exchange contract at 31st December 2023 (2022: US$53.3 million).

Interest rate swaps
The notional principal amounts of the outstanding interest rate swap contracts at 31st December 2023 were
US$210.9 million (2022: US$272.7 million).
At 31st December 2023, the fixed interest rates relating to interest rate swaps varied from 1.2% to 1.8%(2022: 1.2% to 2.1%) per annum.
The fair values of interest rate swaps at 31st December 2023 were based on the estimated cash flows discounted atmarket rates ranging from 0.9% to 1.0% (2022: 0.9% to 1.0%) per annum.

30 Commitments
2023
US$m

2022
US$m

92.4

148.3

262.2

363.9

354.6

512.2

Capital commitments
Authorised not contracted– other
Contracted not provided– otherThis primarily related to capital commitments for the Causeway Bay site under development, which is expected tocomplete in 2025.

78 Mandarin Oriental International Limited

31 Related party transactions
The parent company of the Group is Jardine Strategic Limited (‘JSL’) and the ultimate holding company of the Group is
Jardine Matheson Holdings Limited (‘JMH’). Both JMH and JSL 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’s subsidiaries, associates and joint ventures. The more significant of these transactions are described below:
The Group managed six (2022: six) associate and joint venture hotels and received management fees of US$14.3 million(2022: US$14.7 million) based on long-term management agreements on normal commercial terms.
The Group provided hotel management services to Hongkong Land group (‘HKL’), a subsidiary of JMH. Total
management fees received from HKL in 2023 amounted to US$2.2 million (2022: US$1.4 million), based on long-term
management agreements on normal commercial terms.
The Group pays a management fee to Jardine Matheson Limited, a subsidiary of JMH, in consideration for certain
management consultancy services. The fee is calculated as 0.5% of the Group’s net profit. No fee was paid in 2023
and 2022 (due to net losses).
The Group rented a property to DFI Retail Group, a subsidiary of JMH, and received rental income of US$0.6 million(2022: US$0.7 million), based on lease agreements on normal commercial terms. The lease was terminated during the year.
In respect of the Causeway Bay site under development, the Group paid consultancy fees of US$1.9 million(2022: US$3.2 million) to HKL in consideration for project management consultancy services. In addition,
Gammon Construction Limited (‘GCL’), a joint venture of JMH, completed value of works of US$59.8 million(2022: US$13.6 million). The HKL agreement and GCL contract were arranged on normal commercial terms.
In June 2023, the Group completed the sale of 96.9% ownership stake in P.T. Jaya Mandarin Agung, the owningcompany of Mandarin Oriental, Jakarta in Indonesia, to P.T. Astra Land Indonesia, a subsidiary of JMH, at a total
consideration of US$84.8 million. The Group has recognised a post-tax, non-trading gain of US$41.3 million which
included cumulative exchange translation loss of US$33.1 million and a tax charge of US$2.5 million. The Grouphas retained the hotel management contracts to manage and brand the hotel. Mandarin Oriental, Jakarta has becomea managed hotel of the Group following the sale (refer notes 8 and 28g).
The outstanding balances with associates and joint ventures are set out in debtors in note 17.
Details of Directors’ emoluments (being the key management personnel compensation) are shown on page 128 under
the heading of ‘Remuneration outcomes in 2023’.

32 Summarised balance sheet of the Company
Included below is certain summarised balance sheet information of the Company disclosed in accordance with
Bermuda Law.

Subsidiaries
Net current liabilities
Net assets

2023
US$m

2022
US$m

1,322.1

1,344.3

(1.8)

(2.0)

1,320.3

1,342.3

Share capital (refer note 24)

63.2

63.2

Share premium (refer note 25)

500.9

500.7

Revenue and other reserves

756.2

778.4

1,320.3

1,342.3

Shareholders’ funds

Subsidiaries are shown at cost less amount provided, and include amounts due from and due to subsidiaries.
Annual Report 2023

79

Notes to the Financial Statements Continued

33 Principal subsidiaries, associates, joint ventures and managed hotels
The principal subsidiaries, associates, joint ventures and managed hotels of the Group at 31st December 2023 are set out below.
Proportion of ordinary sharesand voting powers
at 31st December 2023 held byPrincipal placeof business

Name of entity

Nature of business

Attributable interest %
2023

2022

the Group%

non-controllinginterests%

Hotel profile

Subsidiaries
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

–

447 rooms. Lease expiry 2895

Hong Kong

Excelsior Hotel (BVI) Limited

The Causeway Bay site under development

100

100

100

–

–

Japan

Mandarin Oriental Tokyo KK

Owner: Mandarin Oriental, Tokyo

100

100

100

–

179 rooms. Lease expiry 2050

United Kingdom

Mandarin Oriental Hyde Park Limited

Owner: Mandarin Oriental Hyde Park, London

100

100

100

–

181 rooms. Freehold

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

–

Lease expiry 2040
178 rooms

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

–

135 rooms. Freehold (refer note 19)

United States

Boylston Street Hotel LLC

Owner: Mandarin Oriental, Boston

100

100

100

–

148 rooms. Freehold

Associates and joint ventures
Singapore
Marina Bay Hotel Private Limited

Owner: Mandarin Oriental, Singapore

50

50

50

50

Thailand

Owner: Mandarin Oriental, Bangkok

47.6

47.6

47.6

52.4

OHTL PCL

510 rooms. Lease expiry 2079
331 rooms. Various freehold/leasehold

Malaysia

Asas Klasik Sdn Bhd

Owner: Mandarin Oriental, Kuala Lumpur

25

25

25

75

629 rooms. Freehold

Thailand

Chaophaya Development Corporation Limited

Owner: River City Shopping Complex

49

49

49

51

–

Spain

Ritz Madrid, S.A.

Owner: Mandarin Oriental Ritz, Madrid

50

50

50

50

153 rooms. Freehold

United States

ICD Columbus Centre Hotel LLC

Owner: Mandarin Oriental, New York

25.1

25.1

25.1

74.9

244 rooms. Freehold

United States

Swire Brickell Key Hotel Limited

Owner: Mandarin Oriental, Miami

Hong Kong

Stay One Degree Limited

Online booking service platform for luxury homes

25

25

25

75

22.4

22.4

22.4

77.6

326 rooms. Freehold–

Managed hotels
Hong Kong

The Landmark Mandarin Oriental, Hong Kong

–

–

–

–

111 rooms

Macau

Mandarin Oriental, Macau

–

–

–

–

213 rooms

China

Mandarin Oriental, Sanya

–

–

–

–

278 rooms

China

Mandarin Oriental, Guangzhou

–

–

–

–

263 rooms

China

Mandarin Oriental Pudong, Shanghai

–

–

–

–

362 rooms

China

Mandarin Oriental Wangfujing, Beijing

–

–

–

–

73 rooms

China

Mandarin Oriental, Shenzhen

–

–

–

–

178 rooms

TaiwanMandarin Oriental, Taipei

–

–

–

–

293 rooms

Indonesia

Mandarin Oriental, Jakarta

–

–

–

–

272 rooms

Czech Republic

Mandarin Oriental, Prague

–

–

–

–

99 rooms

Spain

Mandarin Oriental, Barcelona

–

–

–

–

120 rooms

TurkeyMandarin Oriental, Bodrum

–

–

–

–

127 rooms

TurkeyMandarin Oriental Bosphorus, Istanbul

–

–

–

–

100 rooms

Switzerland

Mandarin Oriental Palace, Luzern

–

–

–

–

136 rooms

Switzerland

Mandarin Oriental Savoy, Zurich

–

–

–

–

80 rooms

Italy

Mandarin Oriental, Milan

–

–

–

–

104 rooms

Italy

Mandarin Oriental, Lago di Como

–

–

–

–

75 rooms

GreeceMandarin Oriental, Costa Navarino

–

–

–

–

99 rooms

MoroccoMandarin Oriental, Marrakech

–

–

–

–

63 rooms

Qatar

Mandarin Oriental, Doha

–

–

–

–

249 rooms

United Arab Emirates Mandarin Oriental Jumeira, Dubai

–

–

–

–

250 rooms

United Arab Emirates Emirates Palace Mandarin Oriental, Abu Dhabi

–

–

–

–

390 rooms

Saudi Arabia

Mandarin Oriental Al Faisaliah, Riyadh

–

–

–

–

325 rooms

Chile

Mandarin Oriental, Santiago

–

–

–

–

297 rooms

Saint Vincent and
the Grenadines

Mandarin Oriental, Canouan

–

–

–

–

35 rooms

80 Mandarin Oriental International Limited

Annual Report 2023

81

Notes to the Financial Statements Continued

34 Material accounting policies
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 recognises
the non-controlling interest’s proportionate share of the recognised 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 recognises the resulting gain or loss in profit and loss. Changes in a parent’s ownershipinterest 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 and the resulting gainor loss is recognised in profit and loss.
All material intercompany transactions, balances and unrealised 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 the arrangement have rights
to the net assets of the joint venture. Joint control is the contractually agreed sharing of 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 recognised 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.

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.

82 Mandarin Oriental International Limited

34 Material accounting policies continued
Foreign currencies continued
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 recognised in othercomprehensive income and accumulated in equity under exchange reserves. On the disposal of these investments,
such exchange differences are recognised in profit and loss. Exchange differences on other investments measured at fairvalue through profit and loss are recognised in profit and loss as part of the gains and losses arising from changes in theirfair value. Exchange differences on other investments measured at fair value through other comprehensive income arerecognised in other comprehensive income as part of the gains and losses arising from changes in their fair value. Allother exchange differences are recognised in profit and loss.
Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treated as assets
and liabilities of the foreign entity and translated into United States dollars at the rate of exchange ruling at the year end.

Impairment of non-financial assets
Assets that have indefinite useful lives are not subject to amortisation and are tested for impairment annually andwhenever there is an indication that the assets may be impaired. Assets that are subject to amortisation 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
is recognised 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.

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-controlling interests
are measured at their proportionate share of the net identifiable assets at the acquisition date. If the cost of acquisitionis less than the fair value of the net assets acquired, the difference is recognised directly in profit and loss. Goodwill on
acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates and joint ventures is
included in investment in associates and joint ventures. Goodwill is allocated to cash-generating units or groups ofcash-generating units for the purpose of impairment testing and is carried at 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.
ii) Computer software represents acquired computer software licences which are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software and are stated at cost less accumulated amortisation.
Amortisation is calculated on the straight-line basis to allocate the cost over their estimated useful lives.
iii) Development project contract costs are setup costs in order to secure long-term hotel management contracts anddirectly attributable to hotel projects under development, which are capitalised to the extent that such expenditure is
expected to generate future economic benefits and upon completion of the project. Capitalised development projectcontract costs are amortised over the term of the management contracts when the related revenue is recognised.
Where the carrying amount of a development project contract cost is greater than its estimated recoverable amount,
it is written down immediately to its recoverable amount.

Annual Report 2023

83

Notes to the Financial Statements Continued

34 Material accounting policies continued
Tangible fixed assets and depreciation
Freehold properties comprised land and buildings. Freehold land is stated at cost less any impairment. No depreciation
is provided on freehold land as it is deemed to have an indefinite life. Properties on freehold and leasehold land are statedat cost less any accumulated depreciation and impairment. 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:
Properties on freehold land and under leases more than 20 years
21 years to 150 years
Properties under leases less than 20 years
over unexpired period of lease
Surfaces, finishes and services of hotel properties
20 years to 30 years
Leasehold improvements
shorter of unexpired period of the lease	  or useful life
Plant and machinery
5 years to 15 years
Furniture, equipment and motor vehicles
3 years to 10 years
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 recognised by reference to their carrying amount.

LeasesAt inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Lease contracts may contain lease and non-lease components. The Group allocates the consideration in the contract
to lease and non-lease component based on their relative stand-alone prices. For property leases where the Group is
a lessee, it has elected not to separate lease and immaterial non-lease components and accounts for these items as a single
lease component.
i) As a lessee
The Group enters into property leases for use as hotels or offices.
The Group recognises right-of-use assets and lease liabilities at the lease commencement dates, that is the dates theunderlying assets are available for use. Right-of-use assets are measured at cost, less any accumulated depreciation andimpairment, and adjusted for any remeasurement of lease liabilities. The cost of the right-of-use assets includes amountsof the initial measurement of lease liabilities recognised, lease payments made at or before the commencement dates
less any lease incentives received, initial direct costs incurred and restoration costs. Right-of-use assets are depreciatedusing the straight-line method over the shorter of their estimated useful lives and the lease terms.
When right-of-use assets meet the definition of investment properties, they are presented in investment properties,
and are initially measured at cost and subsequently measured at fair value, in accordance with the Group’s
accounting policy.
The Group also has interests in leasehold land for use in its operations. Lump sum payments were made upfront toacquire these land interests from their previous registered owners or governments in the jurisdictions where the land
is located. There are no ongoing payments to be made under the term of the land leases, other than insignificant leaserenewal costs or payments based on rateable value set by the relevant government authorities. These payments arestated at cost and are amortised over the term of the lease which includes the renewal period if the lease can be
renewed by the Group without significant cost.
84 Mandarin Oriental International Limited

34 Material accounting policies continued
Leases continuedi) As a lessee continued
Lease liabilities are measured at the present value of lease payments to be made over the lease terms. Lease payments
include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised andpayments of penalties for terminating a lease, if the lease term reflects the Group exercising that option. The variable
lease payments that do not depend on an index or a rate are recognised as expense in the period on which the eventor condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the leasecommencement date if the interest rate implicit in the lease is not readily determinable. Lease liabilities are measured
at amortised cost using the effective interest method. After the commencement date, the amount of lease liabilities
is increased by the interest costs on the lease liabilities and decreased by lease payments made.
The carrying amount of lease liabilities is remeasured when there is a change in the lease term, or there is a change
in future lease payments arising from a change in an index or rate, or there is a change in the Group’s estimate of
the amount expected to be payable under a residual guarantee, or there is a change arising from the reassessmentof whether the Group will be reasonably certain to exercise an extension or a termination option. When the leaseliability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or isrecorded in profit or loss if the carrying amount of right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low value assets(i.e. US$5,000 or less) and short-term leases. Low value assets comprised office equipment. Short-term leases
are leases with a lease term of 12 months or less. Lease payments associated with these leases are recognised ona straight-line basis as an expense in profit and loss over the lease term.
Lease liabilities are classified as non-current liabilities unless payments are within 12 months from the balance
sheet date.
ii) As a lessor
The Group enters into contracts with lease components as a lessor primarily on its properties. These leases areoperating leases as they do not transfer the risk and rewards incidental to the underlying properties. The Group
recognises the lease payments received under these operating leases on a straight-line basis over the lease term aspart of revenue in the profit and loss.

Investment properties
Properties including those under operating leases which are held for long-term rental yields or capital gains are classified
and accounted for as investment properties, but the business model does not necessarily envisage that the properties will
be held for their entire useful life. Investment properties are carried at fair value, representing estimated open market
value determined annually by independent qualified valuers who have recent experience in the location and segment of
the investment property being valued.
The market value of the under development commercial property is derived using the residual method. The residual
method is based on the estimated capital value of the proposed development assuming completion as at the date ofvaluation, after deducting development costs together with developer’s profit and risk. The market value of the residential
property is arrived at by reference to market evidence of transaction prices for similar properties. Changes in fair value
are recognised in profit and loss.

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85

Notes to the Financial Statements Continued

34 Material accounting policies continued
Investments
The Group classifies its investments into the following measurement categories:i) Those to be measured subsequently at fair value, either through other comprehensive income or through profit
and loss; andii) Those to be measured at amortised cost.
The classification is based on the management’s business model and their contractual cash flows characteristics.
Investments are measured at fair value with fair value gains and losses recognised in profit and loss, unless management
has elected to recognise the fair value gains and losses through other comprehensive income. For investments measured
at fair value through other comprehensive income, gains or losses realised upon disposal are not reclassified to profit
and loss.
At initial recognition, the Group measures an investment at its fair value plus, in the case of the investment not atfair value through profit or loss, transaction costs that are directly attributable to the acquisition of the investment.
Transaction costs of investments carried at fair value through profit and loss are expensed in profit and loss.
All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits topurchase or sell the investments.
Investments are classified as non-current assets.

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

Debtors
Trade debtors are recognised initially at the amount of consideration that is unconditional and measured subsequently
at amortised cost using effective interest method. All other debtors, excluding derivative financial instruments, aremeasured at amortised cost except where the effect of discounting would be immaterial. The impairment measurement issubject to whether there has been a significant increase in credit risk. For trade debtors, the Group applied the simplified
approach as permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the
debtors. Provision for impairment is established by considering potential financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments. The carrying
amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised inarriving 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.

Assets classified as held for sale
Assets are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if theircarrying amounts are expected to be recovered principally through a sale transaction within 12 months after the balance
sheet rather than through continuing use. Once classified as held for sale, the assets are no longer amortised or depreciated.

86 Mandarin Oriental International Limited

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

Provisions
Provisions are recognised 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.

Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. In subsequent periods, borrowings
are stated at amortised cost using the effective interest method.
Borrowing costs relating to major development projects are capitalised until the asset is substantially completed.
Capitalised 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 theliability for at least 12 months after the balance sheet date.

Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit and loss, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognisedin 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 realisedor 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 recognised to the extent that
it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

Annual Report 2023

87

Notes to the Financial Statements Continued

34 Material accounting policies continued
Employee benefits
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 livesof employees in accordance with the advice of qualified actuaries, who carry out a full valuation of major plans every
year. The pension obligations are measured as the present value of the estimated future cash outflows by reference tomarket yields on high quality corporate bonds which have terms to maturity approximating the terms 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 recognisedin other comprehensive income in the year in which they occur.
Past service costs are recognised immediately in profit and loss.
The Group’ total contributions relating to the defined contribution plans are charged to profit and loss in the year towhich they relate.

Derivative financial instruments
The Group only enters into derivative financial instruments in order to hedge underlying exposures and not as
speculative investments. Derivative financial instruments are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting
gain or loss is dependent on the nature 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.
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments
and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes
in the cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its
hedge transactions.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective,
are recognised in other comprehensive income and accumulated in equity under hedging reserves. Changes in the fairvalue relating to the ineffective portion is recognised immediately in profit and loss. Where the hedged item results in therecognition of a non-financial asset or of a non-financial liability, the deferred gains and losses and included in the initial
measurement of the cost of the asset or liability. The deferred amounts are ultimately recognised in profit and loss as thehedged item affects profit and loss. Otherwise, amounts deferred in hedging reserves are transferred to profit and loss inthe same periods during which the hedged firm commitment or forecasted transaction affects profit and loss. The gain orloss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in profit andloss within finance cost at the same time as the interest expense on the hedged borrowings. 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 existingin hedging reserves at that time remains in the hedging reserves and is recognised when the committed or forecasted
transaction ultimately is recognised 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.

88 Mandarin Oriental International Limited

34 Material accounting policies continued
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 IFRS 9. Changes in the fair value of any derivative
instruments that do not qualify for hedge accounting under IFRS 9 are recognised 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 recognised in othercomprehensive income and accumulated in exchange reserves; the gain or loss relating to the ineffective portionis recognised 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.

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 recognised amounts and there is an intention to settle on a net basis or realise 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.

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 fair value gains or losses on revaluation of investment
properties and investments which are measured at fair value through profit and loss; gains and losses arising fromthe sale of businesses, investments and properties; impairment of non-depreciable intangible assets, associates
and joint ventures and other investments; provisions for the closure of businesses; acquisition-related costs in businesscombinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.

Earning 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.

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

Annual Report 2023

89

Notes to the Financial Statements Continued

34 Material accounting policies continued
Revenue recognitioni) Revenue from hotel ownership comprises amounts earned in respect of rental of rooms, food and beverage sales,
and other ancillary services and goods supplied by the subsidiary hotels.
Revenue is recognised over the period when rooms are occupied or services are performed.
Revenue from the sale of food and beverages and goods is recognised at the point of sale when the food and beverages
and goods are delivered to customers.
Payment is due immediately when the hotel guest occupies the room and receives the services and goods.
ii) Revenue from hotel and residences branding and management comprises gross fees earned from the branding andmanagement of all the hotels and residences operated by the Group.
Branding and management fees are recognised over time as determined by the relevant contract, taking into accountthe performance of the hotels, and the sales and operating expenses of the residences. Fees charged to the subsidiary
hotels are eliminated upon consolidation.
Hotels and residences are invoiced in accordance with the terms of contract and fees are payable when invoiced.
iii) Rental income from properties and other tangible assets are accounted for on an accrual basis over the lease terms.

35 Standards and amendments issued but not yet effective
A number of amendments effective for accounting periods beginning after 2023 have been published and will be adopted
by the Group from their effective dates. The Group is currently assessing the potential impact of these amendments but
expects their adoption will not have a significant impact on the Group’s consolidated financial statements.

36 Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest raterisk and price 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 foreign exchange rates
and to minimise the Group’s financial risks. The Group uses derivative financial instruments, principally interest rate
swaps and caps, and forward foreign exchange contracts as appropriate for hedging transactions and managing theGroup’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.
Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item.
The effective portion of the change in the fair value of the hedging instrument is deferred into the cash flow hedge reservethrough other comprehensive income and will be recognised in profit and loss when the hedged item affects profit andloss. In general, the volatility in profit or loss can be reduced by applying hedge accounting.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectivenessassessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

90 Mandarin Oriental International Limited

36 Financial risk management continued
Financial risk factors continued
The Group enters into interest rate swaps and caps that have similar critical terms as the hedged item, such as reference
rate, reset dates, payment dates, maturities and notional amount. The Group does not hedge 100% of its loans, therefore
the hedged item is identified as a proportion of the outstanding loans up to the notional amount of the swaps. As all
critical terms matched during the year, effective economic relationship existed between the swaps and the loans.
The Group performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged
item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Group
uses the hypothetical derivative method to assess effectiveness.
Hedge ineffectiveness for interest rate swaps may occur due to:i) The credit value/debit value adjustment on the interest rate swaps which is not matched by the loan;ii) Differences in critical terms between the interest rate swaps and loans; andThe ineffectiveness during 2023 or 2022 in relation to the interest rate swaps was not material.
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’sfunctional 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 a material
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 a currency
that is not the functional currency. In 2023 and 2022, the Group’s principal foreign exchange exposure was with
the Euro. At 31st December 2023, if the United States dollar had strengthened/weakened by 10% against Eurowith all other variables unchanged, the Group’s loss after tax would have been US$0.5 million (2022: US$0.1 million)
higher/lower, arising from foreign exchange losses/gains taken on translation. The impact on amounts attributable
to the shareholders of the Company would be US$0.5 million (2022: US$0.1 million) lower/higher. This sensitivity
analysis ignores any offsetting foreign exchange factors and has been determined assuming that the change in foreignexchange rates had occurred at 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 2023 that are denominatedin a non-functional currency. Differences resulting from the translation of financial statements into the Group’s
presentation currency are not taken into consideration.

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91

Notes to the Financial Statements Continued

36 Financial risk management continued
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 and assets.
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 such as
interest rate swaps and caps. The Group monitors interest rate exposure on a monthly basis by currency and business
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 2023, the Group’s interest rate
hedge was 51% (2022: 45%), with an average tenor of 0.2 years (2022: 1.1 years). The interest rate profile of theGroup’s borrowings after taking into account hedging transactions are set out in note 21.
Cash flow interest rate risk is the risk that changes in market interest rates will impact cash flows arising from variable
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. Details of interest rate swaps are set out in note 29.
At 31st December 2023, if interest rates had been 100 basis points higher/lower with all other variables held constant,
the Group’s loss after tax would have been US$1.0 million (2022: US$1.7 million) higher/lower, and hedging reserves
would have been US$0.5 million (2022: US$2.7 million) higher/lower, as a result of fair value changes to cash flow
hedges. The sensitivity analysis has been determined assuming that the change in interest rates had occurred at thebalance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative
financial instruments in existence at that date. There is no significant sensitivity resulting from interest rate caps.
The 100 basis point increase or decrease represents management’s assessment of a reasonably possible change in thoseinterest 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 affectthe interest income or expense of non-derivative variable-interest financial instruments, the interest payments ofwhich are not designated as hedged items of cash flow hedges against interest rate risks. As a consequence, they areincluded in the calculation of loss after tax sensitivities. Changes in the market interest rate of financial instrumentsthat were designated as hedging instruments in a cash flow hedge to hedge payment fluctuations resulting frominterest rate movements affect the hedging reserves and are therefore taken into consideration in the equity-relatedsensitivity calculations.

92 Mandarin Oriental International Limited

36 Financial risk management continued
Financial risk factors continuedi) Market risk continued
Price risk
The Group is exposed to price risk from its investments which are measured at fair value through profit and loss.
Gains and losses arising from changes in the fair value of these investments are recognised in profit and loss orother comprehensive income according to their classification. The performance of these investments are monitored
regularly, together with an assessment of their relevance to the Group’s long-term strategic plans. Details of theseinvestments are contained in note 14.
The Group’s interest in these investments are unhedged. At 31st December 2023, if the price of these investments had
been 25% higher/lower with all other variables held constant, non-trading operating profit and total equity would
have been US$3.5 million (2022: US$3.5 million) higher/lower. The sensitivity analysis has been determined basedon a reasonable expectation of possible valuation volatility over the next 12 months.
ii) Credit risk
The Group’s credit risk is primarily attributable to deposits with banks, credit exposures to customers and derivative
financial instruments with a positive fair value. The Group has credit policies in place and the exposures 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 utilisation of credit limits is regularly monitored. At 31st December 2023,
94% (2022: 91%) of deposits and balances with banks and financial institutions were made to institutions withcredit ratings of no less than A- (Fitch). Similarly transactions involving derivative financial instruments are withbanks 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 withcounterparties 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 toother 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.

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93

Notes to the Financial Statements Continued

36 Financial risk management continued
Financial risk factors continuediii) 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 2023, total available borrowing facilities amounted to US$1,074 million (2022: US$1,073 million)of which US$415 million (2022: US$602 million) was drawn down. Undrawn committed facilities, in the form of
revolving credit and term loan facilities totalled US$659 million (2022: US$471 million), in addition to cash andbank balances of US$190 million* (2022: US$226 million).
Included in the total available borrowing facilities of US$1,074 million, the Group has borrowing facilities of
US$754 million due to mature within 2024. The Group has refinanced bank facilities of US$409 million for three tofive years in February 2024.
The table below analyses the Group’s non-derivative financial liabilities and net settled derivative financial liabilities
into relevant maturity groupings based on the remaining period at 31st December 2023 and 2022 to the contractual
maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential
for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Within
one
year
US$m

Betweenone and
two years
US$m

Betweentwo andthree years
US$m

Betweenthree andfour years
US$m

Betweenfour andfive years
US$m

Beyond
five
years
US$m

Total
undiscounted
cash flows
US$m

2023
423.2

0.7

–

–

–

–

423.9

7.7

7.5

7.1

5.2

4.8

102.8

135.1

157.0

–

–

–

–

–

157.0

Borrowings

27.3

611.9

–

–

–

–

639.2

Lease liabilities

7.7

8.0

7.8

7.4

5.4

114.5

150.8

141.6

–

–

–

–

–

141.6

Borrowings
Lease liabilities
Creditors
2022

Creditors* The cash and bank balances of US$190 million included cash and bank balances of US$11 million classified as assets held for sale(refer note 19).

94 Mandarin Oriental International Limited

36 Financial risk management continued
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 maximise benefits to shareholders and other stakeholders. Capital is equity as shown in the consolidatedbalance 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 the amountof dividends paid to shareholders, purchase Group shares, return capital to shareholders, issue new shares or sell assets
to reduce debt.
The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover before
taking into account the impact of IFRS 16 ‘Leases’. The gearing ratio is calculated as net debt divided by shareholders’funds on an IFRS basis, where the Group’s freehold and leasehold interests are carried in the consolidated balance sheet
at amortised cost, or alternatively on an adjusted shareholders’ funds basis which takes into account the fair market valueof the Group’s freehold and leasehold interests. Net debt is calculated as total borrowings less bank and cash balances.
Interest cover is calculated as underlying operating profit before the deduction of amortisation/depreciation of right-of-use
assets, net of actual lease payments, and the Group’s share of underlying results of associates and joint ventures, divided
by net financing charges before the deduction of capitalised interest and excluding interest on lease liabilities. The Group
does not have a defined gearing or interest cover benchmark or range.
The ratios at 31st December 2023 and 2022 are as follows:
2023

2022

– based on shareholders’ funds

8%

11%

– based on adjusted shareholders’ funds

5%8%Interest cover

6.7

1.9

Gearing ratio

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) 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 values of unlisted investments, mainly include club and school debentures, are determined using prices
quoted by brokers at the balance sheet date.
b) Inputs for assets or liabilities that are not based on observable market data (‘unobservable inputs’)
The fair values of other unlisted investments, are determined using valuation techniques by reference toobservable current market transactions (including price-to earnings and price-to book ratios of listed securities
of entities engaged in similar industries) or the market prices of the underlying investments with certain degreeof entity specific estimates or discounted cash flow by projecting the cash inflows from these investments.
There were no changes in valuation techniques during the year.
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Notes to the Financial Statements Continued

36 Financial risk management continued
Fair value estimation continuedi) Financial instruments that are measured at fair value continued
The table below analyses financial instruments carried at fair value at 31st December 2023 and 2022, by the levels in
the fair value measurement hierarchy.
Observablecurrent market
transactions
US$m

Unobservable
inputs
US$m

Total
US$m

5.6

8.4

14.0

2.4

–

2.4

8.0

8.4

16.4

6.0

8.0

14.0

2023
AssetsOther investments
Derivative financial instruments at fair value– through other comprehensive income

2022
AssetsOther investments
Derivative financial instruments at fair value– through other comprehensive income

17.4

–

17.4

23.4

8.0

31.4

There were no transfers among the two categories during the year ended 31st December 2023 and 2022.
Movements of financial instruments which are valued based on unobservable inputs during the year ended
31st December are as follows:
Unlisted investments
2023
2022
US$m
US$m

At 1st January

8.0

10.5

Additions

0.4

0.2

Disposals

–

(2.7)

8.4

8.0

At 31st Decemberii) Financial instruments that are not measured at fair value
The fair values of current debtors, cash and bank balances, current creditors, current borrowings and current leaseliabilities 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. The fair values of non-current lease liabilities are estimated using
the expected future payments discounted at market interest rates.

96 Mandarin Oriental International Limited

36 Financial risk management continued
Financial instruments by category
The fair values of financial assets and financial liabilities, together with carrying amounts at 31st December 2023 and2022 are as follows:
Fair value ofFair value
Financialhedging
throughassets at
instruments profit and loss amortised cost
US$m
US$m
US$m

Other
financialliabilities
US$m

Total
carrying
amount
US$m

Fair
value
US$m

2023
Financial assets measured at fair value
–

14.0

–

–

14.0

14.0

2.4

–

–

–

2.4

2.4

2.4

14.0

–

–

16.4

16.4

Amounts due from associates andjoint ventures

–

–

122.3

–

122.3

122.3

Debtors

–

–

87.1

–

87.1

87.1

Cash and bank balances

–

–

190.3

–

190.3

190.3

–

–

399.7

–

399.7

399.7

Borrowings

–

–

–

(415.5)(415.5)(415.5)

Lease liabilities

–

–

–

(116.4)(116.4)(116.4)

Trade and other payables excluding
non-financial liabilities

–

–

–

(157.0)(157.0)(157.0)–––(688.9)(688.9)(688.9)

–

14.0

–

–

14.0

14.0

17.4

–

–

–

17.4

17.4

17.4

14.0

–

–

31.4

31.4

Amounts due from associates andjoint ventures

–

–

164.1

–

164.1

164.1

Debtors

–

–

69.8

–

69.8

69.8

Cash and bank balances

–

–

226.2

–

226.2

226.2

–

–

460.1

–

460.1

460.1

Borrowings

–

–

–

(602.0)(602.0)(602.0)

Lease liabilities

–

–

–

(129.4)(129.4)(129.4)

Trade and other payables excluding
non-financial liabilities

–

–

–

(141.6)(141.6)(141.6)–––(873.0)(873.0)(873.0)

Other investments
Derivative financial instruments

Financial assets not measured at fair value

Financial liabilities not measured
at fair value

2022
Financial assets measured at fair value
Other investments
Derivative financial instruments

Financial assets not measured at fair value

Financial liabilities not measured
at fair value

The 2022 comparatives have been represented to include amounts due from associates and joint ventures.

Annual Report 2023

97

Notes to the Financial Statements Continued

37 Critical accounting estimates and judgements
Estimates and judgements used in preparing the financial statements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to be reasonableaccording to circumstances and conditions available. The existing and potential impacts arising from climate change has
been considered when applying estimates and assumptions in the preparation of the financial statements, including theGroup’s assessment of impairment of assets and the independent valuers’ valuation of the Group’s investment properties.
The estimates and assumptions that have a significant effect on the reported amounts of assets and liabilities, and income
and expenses are discussed below.

Investment properties
The fair value of the under development commercial property is determined by independent valuers on an open market
basis using the residual method. The residual method is also based on assumptions about the estimated costs to complete
the development, the developer’s estimated profit and margin for risk, prevailing market rent and capitalisation rates(refer note 12).
Consideration has been given to assumptions that are mainly based on market conditions existing at the balance sheet date.
The independent valuers have considered climate change, sustainability, resilience and environmental, social and governance(‘ESG’) within their valuations. Properties held by the Group are considered to currently display ESG characteristics
that would be expected in the market, and therefore there were no direct and tangible pricing adjustments required to
the valuation of the investment properties. The Group will monitor these considerations for each reporting period.

Impairment of assets
The Group tests annually whether goodwill that has indefinite useful life suffered any impairment. Other assets such as
tangible fixed assets and development project contract costs are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount of the asset exceeds its recoverable amount. The recoverable amount ofan asset or a cash generating unit is determined based on the higher of its fair value less costs to sell and its value in use,
calculated on the basis of management’s assumptions and estimates. Changing the key assumptions, including thediscount rates or the growth rate assumptions in the cash flow projections, could materially affect the value-in-use
calculations.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group
uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s
past history, existing market conditions as well as forward looking estimates at the balance sheet date (refer note 17).

Tangible fixed asses 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.

98 Mandarin Oriental International Limited

37 Critical accounting estimates and judgements continued
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 the related
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. There is a rebuttablepresumption in International Financial Reporting Standards that investment properties measured at fair value arerecovered through sale. Thus deferred tax on revaluation of investment property under development held by the Group
is calculated at the capital gain tax rate.
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 utilised. The outcome of their actual
utilisation may be different.

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 thatare denominated in the currency in which the benefits will be paid and that have terms to maturity approximating theterms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions.

LeasesLiabilities and the corresponding right-of-use assets arising from leases are initially measured at the present value of thelease payments at the commencement date, discounted using the interest rates implicit in the leases, or if that rate cannot
be readily determinable, the Group uses the incremental borrowing rate. The Group generally uses the incremental
borrowing rate as the discount rate.
The Group applies the incremental borrowing rate with reference to the rate of interest that the Group would haveto pay to borrow, over a similar term as that of the lease, the funds necessary to obtain an asset of a similar value tothe right-of-use asset in the country where it is located.
Lease payments to be made during the lease term will be included in the measurement of a lease liability. The Group
determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option toextend the lease if it is reasonably certain to be exercised, or any period covered by an option to terminate the lease,
if it is reasonably certain not to be exercised.

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

Annual Report 2023

99

Independent Auditor’s Report

To the Members of Mandarin Oriental International Limited(incorporated in Bermuda with limited liability)
Report on the Audit of the Consolidated Financial Statements
OpinionWhat we have audited
The consolidated financial statements of Mandarin Oriental International Limited (the “Company”) and its subsidiaries(the “Group”), included within the Annual Report, which comprise:
the Consolidated Balance Sheet at 31st December 2023;
the Consolidated Profit and Loss Account for the year then ended;
the Consolidated Statement of Comprehensive Income for the year then ended;
the Consolidated Statement of Changes in Equity for the year then ended;
the Consolidated Cash Flow Statement for the year then ended; andthe Notes to the Consolidated Financial Statements, comprising material accounting policy information and otherexplanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to theconsolidated financial statements. These disclosures are cross-referenced from the consolidated financial statements andare identified as audited.
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31st December 2023, and of its consolidated financial performance and its consolidated cash flows forthe year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board (“IASB”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants(including International Independence Standards) issued by the International Ethics Standards Board for Accountants(“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
Our Audit Approach
Overview
Materiality
Overall Group materiality: US$29.6 million, based on 1% of the net assets of the Group.
Specific Group materiality, applied to balances and transactions not related to investment properties: US$4.3 million,
based on 5% of consolidated underlying profit before tax of the Group.

100 Mandarin Oriental International Limited

Audit scope
A full scope audit was performed on seven of the Mandarin Oriental hotels and two entities engaged in hotelmanagement services and holding the under development leasehold commercial investment property.
These hotels and entities, together with procedures performed over specific balances and transactions for one further
hotel, one further entity engaged in hotel management services, and work performed at the Group level, accounted
for 97% of the Group’s revenue, 97% of the Group’s loss before tax, 93% of the Group’s underlying profit before tax
and 83% of the Group’s net assets.
Key audit matter identified in our audit is summarised as follows:
Valuation of under development leasehold commercial investment property.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated financial statements. In particular, we considered where the Directors made subjective judgements; forexample, in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters, consideration of whether there was evidence of bias by the Directors that
represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonableassurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise
due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
group materiality for the consolidated financial statements as a whole as set out in the table below. These, together withqualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial
statements as a whole.
Overall Group materiality

US$29.6 million

How we determined it

1% of the net assets of the Group

Rationale for benchmark applied

Net assets is a primary measure used by the shareholders in assessing theperformance of the Group, together with the consolidated underlying profit
before tax, which we have used as the basis for our specific materiality as
detailed below.

We set a specific materiality level of US$4.3 million, which was applied to balances and transactions not related toinvestment properties. This was based upon 5% of the consolidated underlying profit before tax of the Group for the year
ended 31st December 2023. In arriving at this judgement, we had regard to the fact that underlying profit before tax is
one of the primary financial indicators of the Group.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall
Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
US$0.4 million. We would also report misstatements below these amounts that in our view, warranted reporting for
qualitative reasons.

Annual Report 2023

101

Independent Auditor’s Report Continued

Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter

How our audit addressed the Key Audit Matter

Valuation of under development leasehold commercial
investment property
Refer to note 34 (Material accounting policies), note 37(Critical accounting estimates and judgements) and note
12 (Investment properties) to the financial statements.
The fair value of the Group’s under development
leasehold commercial investment property amounted
to US$1,971.9 million at 31st December 2023, with arevaluation loss of US$487.6 million recognised as a
non-trading item in the Consolidated Profit and Loss
Account for the year.
The valuation of the under development leaseholdcommercial investment property is inherently subjective
due to, among other factors, the individual nature of
the property, its location, prevailing market returns andexpected future rentals.
The valuation was carried out by a third party valuer(the “valuer”). There is inherent estimation uncertainty
in determining a property’s valuation as the valuation
involves assumptions, judgements and estimates in
key areas.
The valuation was derived using the residual method.
Judgement is required in determination of the grossdevelopment value, estimated costs to complete andexpected developer’s profit margin.
We focused on the valuation of the under development
leasehold commercial investment property due tothe significant judgements and estimates involved
in determining the valuation.

We understood management’s controls and processes
for determining the valuation of the under development
leasehold commercial investment property and assessed
the inherent risk of material misstatement by considering
the degree of estimation uncertainty and the judgement
involved in determining assumptions to be applied.
We assessed the qualification and expertise of the valuer,
considering whether there were any matters that might
have affected their objectivity or may have imposed
scope limitations upon its work. We found no evidence
to suggest that the objectivity of the valuers in theirperformance of the valuations was compromised.
We read the valuation report to consider whether thevaluation methodology used was appropriate and suitablefor use in determining the fair value.
The audit team, including our valuation experts,
discussed with the valuer the methodology and key
assumptions applied in the valuation, and assessed key
assumptions including:the appropriateness of the key assumptions adopted
in the assessment of the gross development value bycomparing them with comparable market data onyields and unit rentals;
the expected developer’s profit margin by comparing
the adopted parameters with the market norm in theindustry; andthe estimated construction costs to complete,by examining the approved project budget, andevaluated past budget to actual variance to assess
the reliability of the project budget.
With the support of our internal valuation experts, we
also questioned the external valuer as to the extent thatclimate change and related environmental, social andgovernance (“ESG”) matters have been considered in
the valuation.

102 Mandarin Oriental International Limited

Key Audit Matter

How our audit addressed the Key Audit Matter

Valuation of under development leasehold commercial
investment property continued
Based on the procedures performed, we found thatthe methodology used in preparing the valuation wasappropriate and that the key assumptions appliedin the valuation were supportable based on theavailable evidence.
We also assessed the adequacy of disclosures related tothe under development leasehold commercial investment
property and related fair value measurements in thecontext of IFRS Accounting Standards. We are satisfied
that appropriate disclosure has been made.
How We Tailored Our Group Audit Scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industries in which the Group operates.
The Group’s accounting processes are structured around finance functions, which are responsible for their own
accounting records and controls, which in turn, report financial information to the Group’s finance function to enable
them to prepare consolidated financial statements.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performedby members of the Group engagement team or by component auditors from member firms within the PwC Network
operating under our instruction. Where the work was performed by component auditors, we determined the level ofinvolvement necessary for us to have in the audit work at those components to be able to conclude whether sufficient,appropriate audit evidence had been obtained as a basis for our opinion on the financial statements as a whole. The Group
engagement team was involved in the significant reporting hotels and entities in scope for Group reporting during theaudit cycle through a combination of meetings, visits and conference calls. The engagement partner and other seniorteam members undertook visits to both London and Tokyo during the year to direct and oversee the audit, along withregular communication through conference calls and remote as well as on-site review of the work of component teamsin those locations.
A full scope audit was performed on seven of the Mandarin Oriental hotels and two entities engaged in hotelmanagement services and holding the under development leasehold commercial investment property. These hotels
and entities, together with procedures performed over specific balances and transactions for one further hotel, one
further entity engaged in hotel management services, and work performed at the Group level, accounted for 97% of
the Group’s revenue, 97% of the Group’s loss before tax, 93% of the Group’s underlying profit before tax and 83% of
the Group’s net assets.
This gave us the evidence we needed for our opinion on the consolidated financial statements as a whole.

Annual Report 2023

103

Independent Auditor’s Report Continued

Other Information
The Directors of the Company are responsible for the other information. The other information comprises all of
the information included in the Annual Report other than the consolidated financial statements and our auditor’sreport thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors and the Audit Committee for the Consolidated Financial Statements
As explained more fully in the Responsibility Statements and the Corporate Governance section in the Annual Report,
the Directors of the Company are responsible for the preparation of the consolidated financial statements that give a trueand fair view in accordance with IFRS Accounting Standards as issued by the IASB, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
The Audit Committee assists the Directors in discharging their responsibilities for overseeing the Group’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.

104 Mandarin Oriental International Limited

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or,if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit Committee, we determine those matters that were of most significancein the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matteror when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.

Annual Report 2023

105

Independent Auditor’s Report Continued

Use of this report
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 these opinions,
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.
The engagement partner on the audit resulting in this independent auditor’s report is Pui Shan, Lo.
Other Matter
In due course, as required by the United Kingdom Financial Conduct Authority Disclosure Guidance and Transparency
Rule 4.1.14R, these consolidated financial statements will form part of the ESEF-prepared annual financial report filed
on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory
Technical Standard (“ESEF RTS”). This auditor’s report provides no assurance over whether the annual financial reportwill be prepared using the single electronic format specified in the ESEF RTS.

PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
7th March 2024

106 Mandarin Oriental International Limited

Report of the Valuers

To Mandarin Oriental International Limited
Dear Sirs

Revaluation of Under Development Leasehold Commercial Investment Property
Further to your instruction, we have valued in our capacity as external valuers of the Causeway Bay site underdevelopment at No. 281 Gloucester Road, Causeway Bay, Hong Kong, being a commercial investment property
held on lease as described in the consolidated financial statements of Mandarin Oriental International Limited.
We are of the opinion that the market value of the commercial investment property as at 31st December 2023 was
US$1,971,900,000 (United States Dollar One Billion Nine Hundred Seventy One Million Nine Hundred Thousand).
Our valuation was prepared in accordance with the International Valuation Standards by the International Valuation
Standards Council and The HKIS Valuation Standards by The Hong Kong Institute of Surveyors. We have inspected
the property without either conducting site nor structural surveys or testing of the services.
We have been provided with details of tenure, proposed development scheme and other relevant information. The property
has been valued by the residual method, which is based on an assessment of the completed gross development value andthe deduction of development costs and the developer’s return to arrive at the residual value of a development property.
For the assessment of the completed gross development value, given the heterogeneous nature of real estate properties,
appropriate adjustments are usually required to allow for any qualitative or quantitative differences that may affect thevalues likely to be achieved by the property under consideration.

Yours faithfully

Jones Lang LaSalle Limited
Hong Kong
29th February 2024

Annual Report 2023

107

Five Year Summary

Consolidated Profit and Loss Account
2019
US$m

2020
US$m

2021
US$m

2022
US$m

2023
US$m

566.5

183.7

316.9

454.1

558.1

Operating loss

(29.0)(660.0)(99.3)(42.6)(341.0)Net financing charges(14.7)(12.6)(12.7)(14.4)(9.9)

Revenue

Share of results of associates and joint ventures(1.7)(26.8)(21.8)

9.7(0.9)

Loss before tax(45.4)(699.4)(133.8)(47.3)(351.8)Tax(10.2)

19.4

(7.6)

(2.1)

(13.5)

Loss after tax(55.6)(680.0)(141.4)(49.4)(365.3)

Loss attributable to shareholders(55.5)(680.1)(141.4)(49.5)(365.4)

Underlying profit/(loss) attributable to shareholders

41.2(205.9)(68.1)

7.6

81.0

Loss per share (US¢)(4.39)(53.84)(11.19)(3.92)(28.91)

Underlying earnings/(loss) per share (US¢)

3.26(16.30)(5.39)

0.60

6.41

Dividends per share (US¢)

1.50

–

–

–

5.00

2019
US$m

2020
US$m

2021
US$m

2022
US$m

2023
US$m

Intangible assets

53.0

45.4

46.7

45.7

43.7

Tangible assets

Consolidated Balance Sheet

1,174.6

1,181.5

1,098.2

916.3

618.6

Right-of-use assets

300.3

297.4

273.3

242.4

229.1

Investment properties

2,967.7

2,528.3

2,462.0

2,472.6

2,060.3

Associates and joint ventures

203.1

231.6

201.5

203.8

155.8

Other investments

15.9

16.1

16.5

14.0

14.0

Deferred tax assets

10.6

17.8

13.7

14.2

14.0

Pension assets

1.3

5.5

7.1

3.0

0.6

Non-current debtors

6.2

5.1

8.9

12.2

10.9

Net current assets/(liabilities)

181.4

19.5

113.2

142.9

(27.2)

Long-term borrowings(568.6)(606.6)(727.8)(599.8)(0.6)

Non-current lease liabilities(168.4)(170.1)(147.4)(123.5)(110.6)

Deferred tax liabilities(59.4)(47.1)(50.1)(41.6)(42.0)

Pension liabilities

(0.2)

(0.3)

(0.3)

(0.1)

–

Non-current creditors(0.9)(10.9)

(3.2)

(4.5)

(1.1)

Net assets

4,116.6

3,513.2

3,312.3

3,297.6

2,965.5

Share capital

63.2

63.2

63.2

63.2

63.2

499.7

499.7

500.5

500.7

500.9

Revenue and other reserves

3,550.1

2,946.6

2,745.1

2,730.2

2,396.3

Shareholders’ funds

4,113.0

3,509.5

3,308.8

3,294.1

2,960.4

3.6

3.7

3.5

3.5

5.1

4,116.6

3,513.2

3,312.3

3,297.6

2,965.5

3.26

2.78

2.62

2.61

2.34

2019
US$m

2020
US$m

2021
US$m

2022
US$m

2023
US$m

Share premium

Non-controlling interests
Total equity
Net asset value per share (US$)

Consolidated Cash Flow Statement
Cash flows from operating activities

112.9(83.5)

26.4

56.5

141.2

Cash flows from investing activities(80.4)(108.5)(32.5)

86.7

30.9

Net cash flow before financing activities

32.5(192.0)

(6.1)

143.2

172.1

Cash flow per share from operating activities (US¢)

8.94(6.61)

2.09

4.47

11.17

108 Mandarin Oriental International Limited

Responsibility Statements

The Directors of the Company confirm to the best of their knowledge that:a) the consolidated financial statements prepared in accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations as issued by the International AccountingStandards Board, give a true and fair view of the assets, liabilities, financial position and profit or loss of
the Group; andb) the Chairman’s Statement, Group Chief Executive’s Review, Financial Review and the description of Principal Risks
and Uncertainties facing the Group as set out in this Annual Report, which constitute the management reportrequired by the Disclosure Guidance and Transparency Rule 4.1.8, include a fair review of all information required
to be disclosed under Rules 4.1.8 to 4.1.11 of the Disclosure Guidance and Transparency Rules issued by the
Financial Conduct Authority in the United Kingdom.

For and on behalf of the Board

Laurent Kleitman
Matthew Bishop
Directors
7th March 2024

Annual Report 2023

109

Corporate Governance

Overview of the Group’s governance approach
The Mandarin Oriental Hotel Group (Mandarin Oriental International Limited (the ‘Company’) and its subsidiaries
together known as the ‘Group’) understands the value of good corporate governance in driving the long-term sustainablesuccess of business. It attaches importance to the corporate stability that strong governance brings, and the opportunities
that result from it being part of the Jardine Matheson Holdings Limited (‘Jardine Matheson’) group.
The Group is committed to high standards of governance. The system of governance it has adopted has been developed,
over many years, by the members of the Jardine Matheson group, and both the Group and its stakeholders regard it
as appropriate to the nature of its business and the long-term strategy it pursues in its Asian markets. The Group’s
governance framework is tailored to its size, ownership structure, complexity and breadth of business. It enables theGroup to benefit from Jardine Matheson’s strategic guidance and professional expertise while at the same time ensuringthat the independence of the Board is respected and clear operational accountability rests with the Company’s executive
management teams.
The Company also ensures that the Group retains and promotes those characteristics and values of a family-owned
business that have enabled the Group to prosper over the long-term:
A long-term perspective – the Group takes a long-term view in its decision-making and investments and draws
on the many years’ experience of our Directors, as opposed to focussing on short-term profitability. This leads tolong-term, sustainable growth generation for our shareholders and benefits the communities where we operate.
Credibility, stability and trust – the credibility, stability and trust that family ownership brings to the business arehighly valued by our partners and other stakeholders, especially in developing markets.
Deep knowledge of the business and our markets – the involvement of many generations of the family in therunning of the Group has led to a deep understanding of how to drive successful growth by the business across its
markets, giving the Group a competitive advantage.
The Group believes that its stakeholders gain significant value from the long-standing governance approach the Group
has taken as a family-owned business and that it is therefore important to retain the key elements of this approach. It isalso important, without losing these benefits, to adapt to changing circumstances in our markets and, where appropriate,
to the developing expectations of stakeholders and changes in best practice.
Accordingly, the Company continues to focus on enhancing the Group’s approach to corporate governance moregenerally, focussing on changes that benefit the Group.
Independent Non-Executive Directors with a broad and diverse range of backgrounds are a valuable source of external
perspectives and are a key element of good governance and decision-making. The Company has taken steps to increase
the independence and diversity of its Board and the Company and the Group benefit from the expertise and experience
they bring.
During the year, the Company underwent several changes in its governance, Laurent Kleitman was appointed as the
new Group Chief Executive, succeeding James Riley, effective from 1st September 2023. Y.K. Pang retired from theBoard and the Audit Committee on 31st March 2024. Accordingly, from 1st April 2024, the Board comprised eight
Directors of whom 25% are considered Independent Non-Executive Directors, taking into account the independence
considerations under the UK Corporate Governance Code (the ‘Code’), and 13% are female. Richard Solomons wasappointed as Chairman of the Audit Committee on 2nd March 2023, and Jinqing Cai was appointed as a member ofthe Audit Committee on 2nd March 2023. The Company’s Audit Committee comprises a majority of Independent
Non-Executive Directors.
Having an effective corporate governance framework supports the Board in delivering the Group’s strategy and supports
long-term sustainable growth, and ensuring it operates transparently and in accordance with the best practice.

110 Mandarin Oriental International Limited

Group structure
Jardine Matheson is the ultimate holding company of the Group. The structural relationship between the Jardine
Matheson group and the Group is considered a key element of the Group’s success. By coordinating objectives,
establishing common values and standards, and sharing experience, contacts and business relationships, the Jardine
Matheson group companies, including Mandarin Oriental Hotel Group, aim to optimise their opportunities acrossthe countries in which they operate.

Governance and legal framework
The Company is incorporated in Bermuda and was established as an Asian-based hotel group, and has since extended its
operations to numerous destinations around the world. The primary listing of the Company’s equity shares is a standard
listing on the Main Market of the London Stock Exchange (the ‘LSE’). The Company also has secondary listings in
Singapore and Bermuda. As the Company has only secondary listings on these exchanges, many of the listing rules ofsuch exchanges are not applicable. Instead, the Company must release the same information in Singapore and Bermuda
as it is required to release under the rules which apply to it as a standard-listed company on the LSE.
As a company incorporated in Bermuda, the Company is governed by:
The Bermuda Companies Act 1981 (the ‘Bermuda Companies Act’);
The Bermuda Mandarin Oriental International Limited Consolidation and Amendment Act 1988 (as amended),pursuant to which the Company was incorporated and the Bermuda Mandarin Oriental International Limited
Regulations 1993 (as amended) was implemented; andThe Company’s Memorandum of Association and Bye-laws.
The shareholders can amend the Company’s Bye-laws by way of a special resolution at a general meeting of the Company.
The Company’s standard listing on the LSE means that it is bound by many, but not all, of the same rules aspremium-listed companies under the UK Listing Rules, the Disclosure Guidance and Transparency Rules (the ‘DTRs’)
issued by the Financial Conduct Authority in the United Kingdom (the ‘FCA’), the UK Market Abuse Regulation(the ‘MAR’) and the Prospectus Regulation Rules, including in relation to continuous disclosure, periodic financial
reporting, disclosure of interests in shares, market abuse and the publication and content of prospectuses in connection
with admission to trading or the offering of securities to the public. The Company is also subject to regulatory oversightfrom the FCA, as the Company’s principal securities regulator, and is required to comply with the Admission andDisclosure Standards of the Main Market of the LSE. In addition, the Company and its Directors are subject tolegislation and regulations in Singapore relating, among other things, to insider dealing.
Although some of the rules applicable to premium-listed companies do not apply to the Company, when the 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 which were then-applicable to the Company’s premium listing. As a result, theCompany adopted several governance principles (the ‘Governance Principles’) based on the then-applicable requirements
for a premium listing, which go further than the standard listing requirements.

Annual Report 2023

111

Corporate Governance Continued

Governance and legal framework continued
The key elements of the Governance Principles are as follows:
When assessing a significant transaction (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.
If the Company carries out a related party transaction which would require a sponsor to provide a fair and reasonable
opinion under the provisions of the UK Listing Rules, it will engage an independent financial adviser to confirm
that the terms of the transaction are fair and reasonable as far as the shareholders of the Company are concerned.
In addition, the Company shall observe the mandatory related party transaction rules under the DTRs, including
assessment, approval and disclosure requirements for material related party transactions, that apply to UK
standard- listed companies.
Further, as soon as the terms of a significant transaction or a related party transaction are agreed, the Company will
issue an announcement, providing such details of the transaction as are necessary for investors to evaluate the effect of
the transaction on the Company.
At each annual general meeting (‘AGM’), the Company will seek shareholders’ approval to issue new shares ona non-pre-emptive basis for up to 33% of the Company’s issued share capital, of which up to 5% can be issued for
cash consideration.
The Company adheres to a set of Securities Dealing Rules, which follow the provisions of MAR with respect tomarket abuse and disclosure of interests in shares.
The Company is not required to comply with the Code, which applies to all premium-listed companies and sets out the
governance principles and provisions expected to be followed by companies subject to the Code. However, the Company
does have regard to the Code in developing and implementing its approach to corporate governance and disclosure.

The management of the Group
The Board
The Board is responsible for ensuring that the Group is appropriately managed and achieves its strategic objectives, in a
way that is supported by the right culture, values and behaviours throughout the Group. The Group’s culture operates
provides the foundation for the delivery of our strategy and our long-term, sustainable success while generating value forshareholders. Our workforce policies and practices are consistent with our values and support the long-term, sustainablesuccess of the Group.
The Board is also responsible for ensuring that appropriate systems and controls are in place throughout the Group to
enable efficient management and well-grounded decision-making. Our business processes incorporate efficient internalreporting, robust internal controls, and supervision of current and emerging risk themes, all of which form a vital part ofour governance framework. As a key part of this, the Company Secretary has set up processes and systems to ensure thatall Directors receive information in a timely, accurate and clear manner. The Group uses a board paper distribution
portal to disseminate Board and Committee papers instantly and securely.
The Chairman facilitates discussions at Board meetings by ensuring all Directors have an opportunity to makecomments and ask questions. In addition, the Chairman, from time to time, discusses Group matters with Directors
individually and collectively outside of Board meetings. The Chairman also uses other gatherings of the Directors, suchas Board dinners, to facilitate discussions in a less formal environment. The Company Secretary has set up processes andsystems to ensure that all Directors receive information in a timely, accurate and clear manner. The Group uses a board
paper distribution portal to disseminate Board and Committee papers instantly and securely.

112 Mandarin Oriental International Limited

The Board continued
The Board has full power to manage the business affairs of the Company, other than matters reserved to be exercised by
the Company in general meeting under Bermuda legislation or the Company’s Bye-laws. Key matters for which theBoard is responsible include:
The overall strategic aims and objectives of the Group;
Establishing the Company’s purpose and values;
Approval of the Group’s strategy and risk appetite to align with the Group’s purpose and values;
Approval and oversight of the Group policy framework and approval of appropriate Group policies;
Approval of the annual budget and monitoring of performance against it;Oversight of the Group’s operations;
Approval of major changes to Group’s corporate or capital structure;
Approval of major capital expenditure and significant transactions in terms of size or reputational impact;
Approval of interim and annual financial statements upon recommendation from the Audit Committee, as well asinterim management statements;
Approval of the annual report and accounts;
Approval of dividend policy and the amount and form of interim and final dividend payments for approval byshareholders as required;
Ensuring relevant sustainability and ESG matters are incorporated into purpose, governance, strategy, decisionmaking and risk management;
Overseeing the management of risk within the Group;
Any significant changes to the Company’s accounting policies or practices, upon recommendation from the Audit Committee;
Appointment, re-appointment or removal of the external auditor, subject to shareholders’ approval, uponrecommendation from the Audit Committee;
Approval of matters relating to AGM resolutions and shareholder documentation;
Approval of all shareholder circulars, prospectuses and listing particulars issued by the Company; andApproval of material public announcements concerning matters decided by the Board.
Responsibility for certain matters, including the approval of borrowing facilities and of capital expenditures (otherthan significant capital expenditure which is required to be approved by the Board), has been delegated to the financecommittee established within the Hong Kong-based Group management company, Mandarin Oriental Hotel GroupInternational Limited (‘MOHG’), with specific written terms of reference outlining its role and authorities.
The Company sees the value of regularly reviewing the effectiveness of its processes, and making improvements
where appropriate.
Board activities
1. Strategy
We have always focussed on evolving our business to reflect changes in the environment in which we operate and theneeds of our customers, and we have invested in our digital capabilities, the Group’s brand and sustainability initiatives.
Our application of these principles over many years has delivered steady growth in returns, through economic cycles.
To facilitate oversight and provide opportunities for the Board to challenge and measure progress against the Group’s
strategic priorities, at each Board meeting, the Group Chief Executive and Chief Financial Officer provide updates on
the operational and financial performance of the Group.
In 2023, the Board meetings discussed strategy on various topics relevant to the Group. The Board meetings provide
Directors with the opportunity to review progress against strategic priorities, inform Directors about the latest trends
relevant to our businesses, assist the Directors in identifying opportunities and risks and give the Directors theopportunity to contribute views and ask questions of management and share experiences for the benefit of the Group.

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113

Corporate Governance Continued

The Board continued
Board activities continued
2. Operational performance
We operate in highly dynamic markets and need to constantly innovate and pivot our businesses to remain relevant
and achieve long-term, sustainable success. In the past years, Asia has seen a large influx of new capital, the rapid rise ofdigital companies and an increasing desire among consumers for convenient digital services. In response, we aim to put
innovation, operational excellence and an entrepreneurial spirit at the heart of everything we do.
At each Board meeting, an update is provided on each business segment which offers important insights into theopportunities and challenges faced by these areas. In addition, a deeper understanding of how our varied markets
function and perform and the implications for stakeholder-related issues equip the Board with the necessary perspective
to enhance strategic decision-making.
The Group attaches great importance to attracting, developing and retaining leadership talent. We strive to develop
leaders with an owner mindset and who are entrepreneurial in how they develop their businesses. This has helped theGroup to capitalise on new business opportunities to achieve long-term, sustainable growth. We continue to enhance our
performance management structures to recognise, reward and retain such talents. As the Group increasingly embraces
digital ways of working and invests in new economy businesses, we are focussed on recruiting and developing digitaltalent across our Group. To provide the Board with oversight of talent attraction, development and retention, progressof Inclusion, Equity and Diversity (‘IE&D’), and colleague engagement and movements, information on the Group’s
employees is provided at every Board meeting.
Building leadership capability to develop and grow diverse talent and strengthen future pipelines through tailoreddevelopment programmes is a key focus for the Board. The Board is committed to creating an inclusive workplace andreflecting the diversity of the communities we serve. The Group has a clear IE&D strategy in place to ensure thatcolleagues treat each other in a way they would expect others to treat them.
3. Financial performance and risk
We take a disciplined long-term approach to capital allocation, to maximise financial performance, maintain our
financial strength and manage risks. Over time, and in addition to be being part of the Jardine Matheson group ofbusiness, we have developed deep relationships with a diverse portfolio of well-capitalised, leading banks and corporate
partners, which have supported and continue to support our financial strength.
The Chief Financial Officer presents a detailed overview of the financial performance of the business at each meeting toensure the Board is provided with sufficient information to enable it to exercise the appropriate financial oversight andhas the opportunity to challenge the management as appropriate. This includes details of the performance of eachbusiness unit and an overview of the sales, profit, cash flow, debt levels and capital expenditure.
The Board also reviews the Group’s capital allocation, dividend policy and shareholder returns as well as the managementof the Group debt levels, interest cover and capital markets activities.
The Board has overall responsibility for risk management and is actively engaged in risk discussions. The Audit Committee,
on behalf of the Board, undertakes an annual assessment of the effectiveness of the management of the principal risksfacing the Group and actions taken to mitigate them, validating the key risks and approving any necessary actions arisingfrom the risk assessments. Maintaining and enhancing the risk and internal control environment is fundamental to theGroup’s governance framework and stewardship of the Company.

114 Mandarin Oriental International Limited

The Board continued
Board activities continued
4. Governance and stakeholder engagement
The Chief Financial Officer provides Directors with regular updates on stakeholder engagement, including engagementwith shareholders, governments and other relevant third parties, and relevant regulatory developments. Increasing the
Directors’ understanding of our stakeholders’ views supports the Board’s decision-making.
Updates from the Chief Financial Officer provide the Board with feedback on investor views and expectations, visibilityof market conditions, share price performance, shareholder returns and the future outlook.
Governance matters are discussed at Board meetings, including directors’ and officers’ insurance, litigation, regulatorychanges, review and approval of statutory reporting and shareholder documentation and governance-related matters.
The Chief Financial Officer provides the Board with Sustainability updates twice a year, which include the progressof the Group’s sustainability commitments, concerning the four strategic pillars, namely planet, colleagues, guest
and community.
In addition, the Audit Committee Chair provides an update on the activities of the Audit Committee to the Board after
each Audit Committee meeting.

Board composition and operational management
The Board’s composition and the way it operates provide stability, allowing the Company to take a long-term view as it
seeks to grow its business and pursue investment opportunities.
The Chairman has been appointed in accordance with the provisions of the Bye-laws of the Company, which provide thatthe chairman of Jardine Matheson, or any Director nominated by him, shall be the Chairman of the Company.
The Company has a dedicated executive management team led by 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. The chairman of Jardine Matheson has appointed the Jardines group managing director as
Managing Director of the Company. Reflecting this, and the Jardine Matheson group’s 80% interest in the Company’s
share capital, the Group Chief Executive and the Managing Director meet regularly. Similarly, the board of MOHG and
its finance committee are chaired by the Managing Director and include Mandarin Oriental Hotel Group executives andJardine Matheson’s deputy managing director, group finance director and group general counsel.
The presence of Jardine Matheson representatives on the Board and Audit Committee of the Company, as well as on theboard and finance committee of MOHG, provides an added element of stability to the Company’s financial planningand supervision, enhancing its ability to raise finance and take a long-term view of business development. In addition,
the presence of Jardine Matheson representatives on the Company’s Board, Audit, Nominations and Remuneration
Committees, as well as MOHG’s finance committee, also strengthens the ability of management to work effectively
together in exploiting the full range of the Jardine Matheson group’s commercial strengths.
As at 7th March 2024, the Company comprises nine Directors, two of whom (22%) – Jinqing Cai and Richard Solomons– are considered Independent Non-Executive Directors, taking into account the independence considerations under theCode. Y.K. Pang retired from the Board and the Audit Committee on 31st March 2024. Accordingly, from 1st April 2024,
the Board comprised eight Directors of whom 25% are considered Independent Non-Executive Directors, taking into
account the independence considerations under the Code. There are detailed succession plans in place to ensure thatplans are in place for orderly succession to the Board. The names of all the Directors and brief biographies appear on
pages 36 and 37 of this Annual Report.
Ben Keswick has been Chairman of the Board since 16th May 2013. John Witt has held the role of Managing Director
from 15th June 2020. Laurent Kleitman has been Group Chief Executive since 1st September 2023, to succeed James Riley.

Annual Report 2023

115

Corporate Governance Continued

Age of Director

Board composition and operational management continued
The Board considers that there is a clear division of responsibilities among the Chairman, the Managing Director and theGroup Chief Executive to ensure an appropriate balance of power and authority is maintained at all times.
Board composition details as at 7th March 2024 are shown below.

Capacity of Directors

Age of Directors
2
3

0

50-59

3

4

Non-Executive Directors

4

60-69

Executive Directors

Nationality of Directors

Tenure of Directors

5
12

Independent Non-Executive Directors

40-49

0

1

2

3

4

1
5

2
6

7

1
8

6
9

0

1

2

3

BritishChinese

5 years or below

Canadian

French6-10 years

1

2

4

5

6

7

8

9

4

5

6

7

8

9

Over 10 years

Directors’ experience
Health, beauty and lifestyle
Luxury retail
Food and beverage
Property management
Corporate governance, risk management and/or sustainability
Financial acumen
Strategy & business acumen
Executive leadership
International business
Hotel sector-related industry knowledge/experience
0

116 Mandarin Oriental International Limited

1

2

3

Board composition and operational management continued
The Board also considered the diversity of the Group’s Board and senior executives in the context of the new Listing
Rules’ requirements that listed companies should publish information on the gender and ethnic representation of theBoard and executive management. As at 31st December 2023, being the reference date for the purposes of 14.3.33R(1)(a)of the UK Listing Rules, which requires the disclosure of certain diversity statistics, and as shown below:
The Board met its target of having one Director from a minority ethnic background;
The Company does not currently meet the target of the Board comprising at least 40% female directors but willcontinue to take IE&D considerations into account for future Board appointments; andThe Board does not currently meet the target to have a female director occupying one of the senior Board positions(chair, chief executive or chief financial officer). The Directors who hold these roles were appointed following formal,
rigorous and transparent nomination procedures and are the most suitable and experienced individuals for their roles
and the Group’s needs. The Board will continue to take IE&D considerations into account for future appointments
for these roles.
The Company did not meet the targets of the Board comprising at least 40% female directors and having one of thesenior Board positions occupied by a female director due to the significant change to the composition of the Board andsenior management which would be required to meet these requirements. The Company will continue to take IE&D
considerations into account with respect to future appointments of directors and senior Board positions.
The table below illustrates the ethnic background and gender diversity of the Group’s Board and executive management –which includes the Company Secretary, but excludes administrative or support staff – pursuant to 14.3.33R(2) of UK
Listing Rules, as at 31st December 2023 which is our chosen reference date in accordance with the UK Listing Rules.

Number of
Board members

Percentage of
the Board

Number of senior
positions on
the Board (Group
Chief Executive,
Chief Financial
Officer, Senior
Independent
Director andChairman)

Men

8

89%

3

9

75%

Women

1

11%

–

3

25%

Not specified/prefer not to say

–

–

–

–

–

As at 31st December 20231

Number in
executive
management(MOHG Board
and Company
Secretary)

Percentage of
executive
management(MOHG Board
and Company
Secretary)

Gender diversity

Ethnic diversity
White British or other White(including minority-white groups)

6

67%

2

10

84%

Mixed/Multiple Ethnic Groups

1

11%

1

1

8%

Asian/Asian British

2

22%

–

1

8%

Black/African/Caribbean/Black British

–

–

–

–

–

Other ethnic group, including Arab

–

–

–

–

–

Not specified/prefer not to say

–

–

–

–

–

1 The numbers had been changed after the chosen reference date owing to the stepping down of Y.K. Pang from the Board of the Company and

MOHG on 31st March 2024.

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117

Corporate Governance Continued

Board composition and operational management continued
Data relating to the gender and ethnic diversity of the Board and executive management was gathered by the Company
Secretary via the collection of each individual’s identification documents, which are held within the Company’s securefiling system. Apart from the retirement of Y.K. Pang from the Board of the Company and MOHG on 31st March 2024,
there is no change in board composition since the reference date.
The Company has a Board Diversity Policy but does not have a separate Diversity Policy for the Audit Committee inplace. IE&D issues are and will be taken into account where relevant to Board and Audit Committee decisions.

Chairman
The Chairman’s role is to lead the Board, ensure its effectiveness while taking into account the Group’s various
stakeholders’ interests, and promote high standards of corporate governance.
The Chairman’s principal responsibilities are in the areas of strategy, external relationships, governance and people. In
addition, he leads the Board in overseeing the long-term strategic direction of the Group and approving its key businesspriorities. His key responsibilities include:
Leading, with the Managing Director and the Group Chief Executive, the development of the culture and values of
the Group;
Supporting the development and maintenance of relationships with existing and new key business partners,
governments and shareholders;
Ensuring, together with the Managing Director and Group Chief Executive, an appropriate focus on attracting andretaining the right people and carrying out succession planning for senior management positions;
Creating a culture of openness and transparency at Board meetings;
Building an effective Board supported by a robust governance framework;
Ensuring all Directors effectively contribute to discussions and feel comfortable in engaging in healthy debate andconstructive challenge;
Leading, with the Managing Director, the succession planning for the Group Chief Executive;
Ensuring all Directors receive accurate, timely and clear information; andPromoting effective communication between Executive and Non-Executive Directors (including the Independent
Non-Executive Directors).

Managing Director
The Managing Director acts as chairman of MOHG and of its finance committee and is a member of the Company’s
Nominations and Remuneration Committees. He has responsibility for representing Jardine Matheson, as the major
shareholder of the Company, including:
Providing oversight of the day to-day management by the Group Chief Executive and his leadership team ofthe business;
Carrying out ongoing reviews of the business, financial and operational performance against agreed objectives;
Providing regular feedback to the Group Chief Executive on his/her performance and conducting an annual
performance review;
Leading the Group Chief Executive succession planning;
Ensuring that there is appropriate discussion of future competencies required of the management team to executethe strategy;
Ensuring that the information submitted to the Board is of high quality and provided on a timely basis;
Ensuring the Board conducts reviews on past significant capex decisions; andCommunicating with shareholders as appropriate.

118 Mandarin Oriental International Limited

Group Chief Executive
The responsibility for running the Group’s business and all the executive matters affecting the Group rest with the Group
Chief Executive. The implementation of the Group’s strategy is delegated to the Company’s executive management, withdecision-making authority within designated financial parameters delegated to the MOHG finance committee. The
Group Chief Executive has day-to-day operational responsibility for:Effective management of the Group’s business;
Leading the development of the Company’s strategic direction and implementing the agreed strategy;
Identifying and executing new business opportunities;
Managing the Group’s risk profile and implementing and maintaining an effective framework of internal controls;
Developing targets and goals for his executive team;
Ensuring effective communication with shareholders and key stakeholders and regularly updating institutional
investors on the business strategy and performance;
Providing regular operational updates to the Board on all matters of significance relating to the Group’s businessor reputation;
Overseeing the Group’s capital allocation, business planning and performance;
Ensuring (together with the Chairman and the Managing Director) an appropriate focus on attracting and retaining
the right people and carrying out succession planning for senior management positions; andFostering innovation and entrepreneurialism to drive the Group’s business forward.

Non-Executive Directors
The Non-Executive Directors bring insight and relevant experience to the Board. They have responsibility for constructively
challenging the strategies proposed by the Executive Directors, and scrutinising the performance of management inachieving agreed goals and objectives. In addition, Non-Executive Directors work on individual initiatives as appropriate.

Board meetings
The Board usually holds four scheduled meetings each year, and ad hoc procedures are adopted to deal with urgent
matters between scheduled meetings. Board meetings are usually held in different locations around the Group’s markets.
In March 2023, an in-person Board meeting was held in Singapore. The May 2023 Board meeting was held virtually.
In-person Board meetings were held in Shenzhen, China in July 2023 and Shanghai, China in December 2023.
The Board receives high quality, up to date information for each of its meetings, which is provided to Directors via asecure online board information portal. The Company reviews the information provided to the Board regularly, to ensurethat it remains relevant to the needs of the Board in carrying out its duties.
The Directors of the Company who do not serve on the board of MOHG and who are based outside Asia will usually visit
Asia to discuss the Group’s business and inspect the Group’s hotels and branded residences.

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Corporate Governance Continued

Board attendanceDirectors are expected to attend all Board meetings. The table below shows the attendance at the scheduled 2023
Board meetings:
Meetings eligible
to attend

AttendanceDirectors
Non-Executive Directors
Ben Keswick

4/4

100%

Jinqing Cai

4/4

100%

Adam Keswick

4/4

100%

Archie Keswick

4/4

100%

Y.K. Pang1

4/4

100%

Richard Solomons

4/4

100%
100%

Executive Directors
John Witt

4/4

Laurent Kleitman2

1/1

100%

Matthew Bishop

4/4

100%

3/3

100%

Former Director
James Riley3
1 Y.K. Pang retired as Director on 31st March 2024.
2 Laurent Kleitman joined the Board as Director and was appointed as Group Chief Executive on 1st September 2023. In 2023, only one

Board meeting was held after 1st September 2023.
3 James Riley retired as Director and Group Chief Executive on 31st July 2023. In 2023, three Board meetings were held before 31st July 2023.

Appointment and retirement of Directors
There are detailed succession plans in place to ensure that plans are in place for orderly succession to the Board.
The Board is focussed on development and succession plans at both Board and executive level to strengthen the diverse
management pipeline. The Chairman, in conjunction with other Directors, reviews the size, composition, tenure andskills of the Board. The Chairman leads the process for new appointments, monitors Board succession planning, andconsiders independence, diversity, inclusion and Group governance matters when recommending appointments to
the Board. Non-Executive Directors are appointed on merit, against objective criteria and are initially appointed fora three-year term.
Upon appointment, all new Directors receive a comprehensive induction programme over several months. This isdesigned to facilitate their understanding of the business and is tailored to their individual needs. The Chief Financial
Officer and the Company Secretary are responsible for delivering the programme covering the Company’s core purpose
and values, strategy, key areas of the business and corporate governance.
The Chairman regularly assesses the time commitments of Directors to ensure that they each continue to havesufficient time for their role. He also considers the potential additional time required in the event of corporate stress.
Prior to appointment, the Chairman assesses the commitments of a proposed candidate, including other directorships,
to ensure they have sufficient time to devote to the role. Any Director’s external appointments, which may affect existingtime commitments relevant to the Board, must be agreed with the Chairman in advance.

120 Mandarin Oriental International Limited

Appointment and retirement of Directors continued
The Board appoints each new Director, and the Nominations Committee has been established to assist the Board insuch matters. In accordance with the Company’s Bye-laws, each new Director is subject to retirement and re-election
at the first AGM after the appointment. After that, Directors are subject to retirement by rotation requirements underthe Bye-laws, whereby one-third of the Directors retire at the AGM each year. These provisions apply to both Executive
and Non-Executive Directors, but the requirement to retire by rotation does not extend to the Chairman or Managing
Director of the Company. The Company has determined that it is appropriate for the Chairman and the Managing
Director to be exempted from the retirement by rotation requirements because an important part of the Group’s strong
governance is corporate stability, and this is provided by the long-term stewardship of the business by family as well
as related and like-minded shareholders, who hold a significant proportion of the shares of the Company. John Witt,being the Managing Director, has a service contract with the Company that has a notice period of six months.
On 31st July 2023, James Riley stepped down as a Director and Group Chief Executive of the Company, and Laurent
Kleitman joined the Board in his place on 1st September 2023. As announced in November 2023, Y.K. Pang stepped
down from the Board on 31st March 2024.
In accordance with Bye-law 85, Matthew Bishop and Jinqing Cai will retire by rotation at this year’s AGM and,being eligible, offer themselves for re-election. In accordance with Bye-law 92, Laurent Kleitman will also retire and,being eligible, offer himself for re-election. Both Laurent Kleitman and Matthew Bishop have service contracts with asubsidiary of the Company that has a notice period of six months. Jinqing Cai does not have a service contract with theCompany or its subsidiaries.
Directors need to obtain the Chairman’s approval before accepting additional appointments that might affect their time
to devote to the role as a Director of the Company.

Board and Audit Committee Training
During the year, certain Board members and Audit Committee members received trainings in Gen AI and cybersecurity,
respectively.

Company Secretary
All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all
governance matters.

Committees
The Board is supported by the activities of its Committees (the Nominations, Remuneration and Audit Committees),
which ensure the right level of attention and consideration are given to specific matters. Matters considered by each of
the Committees are set out in their respective terms of reference. Copies of these documents can be obtained from theCompany’s website at www.mandarinoriental.com.

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Corporate Governance Continued

Committees continued
Nominations Committee
The Board established a Nominations Committee (the ‘Nominations Committee’) in March 2021. The key
responsibilities of the Nominations Committee are to:
Review the structure, size and composition of the Board and its committees and make recommendations to the Boardon any appointments to maintain a right balance of skills, knowledge and experience and independence, as well as
a diversity of perspectives;
Support the Chairman to lead the process for Board appointments and nominate suitable candidates to the Board;
Assess suitable candidates based on merit and objective criteria (considering the promotion of the diversity of socialand ethnic backgrounds, knowledge, experience and skills), taking into account their ability to meet the required
time commitments;
Oversee the development of succession pipelines for both the Board and senior management positions to ensure talent
is identified and nurtured to meet the challenges and opportunities facing the Group; andSatisfy itself that any skill gaps are addressed in the reviews of Board composition and that appropriate development
opportunities are in place for Directors to keep abreast of market knowledge and industry trends to perform theirrole effectively.
The Nominations Committee consists of a minimum of three members, selected by the Chairman of the Board. The
Chairman of the Board is the chairman of the Nominations Committee. The current members of the Nominations
Committee are Ben Keswick, Adam Keswick and John Witt. The Nominations Committee meets as circumstances
require, or by the circulation of Committee circulars to make recommendations to the Board for approval as it deems
appropriate. It plays a key role in the process of recruiting senior executives. Candidates for appointment as Executive
Directors of the Company or other senior management positions may be sourced internally or externally, including byusing the services of specialist executive search or recruitment firms. The aim is to appoint individuals who combine
international business knowledge and experience, industry knowledge and experience, if possible, and familiarity with,or adaptability to, Asian markets. When appointing Non-Executive Directors, the Nominations Committee pays
particular attention to the Asian business experience and relationships that they can bring.

Insurance and indemnification
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 applicable law, every Director shall be indemnified and secured harmless out of the assets of
the Company against all liability and loss suffered and expenses reasonably incurred. However, neither insurance nor
indemnity provides cover where the Director has acted fraudulently or dishonestly.

Delegations of authority
The Group has in place an organisational structure with defined lines of responsibility and delegation of authority.
There are established policies and procedures for financial planning and budgeting, information and reporting systems,
assessment of risk; and monitoring of the Group’s operations and performance. The information systems in place aredesigned to ensure that the financial information reported is reliable and up to date.
The Group’s delegation of authority establishes a clear pathway for decision-making. This ensures that judgements are
made at the correct business level by the team members most equipped to do so. Every decision made aligns with ourculture and values, taking into account the advantages, risks, financial consequences, and effects on all stakeholders.
The Board, bolstered by the Audit Committee, places significant emphasis on maintaining high governance standards
throughout the Group. This reinforcement assists the Board in accomplishing its strategic goals and fulfilling key
performance objectives.

122 Mandarin Oriental International Limited

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

Substantial shareholders
As classified as a non-UK issuer, the Company is subject to the provisions of the DTRs, which require that a person must,in certain circumstances, notify the Company of the percentage of voting rights attaching to the share capital of theCompany that person holds. The obligation to notify arises if that person acquires or disposes of shares in the Company
and that results in the percentage of voting rights which the person 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 Limited (‘Jardine Strategic’), which is directly interested in 1,014,132,905
ordinary shares carrying 80.24% 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 Company’s issued ordinary share capital as of 7th March 2024.
There were no contracts of significance with substantial corporate shareholders during the year under review.

Related party transactions
Details of transactions with related parties entered into by the Company during the course of the year are included innote 31 to the financial statements on page 79.

Engagement with shareholders, other stakeholders and colleagues
Engaging with our stakeholders, including our employees, investors, creditors, partners and government, enables us tounderstand their perspectives and ensure we address their expectations and improve accordingly.
The Group regularly engages with its shareholders to provide an opportunity to ask questions of senior management.
Since the beginning of 2023, the Group have held two results briefings and six analyst and institutional shareholder
meetings to answer those questions, discuss concerns, and hear feedback on areas where improvements could be made.
The Group has also engaged with thought leaders to listen, learn and understand how we can improve. They include
global and regional non-profit associations at the forefront of driving sustainable travel and tourism, an independent
think tank and the world’s leading conservation non-governmental organisation. The engagements provide an
opportunity for us to explore and discuss key social, environmental and economic issues facing society and where
our businesses operate. They also provide an important touch point to sense-check the issues that matter most tosociety and help us better understand evolving expectations. The meetings with key thought leaders are attended bysenior management including the Group Chief Executive.

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 and, therefore, reduce theCompany’s issued share capital. When the Board considers the possibility of share repurchases, it will consider the
potential for enhancing earnings or asset values per share. When purchasing such shares, the Company is subject tothe provisions of MAR.

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123

Corporate Governance Continued

Colleague engagement
The Group is working hard to support the growth of the next generation of leaders within our businesses, ensuring ourcolleagues can develop the skills they need and further their careers with the Group.
We also aim to create an owner mindset among our senior leadership and support this by enhancing our incentive
structures to focus less on current profits and more on value creation over a longer time horizon.
The Group conducted a colleague experience survey with a global completion rate of 99%. Results from the survey led toa global sustainable engagement score of 90%, compared to 88% in 2022, and a global colleague retention score of 63%,
compared to 61% in 2022. Action plans have been developed by each hotel and the corporate teams to address thesurvey outcomes.

Annual General Meeting
The 2024 AGM will be held on 8th May 2024. The full text of the resolutions and explanatory notes regarding themeeting are contained in the Notice of AGM, despatched at the same time with this Annual Report and can be foundat www.mandarinoriental.com/en/investors/regulatory.

Corporate website
A corporate website is maintained containing a wide range of information of interest to investors at
www.mandarinoriental.com.

Group policies
Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are set out in its
Code of Conduct, a set of guidelines to which every employee must adhere. It is reinforced and monitored by an annualcompliance certification process and 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. In addition, the Code of Conduct prohibits the giving or receiving ofillicit payments. It requires that all Directors and employees must be fully aware of their obligations under the Code of
Conduct and establish procedures to ensure compliance at all levels within their businesses.
The Company’s policy on commercial conduct underpins the Group’s internal control process, particularly in the area ofcompliance. The policy is also set out in the Group’s Code of Conduct.

Data privacy
The Group is committed to being a responsible custodian of the data entrusted to it by customers, employees, business
partners and other stakeholders. In addition, it is subject to multiple data privacy and security laws and regulationsin the global jurisdictions in which it operates. Accordingly, the Group is dedicated to complying with such laws andregulations, regularly monitoring for legislative changes and adjusting its policies and procedures when appropriate.
Appropriate protections are in place to prevent misuse and unauthorised disclosure of personal data.
The Group’s Privacy Policy, and internal guidelines and procedures, underline the Group’s commitment to being a
responsible data custodian and ensuring compliance with applicable law.

124 Mandarin Oriental International Limited

Whistleblowing policy
The Group has a whistleblowing policy covering how employees can report matters of serious concern. The Audit
Committee has responsibility for overseeing the effectiveness of the formal procedures for colleagues to raise suchmatters and is required to review any reports made under those procedures referred to it by the internal audit function.
In addition, the Group has a whistleblowing service managed by an independent third-party service provider tosupplement existing whistleblowing channels to assist employees in reporting suspected illegal or unethical behaviouror other matters of serious concern and is intended to help foster an inclusive, safe and respectful workplace. The service,
which is available 24 hours in multiple local languages, and is accessible through phone hotline or online, and asanonymous submissions, may be used by colleagues to report a matter of concern to a manager supervisor, Human
Resources or Legal representative.
Reports may be lodged by one of three channels: email, website and telephone hotline. Each report is allocated a uniquecase number which enables follow-up with the reporter, if appropriate. Once a report is lodged, it is sent to certain
authorised persons at the relevant business units. These include senior representatives from legal, compliance andHuman Resources teams who have experience in dealing with such matters. The authorised persons will follow up
on the report and investigate where necessary. The reporter will be notified of the outcome.
All reports are treated confidentially and any retaliation against a person reporting a potential breach of the Code of
Conduct is a cause for disciplinary action under the Group’s whistleblowing policy.

Inclusion, Equity and Diversity
The Group will continue to foster a culture of inclusivity and empowerment, where colleagues with different backgrounds
feel comfortable in being themselves, in voicing their ideas and have equal opportunities to thrive. The Group applies theprinciple that colleagues should always treat others in a way they would expect others to treat them. No form of bullying,
intimidation, discrimination, and harassment of others has a place in the Group and would not be tolerated.
As a global hospitality employer, the Group believes in promoting equal opportunities in recruiting and developing all
employees, regardless of ethnicity, gender, age, sexual orientation, disability, background or religion, should be treatedfairly and with respect, and be valued for the contributions they make in their role. The high service expectations andoverall quality of the Mandarin Oriental brand necessitate that the Group seeks the best people from the communities
in which it operates most suited to its needs.
All colleagues are encouraged and supported to develop their full potential and contribute to the sustainable growthof the Group. Colleagues’ views and ideas are essential, and they are encouraged to express them respectfully withcolleagues at all levels within the organisation.
To build an inclusive workplace, we incorporate IE&D principles across our businesses and People and Culture practices.
This includes:
Ensuring a set of inclusive working arrangements and policies to support IE&D;
Keeping our recruitment, promotion and retention systems fair, based on aptitude, merit and ability;
Providing active talent management and career support for the Group’s colleagues to open up opportunities thatwill facilitate a future pipeline of excellent leaders; andCultivating leadership behaviour through learning campaigns to ensure colleagues behave in accordance with
the Group’s value.
The Company keeps the composition of its Board and senior management positions under review, to ensure that it
adapts to the changing business landscape. The Company is actively focussed on increasing gender diversity at all levelsof the organisation.

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125

Corporate Governance Continued

Remuneration Report
Message from the Board/Remuneration Committee
The Board is pleased to present shareholders with the 2023 Remuneration Report. This report sets out the Group’s
approach to remuneration for its executives and Directors, particularly the link between the Group’s values, strategy
and its remuneration framework, and the link between performance and reward, in determining remuneration outcomesfor senior executives.

The Group’s remuneration philosophy and framework for rewarding staff
The remuneration outcomes in 2023 reflect the intended operation of the remuneration framework.
At the heart of the Group’s remuneration framework is our commitment to deliver competitive remuneration for
excellent performance to attract the best and motivate and retain talented individuals, while aligning the interests ofthe business and shareholders. The Company aims to ensure that its remuneration system is designed in a manner thatis aligned with the values and strategic priorities of the Company.
The Group achieves this through:Performance-based variable compensation;
Incentives based on financial measures and strategic objectives that reflect key goals critical to long-term sustainableorganisational success;Consideration of business and operational risk as well as a sustainability development goal through the design ofperformance objectives;
Providing incentives and policies which align the interests of executives to those of shareholders;Best-practice governance and ensuring remuneration outcomes are reasonable, taking into account community andstakeholder expectations; andTargeting remuneration levels and outcomes appropriately reflect the challenge and complexity of being a
multinational Asian-based hotel group with diverse hospitality businesses.
The Company’s policy is to offer competitive remuneration packages to its senior executives. The Company relies
on a reward framework that provides varying levels of remuneration and benefits depending on colleague level. It is
recognised that, given the nature of the Group and its diverse geographic base, a number of its senior executives are
required to be offered international terms, and the nature of the remuneration packages is designed to reflect this. This
structure of remuneration varies from senior executives to more junior level colleagues, but the link of remuneration
to strategic goals is consistent. The nature of goals used for remuneration varies depending on colleague level, but
the Company ensures goals are relevant and measurable while aligned with company values and strategic priorities.
In addition, Executive Directors joining from outside the Group may be offered an initial fixed-term service contract
to reflect any requirement for them to relocate.
Accordingly, the remuneration mix for colleagues varies depending on level. At senior executive levels, more
remuneration is variable , depending on performance levels against goals. At more junior levels, remuneration is
directed toward fixed remuneration. The Company strives to provide an appropriate amount of remuneration ‘at risk’for the achievement of goals – whether those are short- or long-term in nature.

126 Mandarin Oriental International Limited

Directors’ Remuneration
Shareholders decide in general meetings the Directors’ fees which are payable to all Directors other than the Group Chief
Executive and the Chief Financial Officer, as provided for by the Company’s Bye-laws.
The remuneration of the Company’s Non-Executive Directors is not linked to performance. This is consistent with
Non-Executive Directors being responsible for objective and independent oversight of the Group. The total amountprovided to all Directors (including the Managing Director but exclusive of salaried Executive Directors who are notentitled to such fees) must not exceed the sum agreed by shareholders at a general meeting. The maximum aggregate
remuneration of US$1.0 million per annum was approved by shareholders at the 2022 AGM and would be subject
to review at the 2025 AGM. Executive Directors (excluding the Managing Director, who is also the Jardines groupmanaging director) are paid a basic fixed salary as well as discretionary annual incentive bonuses by and receive certain
employee benefits from the Group. Non-Executive Directors do not receive bonuses or any other incentive paymentsor retirement benefits. The Non-Executive Directors are reimbursed for expenses properly incurred in performing theirduties as a Director of the Company. The schedule of fees paid to Directors in respect of the financial year 2023 is set out
in the table below. Fees are annual fees, unless otherwise stated:
USD (per annum)
Chairman/Managing Director fee:
Base Director fee:
Audit Committee fee (Chairman):
Audit Committee fee (member):Nominations Committee fee:
Director

100,000
90,00045,00035,00015,000
Director Fee
US$

Audit
Committee Fee
US$

Nominations
Committee Fee
US$

Total Fees
US$–

15,000115,000*

1

Ben Keswick (Chairman)

100,000

2

John Witt (Managing Director)

100,000–

15,000115,000*

3

James Riley1

–

–

–

–

4

Laurent Kleitman2

–

–

–

–

5

Matthew Bishop

–

–

–

–

6

Jinqing Cai3

90,00035,000–125,000

7Adam Keswick

90,000–15,000105,000*

8

Archie Keswick

90,000––90,0009

Y.K. Pang4

90,00036,644–

126,644*

10

Richard Solomons5

90,00045,000–135,000

650,000

116,644

45,000811,644

Total* Fees surrendered to Jardine Matheson
1 James Riley retired from the Board on 31st July 2023.
2 Laurent Kleitman joined the Board on 1st September 2023.

3 Jinqing Cai was appointed as a member of the Audit Committee on 2nd March 2023.
4 Y.K. Pang ceased to be the Chairman of Audit Committee and remained as a member of Audit Committee on 2nd March 2023, and heretired from the Board and Audit Committee on 31st March 2024.
5 Richard Solomons was appointed as the Chairman of Audit Committee, in place of Y.K. Pang on 2nd March 2023.

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127

Corporate Governance Continued

Remuneration Committee
The Board has overall responsibility for setting remuneration across the Group, ensuring it is appropriate and supports
the Group’s strategy, creating value for stakeholders. The Remuneration Committee has been established to assist theBoard in these remuneration matters.
The Board established a Remuneration Committee (the ‘Remuneration Committee’) at the Company level in December
2021. The role of the Remuneration Committee is governed by its terms of reference. The key responsibilities of theRemuneration Committee are to:Oversee the formulation of a Group-wide reward strategy and ensure the business implements the reward strategy
in alignment with its industry-specific needs;
Review and approve the compensation of the Group Chief Executive and leadership team of the business;
Review the terms of and design of performance-related incentives (both short- and long-term), including the review
and approval of any changes to plan design, targets and metrics;
Review and approve the overall compensation costs, including salary and bonus budgets, of the business; andRemain abreast of trends and developments in executive compensation and corporate governance related to theGroup’s industry and countries of operation.
The Remuneration Committee consists of a minimum of three members, selected by the Chairman of the Board. The
Chairman of the Board is the chairman of the Remuneration Committee. The current members of the Remuneration
Committee are Ben Keswick, John Witt and Graham Baker. In addition, the Group Chief Executive, the Group Chief
People Officer and Jardine Matheson group head of human resources will generally attend meetings of the Remuneration
Committee. The Remuneration Committee meets as circumstances require, or by the circulation of Committee circulars
which make recommendations to the Board for approval as it deems appropriate.

How remuneration framework is linked to the business strategy
The Group’s remuneration strategy is designed to support and reinforce its business and sustainability strategies, both
short- and long-term. The ‘at risk’ components of remuneration are tied to measures that reflect the successful executionof these strategies in both the short- and long-terms. Our strategic drivers of ‘Elevating our brand, Lifting our people,
Powering our core and Exceptional quality’ are reflected in bonus performance measures. So, the Group’s actual
performance directly affects what executives are paid.

Remuneration outcomes in 2023
For the year ended 31st December 2023, the Directors received from the Group US$7.9 million (2022: US$5.7 million)
in Directors’ fees and employee benefits, being:
US$0.8 million (2022: US$0.8 million) in Directors’ fees;
US$5.3 million (2022: US$4.7 million) in short-term employee benefits, including salary, bonuses, accommodationand deemed benefits in kind;
US$0.2 million (2022: US$0.1 million) in post-employment benefits; andUS$1.6 million (2022: US$0.1 million) in long-term incentive benefits.
The information set out in the section above headed ‘Remuneration outcomes in 2023’ forms part of the audited
financial statements.

Share schemes
Share-based long-term incentive plans have also been established to provide incentives for Executive Directors and senior
managers. The scheme trustee grants share options and share awards after consultation between the Chairman and theGroup Chief Executive and other Directors as they consider appropriate. Share options are granted at prevailing market
prices, while share awards will vest free of payment. The share options and share awards normally vest on or after thethird anniversary of the grant date. Grants may be made in several instalments. Share options and share awards are notgranted to Non-Executive Directors.
128 Mandarin Oriental International Limited

Directors’ share interests
The Directors of the Company in office on 7th March 2024 had interests* as set out below in the Company’s ordinary
share capital. These interests include those notified to the Company regarding the Directors’ closely associated persons*.
John Witt

4,894,068* Within the meaning of MAR

Audit Committee Report
Audit Committee
The Board had established an Audit Committee (the ‘Audit Committee’) at the Company level in December 2021.
The Audit Committee consists of three members, the current members of which are:Richard Solomons (Chairman of the Audit Committee and Independent Non-Executive Director);
Graham Baker (Financial Expert); andJinqing Cai (Independent Non-Executive Director).
None of them is directly involved in the operational management of the Company. On 2nd March 2023, Richard
Solomons was appointed as Chairman of the Audit Committee in place of Y.K. Pang, who remained as a member of the
Audit Committee until 31st March 2024. As a result, the Audit Committee is chaired by an Independent Non-Executive
Director. Jinqing Cai, an Independent Non-Executive Director, was also appointed as a member of the Audit Committee
on 2nd March 2023.
With the appointment of Richard Solomons and Jinqing Cai, both Independent Non-Executive Directors, in December
2021 and March 2023 to the Audit Committee and Y.K. Pang’s resignation from the Audit Committee on 31st March
2024, accordingly, from 1st April 2024, the Company considers that the Audit Committee has a majority of independent
members. Graham Baker is also a member of the Audit Committee with recent financial experience and expertise, as well
as a deep understanding of risk management.
The Group Chief Executive and Chief Financial Officer, together with representatives of the internal and external
auditors, also attend the Audit Committee meetings by invitation. In addition, other individuals may attend part of ameeting for specific agenda items as appropriate. The Audit Committee meets twice a year and reports to the Board after
each meeting.
Its terms of reference govern the role of the Audit Committee. The Audit Committee’s remit includes:
Independent oversight and assessment of financial reporting processes, including related internal controls;
Independent oversight of risk management and compliance;
Independent oversight and responsibility for cybersecurity;
Monitoring and reviewing the effectiveness of the internal and external audit functions;
Considering the independence and objectivity of the external auditors; andReviewing and approving the level and nature of non-audit work performed by the external auditors.
Before completion and announcement of the half-year and year-end results, a review of the Company’s financial
information and 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 fromthe external auditors. The external auditors also have access to the entire Board when necessary, in addition to the Group
Chief Executive, Chief Financial Officer and other senior executives.

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129

Corporate Governance Continued

The matters considered by the Audit Committee during 2023 included:
Reviewing the 2022 annual financial statements and 2023 half-year financial statements, with particular focus on
the provisioning and impairment assessments, assumptions that underpinned key valuation models and effectivenessof financial controls;
Reviewing the actions and judgements of management in relation to changes in accounting policies and practices toensure clarity of disclosures and compliance with new accounting standards;
Receiving reports from the internal audit function on the status of the control and compliance environment of theGroup and its business divisions and progress made in resolving matters identified in the reports;
Reviewing the principal risks, evolving trends and emerging risks that affect the Group, and monitoring changes tothe risk profile, as well as the effectiveness of risk management measures and crisis management arrangements;
Receiving updates on the cybersecurity threat landscape and the Group’s cybersecurity environment, risk
management approach, training, priorities and control effectiveness;
Receiving reports from risk management and legal functions on key legal matters and compliance and code of
conduct issues, and the actions taken in addressing those issues and strengthening controls;
Reviewing the annual internal audit plan and status updates;
Reviewing the Group’s governance approach to cybersecurity management, data security and privacy management
across its businesses;
Reviewing the biennial assessment of the effectiveness of PwC;
Reviewing the independence, audit scope and fees of PwC, and recommending their re-appointment as the external
auditor at general meeting;
Conducting a review of the terms of reference of the Audit Committee;
Recommending the change of auditor from PwC LLP to PwC Hong Kong to the Board for approval; andApproving the adoption of Non-Assurance Services Concurrence Policy, which establishes procedures anddelegations by which the Audit Committee intends to fulfil its responsibilities for the engagement of the independent
auditor to perform non-assurance services to comply with the revised Code of Ethics issued by the International
Ethics Standards Board for Accountants.

Audit Committee attendance
The table below shows the attendance at the scheduled 2023 Audit Committee meetings:
Meetings eligible
to attend

Attendance

Members of the Audit Committee
Directors of the Company
Y.K. Pang

1/2

50%

Richard Solomons

2/2

100%

Jinqing Cai1

1/1

100%

2/2

100%

Director of MOHG
Graham Baker

1 Jinqing Cai was appointed to the Audit Committee on 2nd March 2023. In 2023, only one Audit Committee meeting was held after

2nd March 2023.

130 Mandarin Oriental International Limited

Auditor independence and effectiveness
The Group auditor’s independence and objectivity are safeguarded by control measures including:
Reviewing the nature of non-audit services (including the adoption by the Company of a non-audit services policy);
The external auditor’s own internal processes to approve requests for non-audit work to the external audit work;
Monitoring changes in legislation related to auditor independence and objectivity;
The rotation of the lead auditor partner after five years;
Independent reporting lines from the external auditor to the Audit Committee and providing an opportunity forthe external auditor to have in-camera sessions with the Audit Committee;
Restrictions on the employment by the Group of certain employees of the external auditor;
Providing a confidential helpline that employees can use to report any concerns; andAn annual review by the Audit Committee of the policy to ensure the objectivity and independence of theexternal auditor.
The Board’s annual review in 2023 of the Auditor’s independence and effectiveness found that PwC performed theirduties effectively. The Board found the level of professional scepticism, the number and regularity of meetings with the
Audit Committee, feedback from Audit Committee members and internal stakeholders and the levels of technical skills
and experience to be effective.
At each AGM of the Company, the Company is required to appoint an Auditor to hold office until the conclusion of thenext AGM. The Company's previous Auditor was PricewaterhouseCoopers LLP (‘PwC LLP’). In March 2023, the Audit
Committee recommended that the Company appoint PwC Hong Kong, also a PricewaterhouseCoopers network firm
and which had conducted much of the audit work on behalf of PwC LLP for many years, as its Auditor in place of PwC
LLP for future audit processes, to streamline audit procedures and align the location of the firm acting as Auditor moreclosely with the location of the Company’s businesses. The Company’s shareholders approved the appointment of PwC
Hong Kong as the Company’s Auditor at the AGM on 4th May 2023.

Risk management and internal control
The Board has overall responsibility for the Group’s risk management systems and internal control. The Board hasdelegated responsibility to the Audit Committee for providing oversight regarding risk management activities. The Audit
Committee considers the Group’s principal risks and uncertainties and potential changes to the risk profile. It reviews
the operation and effectiveness of the Group’s internal control systems (financial, operational and compliance) and theprocedures by which these risks are monitored and mitigated.
The Audit Committee considers the systems and procedures regularly and reports to the Board semi-annually. The
Jardine Matheson Group Audit and Risk Management (‘JM GARM’) is appointed to assist the Audit Committee infulfilling its assurance and reporting roles. JM GARM adheres to international standards for the professional practice ofinternal audit. To safeguard its independence and objectivity, JM GARM reports functionally to the Audit Committeeof the Company and has full and unrestricted access to all business functions, records, properties and personnel.
The internal control systems are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s
assets against fraud and other irregularities; and give reasonable, but not absolute, assurance against material financial
misstatement or loss. Executive management is responsible for implementing the systems of internal control throughout
the Group.

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131

Corporate Governance Continued

Risk management and internal control continued
The Group has an established risk management process that is reviewed regularly and covers all business units within theGroup. This includes the maintenance of risk registers that detail the emerging and existing risks to the future success ofthe business and the relevant key controls and mitigating factors that address those risks. The Group’s risk management
process and risk registers are reviewed on a regular basis.
The internal audit function also monitors 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 Company’s principal risks and uncertainties are set out on pages 134 to 140.

Risk governance structure
External Audit(‘PwC’)

Internal Audit(‘JM GARM’)

MO Board of Directors

MO Audit Committee

MO Management

MO Risk Management

Delegate/
Oversee

ReportMonitor/
Review

The Group’s Management is responsible for:Identifying and assessing principal risks and uncertainties to which it is exposed;
Implementing the most appropriate actions to mitigate and control those risks to an acceptable level;
Providing adequate resources to minimise, offset or transfer the effects of any loss that may occur while managing
acceptable risk/benefit relationships;
Monitoring the effectiveness of the systems of risk management and internal control;
Reporting periodically to its Board of Directors via the Audit Committee and JM GARM on the principal risks anduncertainties; andWorking with external and internal auditors to monitor and improve its control environment.

132 Mandarin Oriental International Limited

Risk Management Framework
Risk management is integrated into each business unit’s strategic planning, budgeting, decision-making and operations.
Central to this is the continuous and systematic application of:

Risk Identification

Risk Reporting& Monitoring

Risk
Assessment

Risk
Treatment

A Risk Management Framework based on ISO 31000 and COSO principles is embedded in the Group to identify, assessand define the strategies to monitor risks. The risk registers prepared by each business unit provide the basis for theaggregation process, which summarises the principal risks and uncertainties facing the Group as a whole.
Risk Identification

Identify and document the Group’s exposure to uncertainty with existing
strategic objectives.
Adopt structured and methodical techniques to identify critical risks.

Risk Assessment

Evaluate risks by estimating likelihood, financial and reputational damage, and the
speed at which the risk materialises, based on its inherent and residual level.
Determine risk rating using the risk heatmap, with four levels of residual risk status.

Risk Treatment

Tolerate – accept if within the Group’s risk appetite.
Terminate – dispose or avoid risks were no appetite.
Risks may be accepted if mitigated to an appropriate level via:
– Transfer – take out insurance or share risk through contractual arrangements withbusiness partners; and– Treat – redesign or monitor existing controls or introduce new controls.

Risk Reporting& Monitoring

Periodic review of principal risks and uncertainties.
Setting key risk indicators to enhance monitoring and mitigation of risks.
Regular reporting of principal risks and uncertainties from the Group’s business units to
the Board of Directors via Audit Committee and JM GARM.

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133

Corporate Governance Continued

Principal risks and uncertainties
Set out below are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to the
DTRs issued by the FCA, as well as a summary of the steps taken to mitigate those risks. These risks are in addition to thematters referred to in the Chairman’s Statement, Group Chief Executive’s Review, and other parts of this Annual Report.
Reputational risk andvalue of the brandDescription
The Group’s brand equity and global reputation is fundamental in supporting its ability
to offer premium products and services and to achieving acceptable revenues and profit
margins. Accordingly, any damage to the Group’s brand equity or reputation, including asa result of adverse effects relating to health and safety, acts or omissions by Group personnel,
and any allegations of socially irresponsible policies and practices, might adversely impact
the attractiveness of the Group’s properties or the loyalty of the Group’s guests.
Mitigation
Engage external consultants and experts where necessary.
Perform regular cybersecurity and data vulnerability assessment at least annually and/or
penetration testing to identify weaknesses.
Active monitoring and use of social media.

Concentration risk

Description
Certain locations in Asia contribute a significant portion of the Group’s underlying profit.
Adverse conditions such as social upheaval, erosion of the rule of law or travel restrictions
could reduce a location’s competitiveness and impact the Group’s businesses with
operations and exposure to that jurisdiction.
Mitigation
Geographical diversification of the businesses through organic growth.
Maintaining financial strength under challenging scenarios.
Further strengthening the Group’s brand to sustain competitiveness and resilience.

Commercial risk

Description
The Group operates within the highly competitive global hotel industry. Failure to compete
effectively in terms of product quality, service levels, or price can adversely affect earnings.
This may also include failure to adapt to rapidly evolving customer preferences andexpectations. Significant competitive pressure or the oversupply of hotel rooms in a specificmarket can reduce margins. Advances in technology creating new or disruptive competitive
pressures might also negatively affect the trading environment.
The Group competes with other luxury hotel operators for new opportunities in the areasof hotel management, residences management and residences branding. Failure to establish
and maintain relationships with hotel owners or developers could adversely affect theGroup’s businesses.
The Group also makes investment decisions regarding acquiring new hotel properties andundertaking significant renovations or redevelopments in its owned properties, exposing
it to construction risks. The success of these investments is measured over the longer termand, as a result, is subject to market risk.
Mandarin Oriental’s continued growth depends on opening of new hotels and branded
residences. Most of the Group’s new developments are controlled by third-party owners anddevelopers. As a result, they can be subject to delays due to issues attributable to planningand construction, sourcing of finance, and the sale of residential units. In extreme
circumstances, such factors might lead to the cancellation of a project.

134 Mandarin Oriental International Limited

Principal risks and uncertainties continued
Commercial risk
continued

Mitigation
Utilise market intelligence and deploy strategies for business-to-consumer business.
Establish customer relationship management and digital commerce capabilities.
Engage in longer-term contracts and proactively approach suppliers for contract renewals.
Re-engineer existing business processes to take advantage of new technological capabilities.
Invest in and partner with companies that can provide the Group access to different
capabilities and technologies.

Environmental
and climate risk

Description
Environmental disasters such as earthquakes, floods and typhoons can damage the Group’s
assets and disrupt operations. Global warming-induced climate change has increased
the frequency and intensity of storms, leading to higher insurance premiums or reduced
coverage for such natural disasters.
With governments also taking a more proactive approach towards carbon taxes, renewableenergies and electric vehicles, additional investments, and efforts to address physical andtransition risks of climate change are anticipated from businesses.
With interest in sustainability surging in recent years from investors, governments and thegeneral public, expectations by regulators and other stakeholders for accurate corporate
sustainability reporting and commitments towards carbon neutrality to address climatechange are also growing. This brings increasing challenges to the Group to meet key
stakeholders’ expectations.
There is potential for negative publicity and operational disruption arising from conflict
between activists and the Group’s businesses that is perceived to be engaged in trade andactivities that are environmentally unfriendly.
Mitigation
Executive Advisory Panel, Sustainability Leadership Council and Hotel Sustainability
Committees have been in place to mobilise and coordinate sustainability efforts acrossthe Group.
A sustainability strategy framework, including a pillar for the planet, drives the Group’s
sustainability agenda.
Renewed environmental targets for 2025 and 2030 have been determined per property
through a Group-wide inventory management plan.
Identify environmental impact opportunities that address multiple problems and risks
and gaps that are generally relevant to all properties and society in general.
Assess emerging Environmental, Social and Governance (‘ESG’) reporting standards
and requirements, to align Group disclosures to best market practice.
Conduct climate risk assessments and adaptation action plans based onrecommendations of Task Force on Climate-Related Financial Disclosures (‘TCFD’),including implementing measures to address physical risks posed by climate change andidentifying opportunities in global transition to a low carbon economy.

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135

Corporate Governance Continued

Principal risks and uncertainties continued
Financial strengthand funding

Description
The Group’s activities expose it to a variety of risks to its financial strength and funding,including market risk, credit risk and liquidity risk.
The market risk the Group faces includes i) 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; ii) interest
rate risk through the impact of rate changes on interest bearing assets and liabilities;
and iii) securities price risk as a result of its equity investments and limited partnershipinvestment funds which are measured at fair value through profit and loss, and debt
investments which are measured at fair value through other comprehensive income.
The Group’s credit risk is primarily attributable to deposits with banks, contractual cash flows
of debt investments carried at amortised cost and those measured at fair value throughother comprehensive income, credit exposures to customers and derivative financial
instruments with a positive fair value.
The Group may face liquidity risk if its credit rating deteriorates or if it is unable to meet its
financing commitments.
Mitigation
Set clear policies and limits on market, credit, and liquidity risks, including in relation
to foreign exchange exposure, interest rate risks, cash management and prohibition onderivatives not used in hedging.
Regular internal audits of compliance with treasury policies.
Adopt appropriate credit guidelines to manage counterparty risk.
When economically feasible, take borrowings in local currency to hedge foreignexchange exposures on investments.
Fix a portion of borrowings in fixed rates.
Maintain adequate headroom in committed facilities to facilitate the Group’s capacity
to pursue new investment opportunities and to provide some protection against
market uncertainties.
Keep an appropriate funding balance between equity and debt from banks and capital
markets, both short- and long-term in tenor, to give flexibility to develop the business.
Maintain sufficient cash and marketable securities, and availability of funding
from an adequate amount of committed credit facilities and the ability to close out
market positions.
The Group’s treasury operations are managed as cost centres and are not permitted toundertake speculative transactions unrelated to underlying financial exposures.
The detailed steps taken by the Group to manage its exposure to financial risk are set out in
the Financial Review on pages 31 to 35 and note 36 to the financial statements on pages 90
to 97.

136 Mandarin Oriental International Limited

Principal risks and uncertainties continued
Governance andmisconduct

Description
Effective management of the Group’s risks depends on the existence of an appropriate
governance structure, tone from top leadership, and functioning system of internal
controls. Ethical breaches, management override of controls, employee fraud andmisconduct, or other deficiencies in governance and three lines of internal controls
may result in financial loss and reputational damage for the Group.
Inadequate capability and diversity in management or the Board may also lead to
sub-optimal deliberations and decisions.
Mitigation
Established Group-wide mandatory code of conduct.
Maintain a robust Corporate Governance Framework which includes
a whistleblowing channel.
Maintain functionally independent internal audit function that reports to the Group
Audit Committee on risk management, the control environment and significant
non-compliance matters.
Maintain Professional Indemnity, Crime and General Liability insurance policies withadequate coverage.

Health, safety, andproduct quality

Description
The Group’s colleagues engage in physical activities that may lead to serious injury or
fatal incidents if work conditions are unsafe or workers do not take due care to observe
safety procedures.
The safety and quality of food products and other items provided by the Group are
fundamental to its reputation with customers. Any actual or perceived deficiency in productsafety or quality may damage consumer confidence and the brand’s reputation, leading tofinancial loss.
Mitigation
Establish safe working environments and regular safety training for all employees
and subcontractors.
Establish contractual requirements for contractors to comply with high expected levelsof safety standards.
Conduct occupational health and safety awareness campaigns.
Establishing product quality and safety standards, guidelines.
Ensure suppliers follow the Group’s guidelines, principals’ requirements, andlocal regulations.

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137

Corporate Governance Continued

Principal risks and uncertainties continued
IT and cybersecurity

Description
The Group’s businesses are ever more reliant on technology in their operations andface increasing cyber-attacks from groups targeting both individuals and businesses.
As a result, the privacy and security of customer and corporate information are at
risk of being compromised through a breach of our or our suppliers’ IT systems or theunauthorised or inadvertent release of information, resulting in brand damage, impaired
customer trust, loss of competitiveness or regulatory action.
Cyber-attacks stemming from inadequate cybersecurity or lack of employee cybersecurity
awareness may also adversely affect the Group’s ability to manage daily business operations,
resulting in business interruption, reputational damage, regulatory penalties, lost revenues,
repair or other costs.
Mitigation
Engage external consultants to perform assessments on the business units withindustry benchmarks.
Define cybersecurity programme and centralised function to provide oversight,
promote cybersecurity hygiene, strengthen cybersecurity defences and manage
cybersecurity incidents.
Perform regular vulnerability assessment and penetration testing to identify weaknesses.
Maintain disaster recovery plans and backup for data restoration.
Arrange regular security awareness training at least annually and phishing testing toraise users’ cybersecurity awareness.
Conduct regular internal audits of IT general controls and cybersecurity.

Pandemic

Description
COVID-19 has demonstrated the wide-ranging and long-lasting impacts and disruptions
for businesses, communities and employees that may result from the spread of a pandemic.
While the governments and businesses have gained experience from COVID-19 in
preparing for and responding to future pandemic scenarios, nevertheless significant
disruptions and uncertainties would likely result from global or regional pandemics
of a similar nature if they raise the prospect of lockdowns, restrictions on cross-bordermobility, interruptions to supply chains, and dampened consumer sentiment while
vaccines are unavailable.
Mitigation
Increase flexibility and resilience of work arrangements, including tools that enable
employees to effectively work from home, where possible.
Test business continuity plans periodically for various scenarios including loss ofpremises, systems, people, and extended periods of split teams.
Increase resilience of supply chain with sourcing alternative suppliers for key inputs andclose coordination with logistics partners.

138 Mandarin Oriental International Limited

Principal risks and uncertainties continued
Political andeconomic risk

Description
Changes and uncertainties in the political landscape pose risks for business activity andsentiment in the territories where the Group operates and consequently for the current
investments and future growth of the Group. In recent years, sources of uncertainty include
geopolitical tensions between China and the United States, terrorism, and government
instability in parts of South East Asia. Rising costs of fuel and staple foods are particularly
sensitive for developing markets where the Group operates, heightening the risk of civil
discontent and political instability. The imposition of export bans by some governments onfood and raw materials adds further uncertainties in the availability and cost of supplies for
the Group’s hotels and residences that import these items.
The Group’s business is exposed to the risk of adverse developments in global and regional
economies and financial markets, either directly, or through the impact such developments
might have on the Group’s joint venture partners, associates, bankers, suppliers, or
customers. These developments could include recession, inflation, deflation, currency
fluctuations, restrictions in the availability of credit, business failures, or increases infinancing costs, oil prices or the cost of raw materials. Such developments might increase
operating costs, reduce revenues, lower asset values or result in some or all of the Group’s
hotels and residences being unable to meet their strategic objectives.
Mitigation
Maintain the Group’s financial strength and funding sources under scenarios of
economic downturn and other stresses.
Monitor the volatile macroeconomic environment and consider economic factors instrategic and financial planning processes.
Make agile adjustments to existing business plans and explore new business streams andnew markets.
Review pricing strategies and keep conservative assumptions on global commodity prices.
Insurance programme covering business interruption due to civil unrest.

People and talent

Description
The competitiveness of the Group’s businesses depends on the quality of the people that it
attracts and retains. The unavailability of needed human resources may impact the ability of
the Group’s businesses to operate at capacity, implement initiatives and pursue opportunities.
Recent and future workforce rationalisation may raise the potential for organisational gaps
in capabilities, succession and controls.
With worker preferences shifting towards greater importance attached to mental healthand well-being, the Group faces heightened risk for talent attraction and retention if theycannot adapt their propositions for workers.

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139

Corporate Governance Continued

Principal risks and uncertainties continued
People and talentcontinued

Mitigation
Support workforce practices that promote well-being and flexible work arrangementsthat are competitive with the market.
Ensure proactive manpower planning and succession planning are in place.
Enhance modern employer branding, training for staff members, compensation, andbenefits, including retention incentives.
Implement strategy to promote IE&D across the Group.
Establish employee assistance and counselling programmes.
Enhance talent development plans to increase employees’ visibility on future career
paths, including identifying strategic talent pools.
Delivering new learning programmes to equip staff with finance, procurement, HR,digital, IT and innovation technical capabilities for business transformation.

Compliance withand changes to laws
and regulations

Description
The Group’s business is subject to several regulatory regimes in the territories they
operate in. New or changing laws and regulations in a wide range of areas such as foreign
ownership of assets and businesses, exchange controls, building and environmental
standards, competition, tax, employment, and data privacy could potentially impact
the operations and profitability of the Group’s business. Non-compliance may lead to
reputational damage from media exposure and financial loss due to litigation or penalties
by government authorities.
Mitigation
Engage legal experts at early stage to assess implications of new rules.
Stay connected and informed of relevant new and draft regulations.
Engage external consultants where necessary.
Raise awareness via principals’ brand conference with an annual update on new
regulations that may have been implemented in other markets.
Lobby relevant associations and authorities through appropriate channels.
Perform early scenario planning to assess implications of new rules and prepare
for contingencies.

Effectiveness review of risk management and internal control systems
The effectiveness of the Company’s risk management and internal control systems is monitored by the internal audit
function, which reports functionally to the Audit Committee of the Group. The findings of the internal audit function
and recommendations for any corrective action required are reported to the Audit Committee and, if appropriate, to
the Jardine Matheson’s audit committee.

140 Mandarin Oriental International Limited

Shareholder Information

Financial calendar
2023 full-year results announced
Shares quoted ex-dividend
Share registers closed
Annual General Meeting to be held
2023 final dividend payable
2024 half-year results to be announced
Shares quoted ex-dividend
Share registers to be closed
2024 interim dividend payable

7th March 2024
21st March 2024
25th to 29th March 2024
8th May 2024
15th May 2024
1st August 2024 *22nd August 2024 *26th to 30th August 2024 *16th October 2024 ** Subject to change

Dividends
Shareholders will receive cash dividends in United States Dollars, except when elections are made for alternate currencies
in the following circumstances.

Shareholders on the Jersey Branch Register
Shareholders registered on the Jersey branch register can elect for their dividends to be paid in Sterling. These shareholders
may make new currency elections for the 2023 final dividend by notifying the United Kingdom transfer agent in writingby 26th April 2024. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference
to a rate prevailing on 2nd May 2024.
Shareholders holding their shares through CREST in the United Kingdom will receive cash dividends in Sterling only,
as calculated above.

Shareholders on the Singapore Branch Register who hold their shares through The Central
Depository (Pte) Limited (‘CDP’)
Shareholders who are on CDP’s Direct Crediting Service (‘DCS’)
Those shareholders on CDP’s DCS will receive their cash dividends in Singapore Dollars unless they opt out of CDP
Currency Conversion Service, through CDP, to receive United States Dollars.

Shareholders who are not on CDP’s DCS
Those shareholders not on CDP’s DCS 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
Link Market Services (Jersey) Limited, IFC 5, St Helier, Jersey JE1 1ST, Channel Islands

Singapore Branch Registrar (with effect from 1st March 2024)
Boardroom Corporate & Advisory Services Pte. Ltd., 1 Harbourfront Avenue, Keppel Bay Tower #14-07, Singapore 098632

United Kingdom Transfer Agent
Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL, United Kingdom
Press releases and other financial information can be accessed through the internet at www.mandarinoriental.com.
Annual Report 2023

141

Mandarin Oriental Hotel Group Contact Addresses

Hong Kong Corporate Office
8th floor One Island East
Taikoo Place
18 Westlands Road
Quarry Bay, Hong Kong
Telephone +852 2895 9288
mandarinoriental.com

Asia
Mandarin Oriental, Bangkok
48 Oriental Avenue
Bangkok 10500
Thailand
Telephone +66 (0) 2 659 9000
Emailmobkk-reservations@mohg.com
Mandarin Oriental Wangfujing, Beijing
No. 269 Wangfujing Street, Dongcheng District
Beijing 100006, China
Telephone +86 (10) 8509 8888
Emailmowfj-reservations@mohg.com
Mandarin Oriental, Guangzhou
389 Tianhe Road, Tianhe District
Guangzhou 510620, China
Telephone +86 (20) 3808 8888
Emailmogzh-reservations@mohg.com
Mandarin Oriental, Hong Kong
5 Connaught Road Central
Hong Kong
Telephone +852 2522 0111
Emailmohkg-reservations@mohg.com
The Landmark Mandarin Oriental, Hong Kong
The Landmark
15 Queen’s Road Central
Hong Kong
Telephone +852 2132 0188
Emaillmhkg-reservations@mohg.com

142 Mandarin Oriental International Limited

Mandarin Oriental, Jakarta
Jalan M H Thamrin
Jakarta 10310
Indonesia
Telephone +62 (21) 2993 8888
Emailmojkt-reservations@mohg.com
Mandarin Oriental, Kuala Lumpur
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia
Telephone +60 (3) 2380 8888
Emailmokul-reservations@mohg.com
Mandarin Oriental, Macau
N.945, Avenida Dr Sun Yat Sen
NAPE, Macau, China
Telephone +853 8805 8888
Emailmomac-reservations@mohg.com
Mandarin Oriental, Sanya
12 Yuhai Road
Sanya 572000
Hainan, China
Telephone +86 (898) 8820 9999
Emailmosan-reservations@mohg.com
Mandarin Oriental Pudong, Shanghai
111 Pudong Road (S), Pudong
Shanghai 200120, China
Telephone +86 (21) 2082 9888
Emailmopud-reservations@mohg.com
Mandarin Oriental, Shenzhen
No. 5001 Huanggang Road
Futian District, Shenzhen
Guangdong 518036, China
Telephone +86 (755) 8802 6888
Emailmoszn-reservations@mohg.com

Mandarin Oriental, Singapore
5 Raffles Avenue, Marina Square
Singapore 039797
Telephone +65 6338 0066
Emailmosin-reservations@mohg.com
Mandarin Oriental, Taipei
No. 158 Dunhua North Road
Taipei 10548, Taiwan
Telephone +886 2 2715 6888
Emailmotpe-reservations@mohg.com
Mandarin Oriental, Tokyo
2-1-1 Nihonbashi Muromachi, Chuo-ku
Tokyo 103-8328, Japan
Telephone +81 (0) 3 3270 8800
Emailmotyo-reservations@mohg.com

E U ROPE , t h e M I DDL E E A ST A N D A F R IC A
Emirates Palace Mandarin Oriental, Abu Dhabi
West Corniche Road
Abu Dhabi, United Arab Emirates
Telephone +971 2 690 9000
Emailmoauh-reservations@mohg.com
Mandarin Oriental, Barcelona
Passeig de Gràcia, 38-40
08007 Barcelona, Spain
Telephone +34 93 151 88 88
Emailmobcn-reservations@mohg.com
Mandarin Oriental, Bodrum
Gölköy Mahallesi 314
Sokak No. 10, 48483,
Bodrum, Muğla, Turkey
Telephone +90 (252) 311 18 88
Emailmobod-reservations@mohg.com

Mandarin Oriental, Costa Navarino
Navarino Bay, Costa Navarino
Pylos, Messenia, 24001
GreeceTelephone +30 272 3099888
Emailmocna-reservations@mohg.com
Mandarin Oriental, Doha
Barahat Msheireb Street
Msheireb Downtown Doha
PO Box 23643
Doha, Qatar
Telephone +974 4008 8888
Emailmodoh-reservations@mohg.com
Mandarin Oriental Jumeira, Dubai
Jumeirah Beach Road, Jumeira 1
PO Box 62092
Dubai, United Arab Emirates
Telephone +971 4 777 2222
Emailmodub-reservations@mohg.com
Mandarin Oriental, Geneva
Quai Turrettini 1
1201 Geneva, Switzerland
Telephone +41 (22) 909 0000
Emailmogva-reservations@mohg.com
Mandarin Oriental Bosphorus, Istanbul
Kuruçeşme, Muallim Naci Caddesi No: 6234345 Beşiktaş, İstanbul, Turkey
Telephone +90 212 349 8888
Emailmoist-reservations@mohg.com
Mandarin Oriental, Lago di Como
Via Caronti, 69
22020 Blevio (Co)
Italy
Telephone +39 031 32 511
Emailmocmo-reservations@mohg.com

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143

Mandarin Oriental Hotel Group Contact Addresses Continued

Mandarin Oriental Hyde Park, London
66 Knightsbridge
London, SW1X 7LA
United Kingdom
Telephone +44 (0) 20 7235 2000
Emailmolon-reservations@mohg.com
Mandarin Oriental Palace, Luzern
Haldenstrasse 106002 Lucerne, Switzerland
Telephone +41 41 588 1888
Emailmolzn-reservations@mohg.com
Mandarin Oriental Ritz, Madrid
Plaza de la Lealtad 528014 Madrid, Spain
Telephone +34 91 701 67 67
Emailmrmad-reservations@mohg.com
Mandarin Oriental, Marrakech
Route du Golf Royal40 000 Marrakech, Morocco
Telephone +212 5 24 29 88 88
Emailmomrk-reservations@mohg.com
Mandarin Oriental, Milan
Via Andegari 920121 Milan, Italy
Telephone +39 02 8731 8888
Emailmomln-reservations@mohg.com
Mandarin Oriental, Munich
Neuturmstrasse 180331 Munich, Germany
Telephone +49 (89) 290 980
Emailmomuc-reservations@mohg.com
Mandarin Oriental, Paris251 rue Saint-Honoré
75001 Paris, France
Telephone +33 (0)1 70 98 78 88
Emailmopar-reservations@mohg.com
Mandarin Oriental, Prague
Nebovidská 459/1, Malá Strana
118 00 Prague, Czech Republic
Telephone +420 233 088 888
Emailmoprg-reservations@mohg.com

144 Mandarin Oriental International Limited

Mandarin Oriental Al Faisaliah, Riyadh
PO Box 4148
King Fahad Road, Al Olaya
Riyadh 12212
Saudi Arabia
Telephone +966 11 273 2000
Emailmoryd-reservations@mohg.com
Mandarin Oriental Savoy, Zurich
Poststrasse 12, 8001 Zurich
Switzerland
Telephone +41 (0) 43 588 38 38
Emailmozrh-reservations@mohg.com

America
Mandarin Oriental, Boston
776 Boylston Street
Boston, Massachusetts 02199, USA
Telephone +1 (617) 535 8888
Emailmobos-reservations@mohg.com
Mandarin Oriental, Canouan
Carenage Bay, Canouan Island VC0450
Saint Vincent and the Grenadines
Telephone +1 (212) 461 8068
Emailmocan-reservations@mohg.com
Mandarin Oriental, Miami
500 Brickell Key Drive
Miami, Florida 33131, USA
Telephone +1 (305) 913 8288
Emailmomia-reservations@mohg.com
Mandarin Oriental, New York80 Columbus Circle
New York, New York 10023, USA
Telephone +1 (212) 805 8800
Emailmonyc-reservations@mohg.com
Mandarin Oriental, Santiago
Avenida Presidente Kennedy 4601
7560994 Las Condes, Santiago, Chile
Telephone +56 2 2950 3088
Emailmostg-reservations@mohg.com

Mandarin Oriental International Limited
mandarinoriental.com