Annual Report 2020

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 over 50 years ago into a global brand, the Group now operates 34 hotels
and seven residences in 24 countries and territories, with each property reflecting the Group’s oriental
heritage and unique sense of place. Mandarin Oriental regularly receives international recognition
and awards for outstanding service and quality management, and has a strong pipeline of hotels andresidences under development. The Group has equity interests in a number of its properties andadjusted net assets worth approximately US$5.2 billion as at 31st December 2020.
Mandarin Oriental continues to drive its reputation as an innovative leader in luxury hospitality,
seeking selective opportunities to expand the reach of the brand, with the aim to maximise
profitability and long-term shareholder value.
The parent company, Mandarin Oriental International Limited, is incorporated in Bermuda and has
a standard listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore.
Mandarin Oriental Hotel Group International Limited, which operates from Hong Kong, manages
the activities of the Group’s hotels. Mandarin Oriental is a member of the Jardine Matheson Group.

Contents

1

Corporate Overview

3

Corporate Information

4

Highlights

6

Chairman’s Statement

8Group Chief Executive’s Review

14

Operating Summary

16

Development Portfolio

18

International Brand Recognition22

Corporate Responsibility and Sustainability Roadmap

24

Financial Review

30

Directors’ Profiles

32

Financial Statements

101

Independent Auditors’ Report

109

Report of the Valuers

110

Five Year Summary

111

Responsibility Statement

112

Corporate Governance123

Principal Risks and Uncertainties

125

Shareholder Information

126

Mandarin Oriental Hotel Group Contact Addresses

2 Mandarin Oriental International Limited

Corporate Information

Directors
Ben Keswick Chairman(stepped down as Managing Director on
15th June 2020)

John Witt Managing Director(joined the Board on 15th June 2020)

James Riley Group Chief Executive
Craig Beattie
Jack Yilun Chen
Edouard Ettedgui(stepped down on 6th May 2020)

Mark Greenberg(stepped down on 31st December 2020)

Julian Hui
Adam Keswick
Archie Keswick
Simon Keswick(stepped down on 1st January 2020)

Lincoln K.K. Leong
Anthony Nightingale
Y.K. Pang
Jeremy Parr(stepped down on 3rd December 2020)

Lord Sassoon, kt(stepped down on 9th April 2020)

James Watkins
Percy Weatherall

Mandarin Oriental Hotel GroupInternational Limited
Directors
John Witt Chairman(appointed as chairman on 15th June 2020)

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

James Riley Group Chief Executive
Craig Beattie Chief Financial Officer
Graham Baker(joined the board on 15th June 2020)

Richard Baker(stepped down on 24th April 2020)

Kieren Barry
Paul Clark
Mark Greenberg(stepped down on 31st December 2020)

Jill Kluge
Christoph Mares
Vincent MarotPaul Massot
Anne O’Riordan
Y.K. Pang
Jeremy Parr
Corporate Secretary

Company Secretary

Jonathan Lloyd

Jonathan Lloyd
Registered Office
Jardine House
33-35 Reid Street
Hamilton
BermudaAnnual Report 20203

Highlights

Mandarin Oriental International Limited
Underlying loss of US$206 million
COVID-19 travel restrictions dramatically reduced demand
Extensive cost reduction measures implemented across the business
Robust liquidity and funding position
Development pipeline remains solid and four new management contracts signed
No dividend proposed for 2020

Results
Year ended 31st December
2020
2019
US$m
US$m

Change%Combined total revenue of hotels under management1

593.0

1,325.1(55)

Revenue

183.7

566.5

(68)

(74.2)

154.5

n/a

Underlying (loss)/profit attributable to shareholders3(205.9)41.2

n/a

Revaluation loss on investment property under development(474.9)(67.3)

n/a

Loss attributable to shareholders(680.1)(55.5)

n/a

US¢

US¢

%

Underlying (loss)/earnings per share3(16.30)3.26

n/a

Loss per share(53.84)(4.39)

n/a

–

1.50

(100)

US$

US$

%

Net asset value per share

2.78

3.26

(15)

Adjusted net asset value per share5

4.09

4.70

(13)

Net debt/shareholders’ funds

14%

7%

Net debt/adjusted shareholders’ funds5

10%

5%

Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)2Dividends per share 4

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

In light of the substantially reduced levels of business due to the impact of COVID-19 pandemic, the Directors withdrew theirrecommendation of a final dividend in respect of the 2019 financial year. No dividend in respect of the 2020 financial year has
been declared or proposed by the Board.

5

The Group’s investment property under development is carried at fair value on the basis of a valuation carried out by independent
valuers at 31st December 2020. The other freehold and leasehold interests are carried at amortised cost in the consolidatedbalance sheet. Both the adjusted net asset value per share and net debt/adjusted shareholders’ funds have included the market
value of the Group’s freehold and leasehold interests.

4 Mandarin Oriental International Limited

Combined total revenue

Combined total revenue

US$m

US$m

by type of businessby geographical area

1,380.4
718.9

1,397.6
758.7

349.8

358.2

358.0

297.4

303.3

280.9

1,323.7
676.5

2016

2017

2018

1,325.1
636.1

1,323.7
700.0

348.6

593.0
278.6

340.4

501.5

1,397.6
763.1

516.9

514.8

1,325.1
718.1

491.8

122.2

126.1

119.7

115.2

2016

2017

2018

2019

2020

2019

593.0
275.5

239.0

76.2
238.2

AmericaAsia

1,380.4
737.4

Food and beverage

Rooms

Europe, Middle East and Africa (EMEA)

78.5

2020

OthersUnderlying EBITDA andnet interest expense

Net debt/adjusted
shareholders’ funds

US$m

US$m

5,936.1

5,826.6

5,740.0

5,170.9

187.9
8.8
179.1
158.2

154.5

157.9

18.0
14.5

2016

3,888.3

10.5
144.0

14.8

2017

18.9

1.6

2.7

16.4

16.2

2018

2019

15.9
1.7

11.2

14.2

(85.4)

5.7%

7.6%

326.8

297.3

2016

2017

4.9%
284.7

2018

5.1%
300.4

2019

9.8%
506.2

2020

(74.2)

2020

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

Adjusted shareholders’ funds
Net debt

IFRS 16 ‘Leases’ impact on EBITDA andinterest on lease liabilities

Annual Report 2020

5

Chairman’s Statement

Overview
Government actions to curtail the COVID-19 pandemic drastically reduced both international and domestic
travel in 2020. Many countries imposed significant restrictions on people’s freedom of movement and on hospitality
operations. Against this background, combined total revenue of hotels under management fell by 55% in 2020
compared to 2019, and the Group’s profitability was severely impacted.
Extensive cost reductions were implemented from early in the year. Results also benefited from government
financial support in some markets. At 31st December 2020, the Group’s liquidity position remained robust andwas further strengthened with the addition of new committed facilities in early 2021.

2020 Financial performance
Underlying losses before interest, tax, depreciation and amortisation (‘EBITDA’) were US$74 million, compared topositive EBITDA of US$155 million in 2019. Underlying losses were US$206 million, comprising US$175 million
of losses from operations and a US$31 million post-tax impairment of the carrying value of the Geneva hotel
following a significant decrease in the market value of the leasehold interest. In 2019, underlying earnings were
US$41 million.
Non-trading items almost entirely comprised a 15% decrease in the valuation of the Causeway Bay site underdevelopment (previously the site of The Excelsior hotel in Hong Kong), in line with the overall market trend inrespect of reductions in property values. The site under development was valued at some US$2.5 billion, net of
future construction costs, a decrease of US$475 million during the year. In 2019, US$97 million of non-trading
losses were recognised, again mostly related to the Causeway Bay site under development. Accordingly, losses
attributable to shareholders were US$680 million, compared to losses of US$56 million in 2019.
At 31st December 2020, the Group’s adjusted net asset value per share was US$4.09, a decrease of 13% compared tothe end of 2019, reflecting the losses incurred during the year. Net debt was US$506 million versus US$300 million
at the end of 2019 and the Group remains well funded with headroom in its available cash and committed facilities
of US$328 million. In addition, US$260 million of new facilities were secured in February 2021. The average tenorof the Group’s debt facilities was 3.2 years, excluding the new facilities, compared with 4.2 years at the end of 2019.
Gearing as a percentage of adjusted shareholders’ funds was 10%, taking into account the market value of theGroup’s properties.
No dividend will be paid in respect of 2020. The Group will consider a resumption of dividend payments whenbusiness performance improves.

Year in review
The Group’s operations and financial performance were severely impacted by the unprecedented decline in global
travel. Many hotels were closed for several months and, when they opened, hotel performance varied dependingon the extent and duration of government restrictions on travel. Management took significant measures to reduce
costs both in hotels and in the Group’s corporate organisation. The Group’s share of payroll across owned hotels
and the corporate organisation, the major component of costs in the business, was reduced by some 40% through a
combination of measures, including furlough, unpaid leave, reduced pay and redundancies. Substantial reductions
in non-payroll costs were also achieved. Many of these measures are continuing.

6 Mandarin Oriental International Limited

In Asia, most hotels were able to remain operational, albeit with sharply reduced occupancy due to constraints on
travel. There was, however, a recovery in the second half for the Group’s managed hotels in the Chinese mainland.
In Europe and America, hotels closed for much of the second quarter, with most reopening thereafter. The relaxationof travel restrictions allowed some recovery in business levels. A resurgence in COVID-19 cases towards the endof the year though brought back many, even stricter, restrictions. The Group’s managed hotels in resort locations,such as Dubai and Bodrum, performed well when travel conditions permitted.
Non-essential capital expenditure was suspended; however the Group did complete renovations in Boston, Bangkok
and Munich. Renovations at the Group’s Hong Kong hotel to create new facilities were also completed in early 2021.
Restoration work at the 50% owned Mandarin Oriental Ritz, Madrid continued, and the hotel is expected to re-openin the second quarter of 2021. The Causeway Bay site under development remains on track to complete in 2025.
The Group’s development pipeline remains strong, with many projects at an advanced stage. The Group took
over the management of the Emirates Palace in Abu Dhabi at the beginning of 2020 and the Al Faisaliah Hotel in
Riyadh in March 2021, increasing the total number of hotels under operation to 34. New management contracts
were signed and announced in 2020 in respect of Zurich and Vienna. In 2021, a new resort was announced in
Da Nang, Vietnam. The recently restored Mandarin Oriental Ritz, Madrid, and Mandarin Oriental Bosphorus,
Istanbul are expected to open in the first half of 2021.

People2020 has been extremely challenging for colleagues. It has been inspiring to see their continuing resilience anddedication to delivering exceptional service whilst finding new ways to innovate and delight customers in difficult
circumstances. On behalf of the Directors, I would like to express my sincere appreciation for the exemplary levelof teamwork, commitment and passion that colleagues have shown and to recognise the contribution of colleagues
who have left the Group.
John Witt succeeded me as Managing Director on 15th June 2020. I will continue as Chairman. Jeremy Parr andMark Greenberg stepped down as Directors of the Company on 3rd December 2020 and 31st December 2020
respectively. We would like to thank them for their contribution to the Board during their tenure.

Outlook2020 was an extremely difficult year with a significant reduction in global travel. Management actions, together
with financial support by governments in some markets, led to lower losses in the second half of the year.
Trading conditions remain extremely challenging, and an underlying loss is expected for the first half of 2021.
The outlook for the full year remains highly uncertain, and will be dependent on the removal of barriers to travel
and continuation of government support measures. Mandarin Oriental remains in a strong competitive position,
however, with robust liquidity and a powerful brand that customers will return to when travel restrictions allow.

Ben Keswick
Chairman
11th March 2021

Annual Report 20207

Group Chief Executive’s Review

Market conditions
The COVID-19 pandemic and government actions to control its spread had an unprecedented impact on global
travel in 2020. Policy responses varied by territory and changed during the year, with the introduction of new
requirements for entering countries and in some instances, almost complete border closures. Social distancing
measures also impacted food and beverage and spa operations.
In Asia, border controls started at the end of January 2020 and were generally tightened through the year, reducing
international travel to near zero. The ability to travel domestically varied depending on the extent of restrictions,making it extremely difficult for hospitality businesses to operate. In Europe and America, restrictive measuresbegan in March with governments requiring people to stay at home and many businesses required to close. A lotof these restrictions were relaxed over the summer months, allowing some recovery in travel. A resurgence in
COVID-19 cases towards the end of the year led to their reinstatement, this time with further border controls,
extended quarantine times and blanket travel bans between certain areas. Government financial support wasavailable in many territories to soften the substantial financial impact on businesses.
At the end of 2020, most parts of the world had extensive restrictions on travel and on food and beverage
operations. These restrictions remain in place and look likely to continue for some time. It is however, unclear towhat degree government financial support will continue. As a result, the travel and hospitality sectors remain largely
depressed. There have been instances where more normal levels of travel have been possible, notably within the
Chinese mainland and certain resort locations which have benefited from a continued appetite for leisure travel
to warmer destinations.

Response to the pandemic
We faced extremely challenging operating conditions throughout 2020. During the year, we took steps to mitigate
the substantial operational and financial impact on our business. Key actions taken include:
1) Containing costs: We conducted an extensive review of costs across hotels and the corporate organisation,
considering location-specific business levels, anti-pandemic restrictions and available government financial
support. The Group’s share of payroll, the largest component of costs, was reduced by around 40% across owned
hotels and the corporate organisation compared to 2019. Colleagues experienced reduced pay, unpaid leave andfurlough measures for much of the year. At the end of 2020, over 40% of colleagues remained on some form of
payroll measure.
While the Group drew upon government financial support where available, some reductions in the workforce
were necessary to contain costs. During the year, headcount across hotels and the corporate organisation was
reduced from around 13,920 to 10,770 through redundancies and natural attrition. Our colleagues and theservice that they deliver are the core of our business and the Group will continue to ensure that actions taken
are balanced with maintaining Mandarin Oriental service standards.
Every possible avenue to reduce costs was proactively pursued. Non-payroll costs including advertising andmarketing expenses were significantly reduced or suspended, except for selective digital marketing. Hotel capital
expenditure was curtailed and all non-essential projects were postponed or cancelled.

8 Mandarin Oriental International Limited

2) Rethinking revenue: The vast majority of our operating income in a typical year is generated from our rooms
as opposed to our food and beverage or spa operations. Rooms demand is almost entirely related to international
travel, except within the Chinese mainland and the United States, where domestic demand is substantial.
In 2020, this was reversed, as most hotels were primarily limited to domestic demand. As a result, we had topivot our offering toward domestic customers. This involved familiarising them with the concept of ‘staycations’(i.e. a short holiday or break spent in one’s home country rather than abroad). As customers gradually adapted
to the new circumstances and some governments started to encourage domestic spending, we were often able
to capture a solid share of domestic demand through competitive room pricing and by incorporating food andbeverage and spa promotions into our offers. Where regulations allowed, our food and beverage operations
continued to generate reasonably strong traffic and innovated to meet demand for food delivery outside ofour properties.
3) Maintaining health and safety standards: The comfort, health and safety of our customers and colleagues
has always been our primary concern. Mandarin Oriental was one of the first hotel groups to initiate enhanced
health and safety protocols, publicised as our ‘We Care’ programme to ensure customers and colleagues felt
safe when they were with us. ‘We Care’ is a set of measures comprising individual consultations prior to arrival,
to cater to personal hygiene preferences and interaction levels, as well as heightened disinfection protocols.
We continue to closely monitor and adapt measures to meet changing local and global requirements.

Group performance in 2020
In 2020, border controls and restrictions on mobility and hospitality operations constrained the ability of our hotels
to generate revenues and impacted Group profitability. In April, the lowest point of the year, the Group’s global
portfolio averaged only 468 paying room guests per day, compared with over 7,155 per day during the same period
in 2019. Moreover, through 2020 only one million paying room guests stayed at our hotels, compared to 2.5 million
in 2019. The combined total revenue from hotels under management fell by 55% and underlying EBITDA losses of
US$74 million were incurred.
In Hong Kong and the Chinese mainland, the impact started to be felt as occupancy levels fell to single-digits in
February and in the rest of Asia, reached low double-digits in March. In Europe, the Middle East and America, theimpact started several weeks later.
During the second quarter, most hotels in Europe and America were either fully or practically closed. We put
extensive measures in place to reduce costs. In Asia, most hotels remained operational but at single-digit occupancy
levels. The Chinese mainland was the sole exception, where operating conditions improved driven by a recovery indomestic demand.
In the third quarter, domestic and some short-haul international demand in specific locations started to return.
Most hotels were reopened but operated at very modest levels of occupancy.
In the fourth quarter, many of the hotels in Asia and America saw some further improvement in occupancy
driven by staycation business. Notably, the 494-key Mandarin Oriental, Hong Kong, was able to improve averageoccupancy to 29% in the fourth quarter. In the Chinese mainland, our hotels in Sanya, Beijing and Guangzhou
reached December occupancy levels in line with 2019. Dubai also benefited from more relaxed regulations andreported average occupancy of 71% in the fourth quarter. In Europe however, business activity worsened as
mobility restrictions were tightened due to a resurgence in COVID-19 cases.

Annual Report 20209

Group Chief Executive’s Review Continued

Near-term priorities
It is difficult to accurately predict when business levels will recover as trading conditions remain highly uncertain.
We are focused on managing costs during periods of fluctuating demand and on being prepared for when travel andoperations are able to resume in full. Our near-term priorities are:1) Driving revenue: We expect that demand will remain significantly below normal levels in the first half of 2021.
Performance in the second half will depend on the relaxation of travel restrictions and the degree of pent up
customer demand. Where tight border controls remain in place, growing our share of domestic demand will
require price flexibility and creativity to keep customers coming back. At the same time, travel between somedestinations is likely to resume faster than others and we will be closely monitoring this to ensure that our hotels
are well-positioned. We must also be alert to new revenue opportunities.
2) Controlling costs: Extensive cost measures remain in place. Costs in each hotel are actively reviewed on an
individual basis, considering the local demand outlook and availability of government financial support. Whilecontaining financial losses is a key priority, this must be balanced with the need to maintain motivation andmorale among colleagues who have been loyal to Mandarin Oriental for many years. We will be dependent
upon them to deliver exceptional experiences when demand returns.
3) Maintaining a strong funding position: We have taken appropriate measures to maintain a robust liquidity
position to absorb financial losses until such time as there is a recovery in business levels.
4) Growing the pipeline: The Group operates 34 hotels today and our strategy for expansion is based on the
opening of new managed hotels and residences. For this to be fulfilled, we must maintain and continue togrow the pipeline of development projects. While there have been some delays in the scheduled opening datesof new properties, our pipeline remains robust with 20 announced hotel projects and two standalone residences
expected to open in the next five years. The Group will receive significant branding fees when individual units
are sold. Continued interest from owners and developers in Mandarin Oriental is a signal of our underlying
growth momentum, putting the Group in a strong position once market conditions improve.

Strategic priorities
Whilst our primary focus has been on crisis management through the pandemic, we also are continuing to progress
our strategic priorities to drive future growth. Key achievements during the year include:
1) Brand: Despite the effective suspension of our brand and advertising expenditure, there were over 180,000 sign-ups
to our Fans of M.O. customer recognition programme. We also evolved the programme to offer new benefits andrecognition to our most loyal Fans.

10 Mandarin Oriental International Limited

2) People: In the face of enormous personal and professional challenges faced by colleagues, there was a considerable
effort by all to sustain ongoing engagement. Through our virtual engagement activities, we were able to give ourcolleagues access to personal growth opportunities and to connect colleagues across the world. I am enormously
grateful to all of our colleagues who contributed to these engagement activities, which strengthen our culture.
We also launched our Forever Fans alumni programme which will enable past, present and future colleagues toconnect and maintain a long-lasting relationship with Mandarin Oriental.
3) Customers: Our colleagues always put the customer first and when I speak with guests, this is consistently thereason that they return to us. Customer expectations are reaching a level where data will play a central role inenabling colleagues to deliver exceptional experiences. In the future, we will strengthen colleague intuition withinsights drawn from data so that we are able to deliver the personalisation that customers expect. We have madesignificant progress this year connecting our data sources across the Group into a single platform.
4) Digital: Over the last two years we have replaced property management systems, the technology infrastructure
at the heart of a hotel, across the Group. Replacing core systems is critical to streamlining operations, enablingcolleagues to spend more time with customers and less time with administrative tasks. We will continue totarget infrastructure transformations to modernise our core business systems. We also intend to push ahead
with investments in our digital platforms.
Having started our journey from a single hotel in 1963, our vision was to be widely recognised as the best luxury
hotel group in the world. Our focus has always been to provide exceptional hospitality within our hotels but infuture, we will also need to create meaningful relationships with our customers beyond the four walls of a hotel.
In 2020, we set out a new vision for the Group: A World of Fans. This celebrates the global recognition that ourbrand has achieved, while also setting a new purpose and challenge for the Group to look for new ways to engage
more broadly with customers everywhere and to use every customer interaction, within or outside our hotels,
physical or digital, to convert a customer into a Fan of Mandarin Oriental.
We recently announced a couple of initiatives that signalled this redefined intent. Firstly, by forming the O&MO
Alliance, we found an ideal partner in the Oberoi Group whose hotel portfolio will provide Mandarin Oriental
customers with access to the most luxurious destinations in India, a market where we do not currently have
any hotels. Through collaborating with Oberoi, we will have an opportunity to grow our Indian customer base.
Secondly, we made a small investment in a peer-to-peer luxury home rental platform, Stay One Degree. Working
with the founders, our objective is for Mandarin Oriental customers to be able to choose between both homes andhotels, to greatly increase the number and type of destinations that we offer.

Annual Report 202011

Group Chief Executive’s Review Continued

Business developments
As I outlined previously, maintaining the momentum of our development pipeline and new hotel and residence
openings is critical. In 2020, we took over management of the Emirates Palace, Abu Dhabi and announced thetakeover of the Al Faisaliah Hotel in Riyadh effective in March 2021. We also announced two management
contracts, the first for a new hotel in Vienna and the second for the re-flagging of an existing property in Zurich,whose management we will take on following a full renovation. In 2021, we signed a new resort location in
Da Nang, Vietnam.
Our development pipeline remains robust, with 20 hotels and two standalone residences under development.
All of these are management agreements for which we receive annual fees with no equity participation. While thepandemic has and will continue to impact construction timelines and there is always a risk that some projects may
not complete, many of the projects in the Group’s pipeline are at an advanced stage.
During the year, despite the challenging financial environment, we completed renovations that were alreadyunderway at our hotels in Bangkok and Boston. A significant restoration of the Mandarin Oriental Ritz, Madrid
is expected to complete in the second quarter of 2021. We also felt it was timely to commence renovations inHong Kong and Munich, which will position both hotels well to benefit when demand returns.
Good progress was made with the redevelopment of the site in Causeway Bay, Hong Kong which used to house
The Excelsior hotel. In 2019, the Group announced its intent to redevelop the site into a mixed-use commercial
building for a cost of some US$650 million, to be financed using a combination of existing and new debt facilities.
Demolition was completed in 2020 and approvals to maximise the gross floor area of the site were obtained.
Completion of the building remains on schedule for 2025. As previously indicated, it is not the Group’s intention
to be the long-term owner of commercial property. Opportunities for the monetisation of this asset will continue
to be reviewed.

Core values
As our business grows and our customer base becomes ever more diverse, evolving our colleague culture remains apriority. We foster a culture of inclusivity and empowerment, where colleagues feel comfortable in being themselves
and in voicing their ideas. We encourage our colleagues to believe in, and deliver, our core values of doing the rightthing for customers, communities and the planet. Sustainability and innovation form the foundation of our culture.
Our approach to sustainability focuses on combining the power of grass-roots action with global, Group-wide
initiatives. One such example is our commitment to completely eliminate single-use plastic across all hotels.
This encompasses items in our rooms, restaurants, spas and lobbies as well as in back of house areas unseen by
the customer such as kitchens. We set ourselves an ambitious completion date of the end of March 2021. This has
hugely accelerated efforts across hotels to find sustainable alternatives to single-use plastic. Whilst we will not fully
meet this target and the pandemic has certainly played a part in this, we hope that, by the end of June, we will have
reduced the single use plastic usage in our properties by over 95% in a normalised year. By setting an aggressive
timeline, we have ensured that actions are taken now and that a meaningful reduction in plastic usage has beenachieved in very short order.

12 Mandarin Oriental International Limited

The Group is committed to four broader sustainability objectives: reducing our environmental footprint, increasing
our social impact, responsible procurement and diversity and inclusion. Specific targets within these areas will
be included in our Sustainability Report that will be published in May 2021. In 2021, we will be focused onincreasing responsible procurement for agricultural commodities, seafood and paper, progressing towards our new
five and ten year environmental goals and identifying new social inclusion and waste management initiatives.
In the area of innovation, we are focused on removing the barriers to creativity and thinking differently. This means
flattening hierarchies, removing bureaucracy and eliminating the fear of failure. Our colleagues innovate every day
as they constantly delight and surprise our customers. We must continue to support and reward these behaviours toproactively evolve our culture over time.

Colleagues
I would like to express my deepest thanks for the dedication of our colleagues in the face of the toughest conditions
that our industry has faced. Despite the challenges that the year presented, they continued delivering exceptional
service to our customers. At the same time, we asked many colleagues to accept a variety of pay reductions, unpaid
leave and furlough to help our business through this period. Our people are the heart of everything that we do andtheir passionate commitment to delight customers, no matter what the circumstances, underpins Mandarin Oriental.
It was with sadness that we said goodbye to some of our colleagues who left the Group. I would like to thank themfor their dedication over many years and wish them the best for the future.

Looking to the future
Trading conditions continue to be difficult. While this is likely to persist in the short-term, I remain confident
about the positive long-term future of our industry and Mandarin Oriental’s growth prospects.
The pandemic has accelerated trends in consumer behaviour that have been prevalent in the travel industry forsome time. For example, the shift to digital channels, the increasing demand for leisure-oriented experiences andthe reduction in corporate travel. When I look back at the pockets of demand during 2020, I am encouraged thatpeople’s underlying appetite for travel and their desire for aspirational, luxury experiences will grow.
The Group’s balance sheet has been conservatively geared to sustain business downturns and today remains
well-positioned to finance us through this crisis. I am also confident that we have taken the right steps to reduce
losses and we will continue to monitor our business levels actively. When travel does return, the strength andreputation of Mandarin Oriental, and the extraordinary service delivered by our colleagues, will draw ourcustomers back to us and welcome new Fans to Mandarin Oriental.

James Riley
Group Chief Executive
11th March 2021

Annual Report 202013

Operating Summary

Total portfolio RevPAR
US dollar

Constant currency
2020
US$

2019
US$

% Change

63

192

(67)

290

569

(49)

America

142

314

(55)

Total

105

280

(63)

Asia
Europe, Middle East
and Africa

2020
US$

2019
US$

% Change

63

192

(67)

313

569

(45)

America

143

314

(54)

Total

108

280

(61)

Asia
Europe, Middle East
and Africa

The like-for-like RevPAR presented in the table above includes all hotels that were in the Group’s portfolio andoperating for the entire year of both 2019 and 2020. As Mandarin Oriental Ritz, Madrid, remains closed forrestoration, it has been excluded along with any new openings or closures during the period. The figures have also
been adjusted to exclude the periods in 2020 when hotels were closed due to COVID-19 restrictions.

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

Mandarin Oriental, Tokyo 100% leasehold

2020

2019

% Change

2020

2019

% Change

Available rooms

494

499

(1)

Available rooms

179

179

0

Average occupancy (%)

15.8

61.5

(74)

Average occupancy (%)

36.1

76.8

(53)

Average room rate (US$)

345

467

(26)

Average room rate (US$)

594

732

(19)

RevPAR (US$)

54

287

(81)

RevPAR (US$)

214

562

(62)

Mandarin Oriental, Hong Kong remained open throughout 2020.

Mandarin Oriental, Tokyo was closed from 9th April 2020 to
6th July 2020.

Mandarin Oriental, Jakarta 96.9% ownership
2020

2019

% Change

Available rooms

272

272

0

Average occupancy (%)

26.0

47.5

(45)

Average room rate (US$)

82

135

(39)

RevPAR (US$)

21

64

(67)

Mandarin Oriental, Jakarta remained open throughout 2020.

14 Mandarin Oriental International Limited

EUROPE, MIDDLE EAST AND AFRICAAMERICA

Mandarin Oriental Hyde Park, London 100% ownership

Mandarin Oriental, Boston 100% ownership

2020

2019

% Change

Available rooms

181

181

0

Average occupancy (%)

29.9

65.6

Average room rate (US$)

1,002
300

RevPAR (US$)

2020

2019

% Change

Available rooms

148

148

0

n/a

Average occupancy (%)

18.7

67.3

(72)

1,194

n/a

Average room rate (US$)

612

635

(4)

784

n/a

RevPAR (US$)

115

427

(73)

Mandarin Oriental Hyde Park, London was closed for repairs following
a fire on 6th June 2018 and fully re-opened on 15th April 2019.
The hotel was closed from 31st March 2020 to 22nd July 2020.
A year-on-year comparison is therefore not meaningful.

Mandarin Oriental, Boston was closed from 26th March 2020 to
9th September 2020.

Mandarin Oriental, Munich 100% ownership

Mandarin Oriental, Washington D.C. 100% ownership

2020

2019

% Change

73

73

0

Average occupancy (%)

35.8

78.0

Average room rate (US$)

882

RevPAR (US$)

316

Available rooms

2020

2019

% Change

Available rooms

373

373

0

(54)

Average occupancy (%)

25.1

68.7

(63)

886

(1)

Average room rate (US$)

284

332

(15)

691

(54)

RevPAR (US$)

71

228

(69)

Mandarin Oriental, Munich was closed from 27th March 2020 to29th September 2020.

Mandarin Oriental, Washington D.C. was closed from 26th March
2020 to 23rd August 2020.

Mandarin Oriental, Paris 100% ownership
2020

2019

% Change

Available rooms

135

135

0

Average occupancy (%)

20.4

58.0

(65)

Average room rate (US$)

1,013

989

2

207

574

(64)

RevPAR (US$)

Mandarin Oriental, Paris was closed from 27th March 2020 to26th September 2020.

Mandarin Oriental, Geneva 100% ownership
2020

2019

% Change

Available rooms

181

181

0

Average occupancy (%)

20.0

62.7

(68)

Average room rate (US$)

542

605

(10)

RevPAR (US$)

108

379

(72)

Mandarin Oriental, Geneva was closed from 27th March 2020 to14th June 2020.

Annual Report 202015

Development Portfolio

The following 20 hotels and 13 Residences at Mandarin Oriental are expected to open in the next five years.
Asia
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, Da Nang
A luxury waterfront resort comprising 69 villas and 18 Residences at Mandarin Oriental, ideally located on a spectacular beach in one of Vietnam’s mostpopular leisure destinations.

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

Mandarin Oriental, Nanjing
A 106-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, Shenzhen
A 178-room hotel situated on the top of an impressive 400-metre tower, with outstanding views of the city skyline and surrounding city parks.

Europe, Middle East and Africa
The Residences by Mandarin Oriental, Barcelona
34 luxury residences housed in a 20-storey tower, in a prime location a short walk from Mandarin Oriental, Barcelona.

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 Bosphorus, Istanbul
A 106-room hotel prominently located on the banks of the Bosphorus, with panoramic vistas of the famed strait, surrounding hills and the city’s historical sites.

Mandarin Oriental Etiler, Istanbul
A 158-room hotel and 251 luxurious Residences at Mandarin Oriental, located within three standalone towers in the prestigious Etiler district of Istanbul.

Mandarin Oriental Mayfair, London
A 50-room boutique hotel and 80 Residences at Mandarin Oriental, located on Hanover Square in the heart of London’s Mayfair district.

Mandarin Oriental Palace, Luzern
A re-branding of the iconic Hotel Palace Luzern, currently closed for renovation. This 136-room hotel is located on the shores of Lake Lucerne, with excellent
lake and mountain views.

Mandarin Oriental, Moscow
A 65-room hotel and 137 Residences at Mandarin Oriental, in a prime riverfront location on the Sofiyskaya embankment in the heart of the city, directly
facing the Kremlin.

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

Mandarin Oriental, Tel Aviv
A 225-room hotel and 231 Residences at Mandarin Oriental, in an unrivalled waterfront location overlooking one of the city’s pristine beaches.

Mandarin Oriental, Vienna
A 151-room hotel and 17 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.

Mandarin Oriental Savoy, Zurich
A re-branding of the historic Savoy Baur en Ville, which will undergo a two-year closure for renovation. This 80-room hotel is situated within the main
business centre, close to the city’s leisure attractions and a short walk from Lake Zurich.

16 Mandarin Oriental International Limited

America
Mandarin Oriental, Boca Raton
A 163-room hotel and 88 Residences at Mandarin Oriental, as part of a mixed-use complex, surrounded by Boca Raton’s most affluent, residential
neighbourhoods and a short walk from miles of pristine beaches.

Mandarin Oriental, Grand Cayman
A 100-room beachfront resort and 89 branded 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 at 685 Fifth Avenue, New York
69 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 202017

International Brand Recognition

The recognition of Mandarin Oriental as one of theworld’s best luxury hotels continued to be reflectedin the awards and accolades received from respectedtravel associations, publications and platforms acrossthe globe. Highlights in 2020 included the Group being
recognized as one of the ‘Best Hotel Brands’ by Travel+ Leisure, and 11 of the Group’s hotels listed in CondéNast Traveller’s ‘Readers’ Choice Awards’, including
London and Doha ranked No. 1 in their categories.
In the 2020 Michelin guides, a total of 16 restaurants
were honoured, with 25 stars granted across the Group,with seven of the 16 restaurants receiving two stars.
The Group’s Spas were also acknowledged for theircommitment to excellence, with 13 hotels being
awarded Forbes ‘Five Star Spa’ status.

Mandarin Oriental Hotel Group
When it comes to the hospitality industry, few hotel
groups have had more success than Mandarin Oriental
Hotel Group… these five-star hotels are synonymouswith luxury, providing a luxury experience wherever
they are in the world. Guest experience is at the centreof the business, with the Group working hard to ensure
guests have the most flawless experience possible.
A&E UAEThe brand that invented the modern Asian luxury hotel.
Condé Nast Traveller, UK

None can really compete with The Oriental, a historic
institution that’s as much a symbol of this city as
tuk-tuks and temples.
Escape (Herald Sun)

The stay also made me understand why the 144-year-old
hotel has been lauded across the globe as one of the very
best. … Over time, it has been the people at Mandarin
Oriental, Bangkok that have made the hotel retain its
highly esteemed reputation. If there was only one word
to describe my experience there, it would be flawless.
Bangkok Post

Mandarin Oriental, Bangkok is your Best Ever
experience. Not only does it have impeccable andcaring service, but also gloriously comfortable, elegant
rooms and suites, an astounding number of world-classrestaurants and an unbeatable location on the edgeof the Chao Phraya River; its legendary Spa and Rim
Nam Terrace just a boat ride away from the main hotel.
Long may it flourish.
The Gallivanter’s Guide, UK

Mandarin Oriental Wangfujing, Beijing
Mandarin Oriental Wangfujing, Beijing shines
elegantly with its oriental charm. Art, Forbidden City,
cocktails, food and meticulous service have become thekey words of this luxury hotel since opening a year ago.
EsquireMandarin Oriental, Bangkok

Mandarin Oriental, Hong Kong

The unimpeachable Mandarin Oriental, Bangkok isfully open again, after a complete redesign. From thewhite-wainscoted walls in the suites and cinemascope
views to the legendary surf-and-turf temple Lord Jim’sand the sleek teak decking and chic rattan all along
the Verandah, it’s pretty much perfection.

As the hotel group’s first property to open, it’s clear where
the luxury hospitality ethos comes from. The Mandarin
Oriental continues to exude charm and legacy throughits service and facilities. Whether you’re a guest staying
overnight or simply visiting the five-star spa andrestaurants, everyone is welcome to indulge in the
impeccable qualities of the hotel.

Financial Times, How To Spend It

LUX Nomade

18 Mandarin Oriental International Limited

With its mix of cool, contemporary luxury and Eastern
heritage, Mandarin Oriental, Hong Kong has rightly
been an icon since opening 57 years ago. With anenviable location in the heart of the city, be sure toseek out rooms or suites with magnificent views ofVictoria Harbour and the city skyline.

There’s something about a luxury five-star hotel thatprovides you with service and amenity that a boutique
hotel just can’t. If it’s upscale you want, then look nofurther than the Mandarin Oriental, Kuala Lumpur.
With its prime location, spacious rooms, and upscaleamenities, you can’t go wrong with a staycation here.

Channel News Asia

Lifestyle Asia

There’s no better place to end your day in this city thanthe legendary Mandarin Oriental, Hong Kong… As thevery first Mandarin Oriental and the brand’s flagship,
you’ll discover that the hotel is a treasure trove of history,
in addition to being a five-star luxury sanctuary awayfrom the city’s hustle and bustle. With a sleek exteriorand spacious, modern rooms and common spaces thatfeature beautiful Chinese antiques, you’ll have a hardtime pulling yourself out of your plush king-sized bed.
Departures

The Landmark Mandarin Oriental, Hong Kong

Mandarin Oriental, Singapore
Boasting an iconic fan-shaped architecture that nods
towards Mandarin Oriental’s logo, Mandarin Oriental,
Singapore offers panoramic views of the city skyline
through the floor-to-ceiling windows of its luxurious
rooms. What’s best about the property is its close
proximity to shopping districts and attractions.
TatlerLuxury and tranquillity in the heart of the city arewhat the Mandarin Oriental, Singapore is about.
Service is flawless and, more importantly, warm.

Hong Kong hotels are generally known for theirimpeccable service, but the experience at The Landmark
Mandarin Oriental is in a league of its own. Setting
the bar extremely high, the attentiveness of staff goes
above and beyond with thoughtful arrangements andpersonalised care that usually go unnoticed. Perfect
for: a modern sense of luxury paired with exceedingly
exceptional service and thoughtfulness.

The Straits Times

Prestige

TatlerMandarin Oriental, Kuala Lumpur

Mandarin Oriental, Tokyo

Set in the heart of KL’s city centre among the lush
greenery of KLCC Park with stunning vistas of thePetronas Twin Towers, Mandarin Oriental, Kuala
Lumpur is a world-class luxury hotel that prides itself
on impeccable service, an array of sumptuous dining
options and an award-winning spa and wellness centre.

A perfect fusion of modern-meets-traditional. Like
many of Tokyo’s luxury hotels, it inhabits the upper
levels of a skyscraper – in this instance, the César
Pelli-designed Nihonbashi Mitsui Tower. Walls ofglass in the 37th floor lobby frame spectacular vistas
across the capital (you can see as far as Mount Fuji ona clear day) – a fitting introduction to a hotel whose
contemporary Japanese design was inspired by theconcept of a ‘living tree’.

Robb Report

Mandarin Oriental, Taipei
Mandarin Oriental, Taipei is a luxe urban retreat forthe discerning traveller. This five-star hotel not only
boasts the largest hotel spa in Taiwan, but it also has adazzling 20m outdoor pool where swimmers can enjoy
stunning views of the city.

The Daily Telegraph

Annual Report 202019

International Brand Recognition Continued

Mandarin Oriental, Barcelona

Mandarin Oriental Jumeira, Dubai

One of the city’s best loved hotels. Getting to paradiseis easier said than done! This place is truly wonderful– service, quality and location. Bathed in sun andswimming in style, Barcelona forever inhabits thehearts of its visitors. And, Mandarin Oriental, Barcelona
is the perfect hub from which to experience it all.

A seamless blend of luxury and relaxation, Mandarin
Oriental Jumeira, Dubai has caught our eye for its
glittering views and inviting décor. Luxury designs,
a spa-inspired ambience, delectable cuisine and warm
hospitality. I think we’ve found the ideal hotel tounwind when looking to escape the daily hustle andbustle of city life.

@lifetailored

Harper’s Bazaar

Mandarin Oriental, Bodrum
Bodrum has for many years specialized in its own
unique style of pretty persuasion, sparkling on its
peninsula in Mugla province – where the 19th century
Crusader castle admires its own reflection in the sea’s
calm surface and a host of luxury resorts discreetly
adorn the shore on its periphery. One of them is thedelightfully luxe Mandarin Oriental.
The Daily Telegraph

Mandarin Oriental, Doha
Mandarin Oriental, Doha was created to serve as ananchor of Doha’s revitalized downtown. Renowned
design firm David Collins Studio has created spacesthat have a sense of place, but also reflect both the“new Doha” and Mandarin Oriental’s often playfulstyle. So while it’s all impeccable and polished, it’s also
got a soul. Doha is not wanting for luxury hotels, but
this one puts you at the heart of a vibrant arts and retail
district and cares for you with that signature Mandarin
Oriental service.
Condé Nast Traveler, US

Doha is not wanting for luxury hotels, but this one
puts you at the heart of a vibrant arts and retail district
and cares for you with that signature Mandarin
Oriental service.
Condé Nast Traveler, US

20 Mandarin Oriental International Limited

The 259-room monolith houses six dining concepts aswell as a famed spa, mega pool and beachfront access,granting travellers a guilt-free pass to never even leave
the premises. It’s no easy feat to combine intimacy withscale and variety, and yet this Mandarin Oriental pulls
it off expertly.
QG Middle East

You can’t go wrong; all 178 rooms, most with private
balconies, are as spacious and comfortable as they are
current and modish. My ocean-view suite, complete withfloor-to-ceiling windows and lovely local book collection,
had me feeling like a model in a design catalogue.
ForbesMandarin Oriental, Lago di ComoTwinning one of the world’s best hotel groups with
Italy’s most famous and magical lake makes for a match
made in minibreak heaven. Recently opened on theeastern shores of Lake Como, the new Mandarin
Oriental is the old 18th century Villa Roccabruna,a stunning neo-classical villa with legendary musicallinks – it was once the residence of Guidiitta Pasta,
the muse of Vincenzo Bellini. The romance remains,whether in the vast bedrooms, the sun-drenchedterrace or the pottering about on the water exploringtiny villages, hidden waterfalls and ancient palazzos.
Country & Town House

The greatest compliment one can pay this hotel is that it
feels as if it has always been here. In an alternate universe,
this suave waterfront nest north of Blevio might havetaken its first guests towards the end of the 19th century,as the European sister of the Oriental in Bangkok. But inthose years, the original villa on the lake’s forested eastern
shore was still a private residence. … Meanwhile,
buoyed by the standing ovation given to its first Italianproperty, the Mandarin Oriental, Milan… the Hong
Kong-based group was planning an encore. … With
this fashion-capital-worthy opening, the Como scene
finally throws off its musty image.
Condé Nast Traveller, UK

Mandarin Oriental Hyde Park, London
Gracious and unstuffy, it’s still the best-situated hotelin London. Perched on the edge of Hyde Park, theMandarin Oriental, a turreted red-brick Edwardian
confection is the closest you’ll get to staying in an
actual palace. If you can afford a grande dame, thisone is faultless.

Mandarin Oriental, Paris
The crème de la crème of new super-suites in the worldright now are all in France. Impressive enough to wow
even Marie Antoinette, these truly take the cake-and,
yes, let you eat it too. The travel returns, there are themost luxe spaces to know… The Parisian Apartment
at Mandarin Oriental, Paris.
Robb Report

Mandarin Oriental, Boston
Located on Boylston Street in the centre of Back Bay,
Mandarin Oriental, Boston offers an elegant, refined
respite in the heart of it all. As soon as you step into the
grand marble lobby, you feel transported from the city’shustle and bustle. This outpost offers all the things
you’d expect from a Mandarin Oriental: a killer urban
location, grandiosity and fabulosity, elegant rooms anda top-notch spa. … There is an elegant minimalism herethat has long made this Back Bay hotel a Boston favorite.
Condé Nast Traveler, US

Condé Nast Traveler, US

Mandarin Oriental, Canouan

Mandarin Oriental Hyde Park, London exemplifies
timeless heritage coupled with contemporary flair and
impeccable service for today’s sophisticated travellers.
Mandarin Oriental Hyde Park, London is the place
where the quintessential spirit of London offers guests
the perfect home-away-from-home, a bespoke
experience incomparable to none.

Perched on the shores of Godahl Beach, Mandarin
Oriental, Canouan’s 26 suites, 13 villas and expansive
grounds make it the ultimate getaway for those looking
for a nearly private island getaway.

Town and Country

Mandarin Oriental, Munich
Mandarin Oriental, Munich is the best address in town
– oh, what am I saying, at least the best address in theBavaria. The service is a revelation. Every interaction
is a declaration of love to the guest and to the industry.
TophotelForbesMandarin Oriental, Canouan commands the perfectlocation on Canouan: a quiet curve of hillside thatlooks out over Godahl Beach. In contrast to theextraordinary emerald-blue ocean, the décor of thehotel’s suites and villas is an intriguing mix of cool grey
marble, pale ceilings and walls and hot pink accents.
IndagareMandarin Oriental, Miami
Surrounded by stunning water and city views, Mandarin
Oriental, Miami offers a private infinity-edge pool,high energy bayside dining and a luxurious day spa
along Biscayne bay.
ForbesAnnual Report 202021

Corporate Responsibility and Sustainability Roadmap

Corporate responsibility values form the foundationof Mandarin Oriental’s culture, and sustainability
implications are carefully considered with every
decision across the Group. The Group has implemented
a strong governance structure with an executive
advisory panel, which champions our initiatives andincorporates sustainability into all our policies andprocedures. The U.N. Sustainable Development Goals(SDGs) serve as an important reference to this panel
when deciding how best to tackle the pressing issuesof energy, water, waste and carbon emissions, and as
we grow our brand around the world, we place great
importance on operating our properties responsibly
and sustainably over the long term.
In 2019, we set ourselves an ambitious goal tocompletely eliminate all single-use plastic across all
hotels by the end of March 2021. This is a considerable
challenge and hotels have made a huge amount ofprogress in a short period of time. While our relatively
small footprint limits our contribution to the world’s
plastic reduction, we are in a strong position to leadand drive important changes in the industry.
The dedication and hard work of all colleagues, who areencouraged to act responsibly in everything that theydo, can positively impact their local communities. We
regularly engage colleagues by conducting sustainability
training and awareness activities across hotels. These
activities not only inspire greater colleague passion but
also help us to better understand how best to supportand drive local efforts. Mandarin Oriental’s initiatives,
achievements and best practices are outlined in theGroup’s annual Sustainability Report, which highlights
our annual progress and ongoing commitment toinitiatives. The 2020 Sustainability Report will be
distributed in May 2021. Also in 2020, Mandarin
Oriental launched the ‘Naturally Better’ campaign
designed to highlight to our customers, the Group’s
efforts to support the wellbeing of the planet, ofcommunities and of individuals. The adjacent table
outlines some of the highlights as well as thecorresponding U.N. SDGs.

22 Mandarin Oriental International Limited

FOR
THE PLANET
As we grow our portfolio of hotels and residences
around the world, we place great importance on operating
our hotels sustainably over the long term. In addition to
our commitment towards being ‘single-use plastic free’,another notable goal has been to establish a programme forresponsible procurement. Our respect for nature and for thepeople who work in the supply chain has been an importantfactor in driving this initiative.

FOR GUESTSAND COLLEAGUESAs our business grows and our customer base becomes
ever more diverse, evolving our colleague culture remains apriority. We foster a culture of inclusivity and empowerment,
where colleagues feel comfortable in being themselves andin voicing their ideas. We are also well known for our wellness
philosophy and the holistic care of the body, mind and spirit.
We offer sustainably sourced in-room and spa amenities
across our portfolio, complimentary fitness classes, in-roomwellness videos and signature spa treatments for strong
healthy bodies and to promote mindfulness.

FOR
COMMUNITIESWe contribute positively to the local communities we belong
to. That means supporting on-the-ground initiatives thatenhance and benefit our immediate society. Each and every
one of our colleagues are committed to identifying impactful
ways to support their local communities and actively engage
in initiatives.

a) Achieved 81% progress1 toward eliminating single-use plasticb) Roll out of responsible procurement and modern slavery awareness training to colleaguesc) Broadened responsible sourcing commitments include coffee, tea, cocoa, vanilla,
paper and seafoodd) Adopted 38 new beehives at our hotels, in support of the fuzzy pollinators and beekeepinge) 20 hotels implemented waste reduction initiatives with circular economy thinking in minda) Implemented We Care programme of enhanced health and safety protocols across all hotelsb) Distribution of We Care packages, including quality fabric masks, to ensure customers andcolleagues felt safe when they were with usc) Over 500 creative ideas sparked from Engaging Better Together initiative to keep colleagues
engaged and motivatedd) Launched Inner Strength-Outer Strength Course to boost colleagues’ physical health andmental resiliencee) Conducted dialogue sessions and workshops with senior management on unconscious bias
and inclusive leadership as a start to a multi-phased plan for Diversity and Inclusiona) US-based FANtastic Match donated over US$68,000 to US colleague charitiesb) 15 years of support for Asian Cultural Council’s Mandarin Oriental Fellowship for Cultural
Heritage Preservationc) 22 hotels implemented social inclusion initiatives with the objective to enable disadvantaged
groups to fulfil their potential in lifei)

Mandarin Oriental, Marrakech tailor-made reusable fabric masks for local hospitals andbrought healthcare workers bouquets of roses to show their support and appreciation.

ii) Mandarin Oriental, Hong Kong, in partnership with Oxfam Hong Kong,
packed 16,680 masks and 11,500 bottles of hand sanitisers that were given to over
250 underprivileged families and 1,300 street cleaners.
iii) The Landmark Mandarin Oriental, Hong Kong raised HK$85,000 for MINDSET Hong Kong,a charity programme by Jardine Matheson dedicated to raising awareness of mental healthissues through its LMO Bespoke Christmas Stockings donation drive. The hotel also recruited
two colleagues from MINDSET Hong Kong and Hong Chi Association, in support of job
opportunities for mental health service users.
iv) Putting colleagues to a ‘3RC Challenge’, Mandarin Oriental Hyde Park, London ‘Reimagined’,‘Reinvented’ and ‘Connected’ to their community creatively. A total of GBP10,000 was raisedby colleagues as they clocked up wellness hours while fundraising for the Felix Project,a charity that redistributes surplus food to the most vulnerable in society.
v) Mandarin Oriental, Miami’s ‘WOW Center’ offers support, guidance and encouragement
to adults with intellectual and developmental disabilities in order for them to leadmeaningful and productive lives, explore their potential, develop a sense of communityand pursue independence and jobs if able. Virtual lessons were conducted in 2020 toengage the students meaningfully and safely during the pandemic.

1

Average elimination success across 32 operating hotels (excludes Mandarin Oriental Ritz, Madrid) for
57 Group-wide standard items (excludes three supplies packaging-related items) as at 31st December 2020.

Annual Report 202023

Financial Review

Response to the pandemic
During the year, the Group implemented extensive
cost measures in response to the unprecedented decline
in global travel. All cost categories were actively reviewed.
Government financial support also helped to reduce
costs in countries where it was available. The Group’s
primary focus was to reduce its cash losses fromoperations, best measured using earnings before
interest, tax, depreciation and amortisation (‘EBITDA’).
Combined total revenue from all hotels undermanagement declined to a low of US$48 million in thesecond quarter (compared to US$333 million in 2019)as the pandemic led to the temporary closure of many
hotels. In the third and fourth quarter, anti-pandemic
restrictions were gradually lifted, allowing hotels toreopen and cater to mostly domestic demand for bothrooms and food and beverage services. As a result of
increased demand through the year, cost measuresand available government support, EBITDA losses
reduced from US$37 million in the second quarter toUS$21 million in the third quarter and US$3 million
in the fourth quarter. Overall, full year EBITDA losses
were US$74 million.
Controlling costs and maintaining a robust liquidity
position were two key priorities for the Group. Actions
taken include:
1) Owned hotels: The Group has an equity interestin 15 hotel properties, which represents the majorityof the Group’s EBITDA in a given year. Payroll,
the largest cost component of operating hotels,
was significantly reduced in 2020 through a
combination of temporary pay cuts, unpaid leave,
furlough, government support and redundancies
where needed. The Group’s effective share ofowned hotel payroll was reduced by 46%1 in 2020
compared to 2019, equivalent to savings of some
US$110 million1. At 31st December 2020, total
headcount across the owned hotels was 22% lower
than at the beginning of the year. Reduced pay,
including government schemes, are temporary
in nature and unlikely to be sustainable over1

the long-term while redundancies represent
ongoing savings.
Notably, although payroll and variable costs weresignificantly reduced, there are certain, often
material costs, associated with owning property
that are fixed in nature and cannot be substantiallyreduced or eliminated, for example, property taxes,
insurance, and utilities.
2) Management business: Costs incurred inoperating the Group’s global hotel managementbusiness are primarily payroll-related, representing
some 70% of total overhead costs. Payroll acrossthe corporate organisation was reduced by 17%
or US$10 million compared to 2019, following the
introduction of temporary pay cuts and furloughmeasures. This saving also included the net cost
impact of redundancies which were implemented
midway through the year. The redundancies, which
reduced headcount by 21%, will provide ongoing
payroll savings of US$12 million per annum.
3) Other non-payroll areas: Non-essential costs
across hotels and the corporate organisation weresignificantly reduced or completely suspended.
This includes sales and marketing expenses, global
advertising, and administrative expenses such as
travel and consultancy fees. Selective investments
were made however, to advance the Group’s
strategic priorities, for example, in digital platforms.
4) Capital expenditure: Non-essential projects were
delayed or suspended, and capital expenditure was
26% lower than originally budgeted in 2020.
Renovation work in Bangkok, Boston, Hong Kong,
Madrid and Munich was completed, much ofwhich was already underway pre-pandemic.
5) Balance sheet: To further strengthen the Group’s
liquidity, US$260 million of new committed
facilities were secured in February 2021.
These facilities add to, and significantly bolster,
the available cash and committed facilities of
US$328 million at 31st December 2020.

Representing the Group’s effective share of payroll savings based on its hotel ownership interests, including the Group’s share of subsidies
from the US furlough scheme which were paid directly to employees. One-off redundancy payments are included.

24 Mandarin Oriental International Limited

Results

revenues fell by some 80% in those two cities compared
to an average 68% decline in revenues for subsidiaries
as a whole.

Overall
The Group uses underlying2 EBITDA to analyse
operating performance. Total underlying EBITDA
including the Group’s share of underlying EBITDA
from associates and joint ventures is shown below:

In 2020, US$30 million of government subsidies wererecognised in EBITDA across subsidiary hotels.

2020
US$m

2019
US$m

Subsidiaries

(62)

138

Associates and joint ventures

(12)

17

Underlying EBITDA

(74)

155

2020
US$m

2019
US$m

Underlying EBITDA from subsidiaries

(62)

138

Subsidiaries

Less: depreciation and amortisation

(79)

(67)

Less: impairment of
Mandarin Oriental, Geneva

(45)

–

Underlying operating (loss)/profit

(186)

71

In 2020, the Group incurred an EBITDA loss fromsubsidiaries of US$62 million compared to positive
EBITDA of US$138 million in 2019, due to thecollapse in global travel demand. Most of this loss
was incurred in hotels that the Group owns, withthe balance coming from the management business.
Typically, the Group’s subsidiary hotels in Hong Kong,
London and Tokyo generate the majority of subsidiary
EBITDA. While the Hong Kong hotel managed toachieve positive EBITDA, all other subsidiary hotels
generated EBITDA losses in 2020, reflecting thedramatic decline in international travel and henceoccupancy levels. The Hong Kong hotel’s positive
EBITDA performance, although 91% lower thanthe previous year, was possible because the hotel wasable to remain open for business throughout the year.
In addition, the hotel benefited from lease income
from its shop units and government financial support.
The largest absolute losses in individual subsidiary
hotels were in Washington D.C. and Boston, as

2

Owned hotels depreciation and amortisation, which isa non-cash item, was broadly in line with 2019. Thesecharges reflect the depreciation of investments in hotel
lease properties and fixed assets.
Impairment of Mandarin Oriental, Geneva
In 2020, the Group impaired its investment in the
Geneva hotel following a review of future businesslevels over the remaining 19 years of the leaseholdinterest. This resulted in US$45 million of accelerated
depreciation and amortisation charges, although the
net impact of this was partially offset by an associateddeferred tax write-back of US$14 million (total net
impact of US$31 million).

Management business
The management business, which comprises income
from management fees earned on all hotels andresidences branding fees, less a deduction for corporate
overheads, incurred an underlying EBITDA loss of
US$12 million, compared to positive EBITDA of
US$30 million in 2019. In 2020, US$2 million of
government subsidies were recognised in EBITDAof the management business.
Total management fees were 64% lower than the prioryear. In some resort locations, hotels were able toperform better than 2019, generating higher fees for
the Group. Residences branding fees earned during theyear were lower than 2019, reflecting the completion
status of various projects under development (fees are
generally earned when individual residences are soldor certain development milestones are achieved). The
majority of branding fees received in 2020 related to
the Group’s standalone residences project in Bangkok.

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.
Annual Report 202025

Financial Review Continued

Included in the management business is the net costof the Group’s central sales and marketing and brandactivities. These activities are funded by marketing
and advertising contributions from hotels based ona percentage of hotel revenues. In 2020, contributions
received from hotels fell significantly and despite cost
reductions, sales and marketing activities resulted in
an EBITDA loss of US$5 million.
Depreciation costs in the management businessincreased by US$11 million compared to 2019
following the write-off of capitalised development
project and digital platform costs.

2020
US$m

2019
US$m

Underlying EBITDA from associates
and joint ventures

(12)

17

Less: depreciation and amortisation

(14)

(14)

Underlying operating (loss)/profit

(26)

3

Less: net financing charges

(3)

(4)

   tax

2

(1)

(27)

(2)

EBITDA losses from associates and joint ventures
were US$12 million compared to positive EBITDA of
US$17 million in 2019. Losses at the New York hotel,
of which the Group has a 25% share, were the primarycontributor to losses from associates and joint venturesin 2020. Despite the hotel being closed since thesecond quarter, there were significant property-related
costs that continued to be incurred. While hotels in
Kuala Lumpur and Miami were near breakeven.
EBITDA losses in Madrid were in line with 2019as the hotel was under renovation in both years.

3

In 2020, US$4 million of government subsidies
were recognised in EBITDA from associates andjoint ventures.
The Group’s share of depreciation, amortisation and net
financing charges of associates and joint ventures werebroadly in line with 2019. Deferred tax movements
associated with losses incurred resulted in a net creditof US$2 million.

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

Share of results of associates
and joint ventures

The Bangkok hotel was partially closed for much of2019 due to renovation work which was completed
in 2020, however the impact of COVID-19 resulted
in EBITDA losses. The Singapore hotel was the only
associate hotel to produce positive EBITDA, though
this was down 73% compared to the prior year.

Net financing charges and Interest CoverNet financing charges for the Group’s subsidiaries
slightly decreased to US$13 million in 2020,
from US$15 million in 2019, despite higher debt,
due to a substantial reduction in base interest rates.
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. Due toan EBITDA loss in 2020, interest cover was notmeaningful. Interest cover3 was 8.6 times in 2019.
Tax
There was a tax credit of US$20 million during theyear. This primarily reflected a deferred tax write-backof US$14 million relating to the impairment of the
Geneva hotel as well as a combined US$5 million ofdeferred tax credits in the Hong Kong and London
hotels. In 2019, the underlying tax charge was
US$13 million.

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.

26 Mandarin Oriental International Limited

Underlying earnings attributable to shareholders
The underlying loss/profit attributable to shareholders
is as follows:
Underlying operating (loss)/profit
from subsidiaries
Share of results of associates andjoint ventures

2020
US$m

2019
US$m

(186)

71

(27)

(2)

(213)

69

Less: net financing charges

(13)

(15)

    
tax

20

(13)

(206)

41

Underlying (loss)/profit attributable
to shareholders

In 2020, the Group incurred an underlying loss of
US$206 million, including the Group’s ownershipshare of subsidiaries, associates and joint ventures.
Underlying earnings were US$41 million in 2019.

Non-trading items
2020
US$m

Net insurance recovery fromfire at Mandarin Oriental
Hyde Park, London

–

2019
US$m

1

Closure of The Excelsior, Hong Kong
– accelerated depreciation and	  amortisation and other costs

–

(29)

Change in fair value of investment
property under development

(475)

(67)

1

(2)

(474)

(97)

Change in fair value ofother investments
Total

Net non-trading losses of US$474 million wererecorded in 2020, almost all related to a 15% decreasein the fair market value of the Causeway Bay site underdevelopment (previously the site of The Excelsior hotelin Hong Kong) from US$3.0 billion at the end of 2019
to some US$2.5 billion at the end of 2020. In 2019,non-trading losses of US$97 million were recognised
also primarily in relation to the Causeway Bay site
under development.

Losses attributable to shareholders
While losses attributable to shareholders were
US$680 million, these were primarily non-cash innature with some US$475 million relating to a decreasein the fair market value of the Causeway Bay site underdevelopment, a US$31 million post-tax impairmentof the carrying value of the Geneva hotel and
US$79 million of fixed asset depreciation charges.
Cash flow
The Group’s consolidated cash ﬂows are summarised
as follows:
2020
US$m

2019
US$m

Operating activities

(84)

113

Investing activities
Capital expenditure on
existing properties

(39)

(42)

Redevelopment of the Causeway
Bay site

(22)

(15)

Restoration of the Madrid hotel

(31)

(15)

Net (advances to)/repaymentsfrom other associates andjoint ventures(9)2

Purchase of intangible assets

(5)

(8)

Other

(2)

(2)

Financing activities
Net drawdown of borrowings

88

34

Dividends paid

–

(38)

Other

(6)

(7)

Net (decrease)/increase in cash

(110)

22

Cash and cash equivalents
at 1st January

271

247

4

2

Cash and cash equivalents
at 31st December

165

271

Gross debt at 31st December

(671)

(571)

Closing net debt at 31st December

(506)

(300)

Effect of exchange rate changes

Annual Report 202027

Financial Review Continued

The Group’s cash outflows from operating activities
were US$84 million in 2020 compared to a cash inflow
of US$113 million in 2019 primarily due to operating
losses across owned hotels as well as tax and net
interest payments.
Under investing activities, capital expenditure on existing
properties was US$39 million in 2020, a slight decrease
compared to 2019. While most capital expenditure
projects were deferred or cancelled, selective renovation
projects already planned or underway before thepandemic continued to proceed. In 2020, theseprojects included rooms renovations in the Boston
and Munich hotels, and the creation of new facilities
in the Hong Kong hotel. In 2019, major capital
expenditure related to the completion of the restorationof the London hotel, a rooms renovation in the Tokyo
hotel and the creation of new premium suites in
the Geneva and Paris hotels. US$22 million and
US$15 million was invested into the Causeway Bay
site under development, in 2020 and 2019 respectively.
US$31 million and US$15 million was the Group’s
50% share of funding for the restoration of the Madrid
hotel, in 2020 and 2019 respectively. Net advances toassociates and joint ventures were to fund operating losses
incurred in the New York hotel in 2020 and in 2019,
related to a repayment received from the Miami hotel.
In 2020 in order to preserve cash, the Directors
withdrew their recommendation to pay a dividend inrespect of 2019 final results and an interim dividendfor 2020 was not declared. Compared to 2019, cash
outflows were US$38 million better as a result.
Significant capital commitments, as previously announced
Looking ahead, the Group is committed to investing
US$708 million into previously announced significant
capital projects:
US$m

TimingMunich expansion

139

2021-25

The Causeway Bay site under development569

2021-25

Total

708

These projects will be funded through an appropriate
mixture of external debt and existing cash reserves,
including new debt facilities entered into in early 2021.

28 Mandarin Oriental International Limited

Dividends
No dividends are being recommended in light of thesignificant losses incurred in 2020. The Group willconsider the resumption of dividend payments oncebusiness levels improve.

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 cost model, the Directors continue
to review the fair market values in conjunction withindependent appraisers on an annual basis. The fairmarket value of both freehold and leasehold land andbuildings is used by the Group to calculate adjusted
net assets, which the Directors believe gives important
supplementary information regarding net asset value
per share and gearing as shown in the table below.
Following the closure of The Excelsior hotel in 2019,the site was revalued and transferred from a right-of-use
asset to an investment property under development
subject to regular valuation review. The initial
revaluation gain of some US$2.9 billion was recognisedin the asset revaluation reserves through othercomprehensive income in 2019 and the gain wasclassified from adjusted shareholders’ funds toshareholders’ funds at the same time.
The decrease in 2020 adjusted shareholders’ funds
was primarily due to the total loss attributable toshareholders of US$680 million, a large portion ofwhich was related to the 15% decrease in valuation of
the Causeway Bay site under development. In 2020,
the fair market value of the Group’s freehold andleasehold land and buildings fell by some 4%.
2020

2019

US$m

Per share
US$

US$m

Per share
US$

Shareholders’ funds/
net assets

3,510

2.78

4,113

3.26

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

1,661

1.31

1,823

1.44

Adjusted shareholders’funds/net assets

5,171

4.09

5,936

4.70

Treasury activities
The Group manages its exposure to ﬁnancial risk using
a variety of techniques and instruments. The main
objective is to manage exchange and interest rate risks
and to provide a degree of certainty in respect of costs.
The Group has ﬁxed or capped interest rates on 41%
of its gross borrowings.
In respect of specific hotel financing, borrowings
are normally taken in local currency to hedge
partially the investment and the projected income.
At 31st December 2020, the Group’s net assets weredenominated in the following currencies:
Adjusted
net assets*

Net assets
US$mHong Kong dollar

%

US$m

%

At 31st December 2020, consolidated net debt was
US$506 million and gearing was 14%, comparedwith consolidated net debt of US$300 million at
31st December 2019 which was 7% of shareholders’ funds.
Taking into account the fair market value of theGroup’s freehold and leasehold interests (which areaccounted for at historical cost less depreciation)
gearing was 10% of adjusted shareholders’ funds at
31st December 2020, compared to 5% in the prior year.
With US$163 million of committed, undrawn facilities
in addition to its cash balances of US$165 million,
the Group remains well financed. The average tenor of
the Group’s borrowings was 3.2 years (2019: 4.2 years).
In early 2021, the Group increased its committed
headroom with four new debt facilities totallingsome US$260 million. These new facilities areintended to finance planned investments in the
Causeway Bay site under development and expansionof the Munich hotel in the next two years, as well as
refinance the Madrid loan.

2,271

64

3,282

63

Euro

551

15

732

14

United Kingdom sterling

217

6

401

8

United States dollar

280

8

324

6

Singapore dollar

67

2

225

4

Thai baht

16

1

80

2

Swiss franc

63

2

63

1

Indonesian rupiah

13

1

30

1

Principal risks and uncertainties
A review of the principal risks and uncertainties facing
the Group is set out on pages 123 and 124.

Others

32

1

34

1

3,510

100

5,171

100

* See supplementary information section above.

The Group, excluding associates and joint ventures,
had committed borrowing facilities totalling
US$834 million, of which US$671 million was drawn
at 31st December 2020. The principal amounts due
for repayment are as follows:
Facilities
committed
US$m

Facilities
drawn
US$m

Unusedfacilities
US$mWithin one year

65

65

–

Between one and two years

–

–

–

Between two and three years

–

–

–

Between three and four years

768

605

163

Between four and five years

–

–

–

Beyond ﬁve years

1

1

–

834

671

163

US$65 million of committed facilities due within one
year relate to a loan used to finance the restoration of
the Madrid hotel. This will be repaid using existingcommitted debt facilities.

Accounting policies
The Directors continue to review the developments inInternational Financial Reporting Standards (‘IFRS’)
and their impact on the Group’s accounting policies.
The accounting policies adopted are consistent withthose of the previous year, except that the Grouphas early adopted the ‘COVID-19 Related Rent
Concessions: Amendment to IFRS 16 Leases’ inrelation to rent concession, where the Group is a lessee.
This is more fully detailed in the note 1(b) ‘Basis ofpreparation’ in the financial statements. The adoptionof the amendment does not have a material effect on
the financial statements.

Craig Beattie
Chief Financial Officer
11th March 2021

Annual Report 202029

Directors’ Profiles

Ben Keswick Chairman
Mr 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 Dairy Farm, Jardine Matheson,
Jardine Strategic and Hongkong Land from 2012 to2020. Mr Keswick has held a number of executive
positions since joining the Jardine Matheson groupin 1998, including finance director and then chief
executive officer of Jardine Pacific between 2003 and2007 and, thereafter, group managing director of
Jardine Cycle & Carriage until 2012. He is executive
chairman of Jardine Matheson and Jardine Strategic,
and chairman of Dairy Farm, Hongkong Land
and Jardine Cycle & Carriage. Mr Keswick is alsoa director of Yonghui Superstores and a commissionerof Astra. He has an MBA from INSEAD.
John Witt* Managing Director
Mr 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 finance positions, includinggroup finance director of Jardine Matheson from 2016
to 2020 and the chief financial officer of HongkongLand from 2010 to 2016. Mr Witt is chairman of
Jardine Matheson Limited, group managing directorof Jardine Matheson and managing director of Dairy
Farm, Jardine Strategic and Hongkong Land. He is
also a director of Jardine Pacific and Jardine Motors,
and a commissioner and chairman of the executive
committee of Astra. Mr Witt is a Chartered
Accountant and has an MBA from INSEAD.

* Executive Director
30 Mandarin Oriental International Limited

James Riley * Group Chief Executive
Mr Riley joined the Board as Group Chief Executive
in 2016. He has previously held a number of senior
executive positions in the Jardine Matheson group sincejoining from Kleinwort Benson in 1993. A Chartered
Accountant, he was group finance director of Jardine
Matheson from 2005 to 2016. He has been a directorof Mandarin Oriental Hotel Group International
since 2005. He was a non-executive director of the
Hongkong and Shanghai Banking Corporation from2012 to 2016.
Craig Beattie* Chief Financial Officer
Mr Beattie joined the Board as Chief Financial Officer
in 2018. He has previously held a number of seniorfinance positions in the Jardine Matheson group sincejoining from Ernst & Young in the UK in 2006, includinggroup treasurer of Jardine Matheson from 2016 to 2018.
He was director of Corporate Finance of the Group
from 2011 to 2013. He is a Chartered Accountant.
Jack Yilun Chen
Mr Chen joined the Board in 2018. He is a senior
executive within Taikang Insurance Group and a directorof China Guardian Auctions.
Julian Hui
Mr Hui joined the Board in 1994. He is an executive
director of Owens Company, and a director ofCentral Development and Jardine Matheson.

Adam Keswick
Mr 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. Mr Keswick is
a director of Dairy Farm, Hongkong Land and Jardine
Strategic. He is also a director of Ferrari NV and Yabuli
China Entrepreneurs Forum and vice chairman of thesupervisory board of Rothschild & Co.
Archie Keswick
Mr Keswick joined the Board in December 2019.
Having joined the Jardine Matheson group in 2007,
he held a number of senior executive positions within
the group, including most recently CEO, Pizza Hut
Vietnam and the general manager of The Landmark
Mandarin Oriental, Hong Kong.
Lincoln K.K. Leong
Mr Leong joined the Board in 2012. He is a
Chartered Accountant and has extensive experiencein the accountancy and investment banking industries.
Mr Leong is a director of Jardine Strategic and
Link Asset Management Limited. He was previously
the chief executive officer of MTR Corporation.
Anthony Nightingale
Mr Nightingale joined the Board in 2006 and was
Managing Director of the Company from 2006
to 2012. He is also a director of Dairy Farm,
Hongkong Land, Jardine Cycle & Carriage,
Jardine Matheson, Jardine Strategic, Prudential,
Shui On Land and Vitasoy, and a commissioner of
Astra. He is chairperson of The Sailors Home andMissions to Seafarers in Hong Kong.

Y.K. Pang
Mr Pang joined the Board in 2016. He is deputy
managing director and chairman of Hong Kong ofJardine Matheson, and chairman of Jardine Pacific.
He previously held a number of senior executive
positions in the Jardine Matheson group, which hejoined in 1984, including chief executive of HongkongLand between 2007 and 2016. Mr Pang is also deputy
chairman of Jardine Matheson Limited, and a directorof Dairy Farm, Gammon, Hongkong Land, Jardine
Matheson (China), Jardine Strategic and Greatview.
He is chairman of the Hong Kong Tourism Board,
deputy chairman of the Hong Kong Management
Association, a member of the Council and General
Committee of the Hong Kong General Chamberof Commerce and the Employers’ Federation ofHong Kong.
James Watkins
Mr Watkins joined the Board in 1997. He was a director
and group general counsel of Jardine Matheson from1997 to 2003. Mr Watkins qualified as a solicitor in1969 and was formerly a partner of Linklaters. He is
also a director of Hongkong Land.
Percy Weatherall
Mr Weatherall joined the Board in 2000 and was
Managing Director from 2000 to 2006. He first joined
the Jardine Matheson group in 1976 and retired fromexecutive office in 2006. He is also a director of Dairy
Farm, Hongkong Land, Jardine Matheson and Jardine
Strategic. He is chairman of Corney & Barrow and
the Nith District Salmon Fishery Board.

Annual Report 202031

Consolidated Profit and Loss Accountfor the year ended 31st December 2020

2020

2019

Note

Underlying
business
performance
US$m

Non-trading
items
US$m

2

183.7

Cost of sales

Total
US$m

Underlying
business
performance
US$m

Non-trading
items
US$m

Total
US$m

–

183.7

566.5

–

566.5

(233.0)–(233.0)(364.7)–(364.7)Gross (loss)/profit(49.3)–(49.3)

201.8

–

201.8

Selling and distribution costs(31.4)–(31.4)(38.8)–(38.8)

Administration expenses(97.5)–(97.5)(117.2)–(117.2)Other operating (expense)/income

(7.6)

0.7

(6.9)

25.2

(32.7)

(7.5)

12

–

(474.9)(474.9)–(67.3)(67.3)

3(185.8)(474.2)(660.0)71.0(100.0)(29.0)

Financing charges(14.2)–(14.2)(18.1)–(18.1)

Interest income

1.6

–

1.6

3.4

–

3.4

Revenue

Change in fair value of investment
property under development
Operating (loss)/profit

Net financing charges

4(12.6)–(12.6)(14.7)–(14.7)

Share of results of associates
and joint ventures

5(26.8)–(26.8)

(1.7)

–

(1.7)

(225.2)(474.2)(699.4)54.6(100.0)(45.4)

19.4

–

19.4

(13.5)

3.3(10.2)(205.8)(474.2)(680.0)41.1(96.7)(55.6)(205.9)(474.2)(680.1)

41.2(96.7)(55.5)

0.1

–

0.1

(0.1)

–

(0.1)

(205.8)(474.2)(680.0)41.1(96.7)(55.6)

US¢

US¢

US¢

US¢

– basic(16.30)(53.84)3.26(4.39)– diluted(16.30)(53.84)3.26(4.39)(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

32 Mandarin Oriental International Limited

7

Consolidated Statement of Comprehensive Income
for the year ended 31st December 2020

Note

Loss for the year

2020
US$m

2019
US$m

(680.0)(55.6)

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

16

5.2

3.4

Revaluation surplus of right-of-use assets before transfer to investment property
under development

11–2,943.4

Tax on items that will not be reclassified

6

(0.9)

(0.6)

4.3

2,946.2

80.0

25.0

(11.4)

(0.4)

1.9

0.1

1.8

3.1

72.3

27.8

Other comprehensive income for the year, net of tax

76.6

2,974.0

Total comprehensive (expense)/income for the year

(603.4)

2,918.4(603.9)2,918.4

0.5–(603.4)

2,918.4

Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences– net gains arising during the year
Cash flow hedges– net losses arising during the year
Tax relating to items that may be reclassified
Share of other comprehensive income of associates and joint ventures

6

Attributable to:Shareholders of the Company
Non-controlling interests

Annual Report 202033

Consolidated Balance Sheetat 31st December 2020

Note

2020
US$m

2019
US$m

Intangible assets

9

45.4

53.0

Tangible assets

10

1,181.5

1,174.6

Right-of-use assets

11

297.4

300.3

Investment property under development

12

2,528.3

2,967.7

Associates and joint ventures

13

231.6

203.1

Other investments

14

16.1

15.9

Deferred tax assets

15

17.8

10.6

Pension assets

16

5.5

1.3

Non-current debtors

17

5.1

6.2

4,328.7

4,732.7

6.0

6.2

71.7

97.2

3.1

1.9

164.6

270.7

245.4

376.0

Net assets

Non-current assets
StocksCurrent debtors

17

Current tax assets
Bank and cash balances

18

Current assets
Current creditors

19(144.6)(166.0)Current borrowings

20(64.2)(2.5)

Current lease liabilities

21

(7.0)

(7.0)

Current tax liabilities(10.1)(19.1)

Current liabilities(225.9)(194.6)

Net current assets

19.5

181.4

Long-term borrowings

20(606.6)(568.6)

Non-current lease liabilities

21(170.1)(168.4)

Deferred tax liabilities

15(47.1)(59.4)

Pension liabilities

16

(0.3)

(0.2)

Non-current creditors

19(10.9)(0.9)

3,513.2

4,116.6

Total equity
Share capital

24

63.2

63.2

Share premium

25

499.7

499.7

Revenue and other reserves

2,946.6

3,550.1

Shareholders’ funds

3,509.5

4,113.0

3.7

3.6

3,513.2

4,116.6

Non-controlling interests

Approved by the Board of Directors
James Riley
Craig Beattie
Directors
11th March 2021
34 Mandarin Oriental International Limited

Consolidated Statement of Changes in Equity
for the year ended 31st December 2020

SharecapitalUS$m

Sharepremium
US$m

Capitalreserves
US$m

Revenue
reserves
US$m

Asset
revaluation
reserves
US$m

Hedging
reserves
US$m

63.2

499.7

260.3

434.8

2,943.4–(88.4)

4,113.0

3.6

4,116.6–––(675.5)

–

(9.7)

81.3

(603.9)0.5(603.4)in a subsidiary

–

–

–

0.4

–

–

–

0.4

(0.4)

–

At 31st December

63.2

499.7

260.3

(240.3)

2,943.4

(9.7)

(7.1)

3,509.5

3.7

3,513.2

63.1

497.8

262.5

525.0

–

0.6

(116.6)

1,232.4

3.8

1,236.2–––(52.6)

2,943.4

(0.6)

28.2

2,918.4–

2,918.4–––(37.9)–––(37.9)–(37.9)

Issue of shares

0.1

0.1

–

–

–

–

–

0.2

–

0.2

Share-based
long-term
incentive plans

–

–

(0.3)

–

–

–

–

(0.3)

–

(0.3)

Change in interestin a subsidiary

–

–

–

0.2

–

–

–

0.2

(0.2)

–

Transfer

–

1.8

(1.9)

0.1

–

–

–

–

–

–

63.2

499.7

260.3

434.8

2,943.4–(88.4)

4,113.0

3.6

4,116.6

Note

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

Total
equityUS$m2020
At 1st January
Total comprehensive
incomeChange in interest

2019
At 1st January
Total comprehensive
incomeDividends paid by
the Company

At 31st December

27

Revenue reserves as at 31st December 2020 included cumulative fair value loss on the investment property underdevelopment of US$542.2 million (2019: US$67.3 million).

Annual Report 202035

Consolidated Cash Flow Statement
for the year ended 31st December 2020

Note

2020
US$m

2019
US$m

3

(660.0)(29.0)

124.2

91.9

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

28a

472.8

69.0

Movements in working capital

28b

1.4

(3.1)

1.8

3.4

Interest and other financing charges paid

(14.1)(19.2)Tax paid

(9.6)

(6.0)

(83.5)

107.0

–

5.9

(83.5)

112.9

Purchase of tangible assets(38.9)(41.7)

Additions to investment property under development(21.6)(15.1)

Purchase of intangible assets

(5.3)

(8.3)

–

(1.1)

(0.6)

(1.1)

Interest received

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

Payment on Munich expansion

28c

Purchase of other investments
Purchase of an associate

28d

(2.0)

–

Advance to associates and joint ventures28e(40.5)(16.7)

Repayment of loans to associates and joint ventures

28f

0.4

3.6

(108.5)(80.4)–

0.1

Cash flows from investing activities
Financing activities
Issue of shares
Drawdown of borrowings

20

88.4

555.8

Repayment of borrowings

20

(0.1)

(522.3)

Principal elements of lease payments

28g

(6.0)

(6.4)

Dividends paid by the Company

27–(37.9)

82.3(10.7)Net (decrease)/increase in cash and cash equivalents(109.7)

21.8

Cash and cash equivalents at 1st January

270.7

246.8

3.6

2.1

164.6

270.7

Cash flows from financing activities

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

36 Mandarin Oriental International Limited

28h

Notes to the Financial Statements

1 Going concern and basis of preparationa) Going concern
The Group’s operations and financial performance were severely impacted by the unprecedented decline in bothinternational and domestic travel in 2020 due to the COVID-19 pandemic. Most governments introduced measuresthat impacted people’s freedom of movement and led to an overall 68% decline in revenue in 2020. It is unclear how
long it will take for the Group’s revenues to recover to pre-pandemic levels, although they are expected to substantially
improve once government restrictions are lifted.
The Group has taken a number of actions to reduce costs and preserve cash both in the hotels in which it has anownership interest as well as the corporate organisation. These included the suspension of non-essential capital
expenditure and non-payroll expenses, significantly reduced payroll costs through furlough, unpaid leave, reduced
pay and redundancies as well as participation in government financial support measures wherever possible. In addition,
the Directors withdrew their recommendation of a final dividend in respect of the 2019 financial year and a dividend
is not proposed in respect of 2020.
While a significant amount of costs has been reduced, there are certain fixed costs relating to property ownershipthat continue to be incurred. In 2020, the Group incurred total cash outflow from operating activities of
US$84 million (2019: cash inflow of US$113 million). A return to positive operating cash flow is expectedonce revenues substantially recover.
The Group has equity interests in a number of prime hotel properties which are carried on the Group’s balance sheet at
historical cost less depreciation. Taking into account the market value of the Group’s property interests, the adjusted
shareholders’ funds were US$5.2 billion at 31st December 2020.
The Group has historically maintained a conservatively financed balance sheet with significant levels of liquidity.
While net debt increased during 2020, at 31st December 2020 gearing was 10% of adjusted shareholders’ funds(refer note 36). At 31st December 2020, the Group had total liquidity of US$328 million, comprising US$163 millionof undrawn committed facilities and US$165 million of cash balances. The Group’s facilities are not subject to any
cash flow covenants and had an average remaining tenor of 3.2 years. In February 2021, the Group further strengthened
its liquidity by securing new committed facilities of US$260 million, with a tenor of two years. This robust liquidity
position enables the Group to sustain a prolonged downturn in the hospitality industry should that eventuate. Overall,the Group’s balance sheet position remains strong.
Trading conditions in 2021 remain highly uncertain, with limited visibility on the pace and scale of a market recovery.
In adopting the going concern basis for preparing the financial statements, the Directors have considered a stress-test
cash flow forecast which assumes the majority of the Group’s hotels are closed as a consequence of government
restrictions for a period of 12 months from the date of approval of the financial statements.
Having considered the outcome of the stress-test cash flow forecast, the Directors are of the opinion that the Group has
sufficient resources to continue operating for a period of at least 12 months from the date of approval of the financial
statements. Accordingly, the financial statements have been prepared on a going concern basis.

Annual Report 202037

Notes to the Financial Statements Continued

1 Going concern and basis of preparation continuedb) Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’),
including International Accounting Standards (‘IAS’) and Interpretations adopted by the International AccountingStandards Board. The financial statements have been prepared on a going concern basis and under the historical costconvention except as disclosed in the accounting policies.
Details of the Group’s principal accounting policies are included in note 34.
The Group has elected to early adopt the ‘Interest Rate Benchmark Reform – Phase 1: Amendments to IFRS 9, IAS 39
and IFRS 7’ (effective 1st January 2020) in relation to hedge accounting for the Group’s annual reporting period
commencing 1st January 2019.
The Group has adopted the following changes in relation to rent concessions for the annual reporting period
commencing 1st January 2020.
COVID-19 related rent concessions: amendment to IFRS 16 leases
The Group has early adopted the Amendment, which became effective 1st June 2020. Where the Group is a lessee,
the practical expedient is applied to account for the change in lease payments resulting from rent concessions granted asa direct consequence of the COVID-19 pandemic. The Group elects not to assess these concessions as lease modifications
when all of the following conditions are met:i) the revised lease payments are substantially the same as, or less than, the consideration for the lease immediately
preceding the change;ii) reduction in lease payments relates to payment due on or before 30th June 2021; andiii) there is no substantive change to the other terms and conditions of the lease.
Rent concessions fulfilling the above conditions are recognised in the profit and loss over the period in which they cover.
Apart from the above, there are no other amendments which are effective in 2020 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.

38 Mandarin Oriental International Limited

2 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 is operated on a worldwide basis in three (2019: three) regions: Asia, Europe, Middle East and Africa(‘EMEA’), and America which form the basis of its reportable segments.
In addition, the Group has three (2019: three) distinct business activities: Hotel ownership, Hotel & Residences branding
and management, and Property development. The Property development segment represents the redevelopment of
The Excelsior site as a commercial building following the closure of The Excelsior, Hong Kong on 31st March 2019(the ‘Causeway Bay site under development’). The redevelopment is expected to complete in 2025. The Group’s segmental
information for non-current assets is set out in note 23.
2020
US$m

2019
US$m

96.9

272.2

Analysis by geographical area
– Asia– EMEA

66.1

189.5

– America

20.7

104.8

183.7

566.5

Analysis by activity– Hotel ownership

161.4

526.9

– Hotel & Residences branding and management

27.1

69.0

– Less: intra-segment revenue(4.8)(29.4)

183.7

566.5

From contracts with customers– Recognised at a point in time

72.5

207.3

– Recognised over time

94.8

339.4

167.3

546.7

16.4

19.8

183.7

566.5

From other sources– Rental income

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, for which revenue is recognised when the goods and services are provided
to the customers.
Contract liabilities are further analysed as follows:
2020
US$m

2019
US$m

Contract liabilities (refer note 19)– Gift cards

10.3

10.9

– Advance customer deposits and other

20.8

20.2

31.1

31.1

Annual Report 202039

Notes to the Financial Statements Continued

2 Revenue continued
Revenue recognised in relation to contract liabilities
Revenue recognised in the current year relating to carried-forward contract liabilities:
2020
US$m

2019
US$m

Gift cards

10.4

10.9

Advance customer deposits and other

5.9

7.1

16.3

18.0

Gift
cards
US$m

Advancecustomer
deposits
and other
US$m

Total
US$m

Revenue expected to be recognised on unsatisfied contracts with customers
Timing of revenue to be recognised on unsatisfied performance obligations:2020
Within one year

4.0

24.2

28.2

Between one and two years

4.2

0.8

5.0

Between two and three years

1.3

–

1.3

Between three and four years

0.5

–

0.5

Between four and five years

0.3

–

0.3

10.3

25.0

35.3

Within one year

4.2

28.4

32.6

Between one and two years

4.5

0.5

5.0

2019

Between two and three years

1.4

–

1.4

Between three and four years

0.5

–

0.5

Between four and five years

0.3

–

0.3

10.9

28.9

39.8

40 Mandarin Oriental International Limited

3 EBITDA (earnings before interest, tax, depreciation and amortisation)
	  and operating loss from subsidiaries
2020
US$m

2019
US$m

– Asia(18.6)

75.1– EMEA(10.5)

55.6– America(32.5)

6.8

Underlying EBITDA from subsidiaries(61.6)

137.5– repair expenses and write-off of tangible assets and other incidental expenses

–

(8.3)

– insurance recovery for replacement of tangible assets and other incidental expenses–

9.0

Closure of The Excelsior, Hong Kong – other costs

–

(6.5)

(474.9)(67.3)

0.7(1.5)(474.2)(74.6)EBITDA from subsidiaries(535.8)62.9

Underlying depreciation, amortisation and impairment from subsidiaries(124.2)(66.5)–(25.4)(660.0)(29.0)

Analysis by geographical area

Non-trading items (refer note 8)Fire at Mandarin Oriental Hyde Park, London

Change in fair value of investment property under development
Change in fair value of other investments

Non-trading items (refer note 8)
Closure of The Excelsior, Hong Kong
– accelerated depreciation and amortisation
Operating loss
Analysis by activity– Hotel ownership(48.5)

99.7– Hotel & Residences branding and management(12.4)

30.5– Property development(474.9)(67.3)EBITDA from subsidiaries(535.8)

62.9– Hotel ownership(158.7)15.0– Hotel & Residences branding and management(26.4)

23.3– Property development(474.9)(67.3)

Operating loss

(660.0)(29.0)The impact of the impairment of Mandarin Oriental, Geneva on EBITDA in 2020 included an accelerated depreciation
for the leasehold property of US$41.9 million and an accelerated amortisation for the leasehold land of US$3.4 million.
Taking into account a deferred tax credit of US$14.4 million (refer note 6), the net impact of the impairment was
US$30.9 million, which was reflected in the underlying loss.

Annual Report 202041

Notes to the Financial Statements Continued

3 EBITDA (earnings before interest, tax, depreciation and amortisation)
	  and operating loss from subsidiaries continued
2020
US$m

2019
US$m

Rental income (refer note 10)

16.4

19.8

Amortisation of intangible assets (refer note 9)(13.7)(3.6)

Depreciation and impairment of tangible assets (refer note 10)(97.6)(79.9)

Amortisation/depreciation and impairment of right-of-use assets (refer note 11)(12.9)(8.4)(176.2)(256.2)

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

Employee benefit (expense)/credit– salaries and benefits in kind–

0.4

– defined benefit pension plans (refer note 16)

(3.6)

–

– defined contribution pension plans

(1.6)

(1.9)

(181.4)(257.7)

Net foreign exchange gains/(losses)

1.3

(1.1)

Expenses relating to short-term leases

(0.5)

(0.7)

Expenses relating to variable lease payments not included in lease liabilities

(2.1)

(6.4)

Subleases income

0.2

0.5

– audit

(1.7)

(1.7)

– non-audit services

(0.7)

(0.9)

(2.4)

(2.6)

– share options and share awards granted

Auditors’ remuneration

For the year ended 31st December 2020, the Group had received government grants, the majority of which werein support of employee retention of US$31.9 million. In addition, there were rent concessions of US$2.3 million.
Both amounts related to the impact of the COVID-19 pandemic. These subsidies were accounted for as otheroperating income.

42 Mandarin Oriental International Limited4 Net financing charges
2020
US$m

2019
US$m

– bank loans(11.2)(13.7)– interest on lease liabilities

(1.9)

(2.4)

Commitment and other fees

(1.1)

(2.0)

Financing charges(14.2)(18.1)

Interest income

1.6

3.4

(12.6)(14.7)

Interest expense

Net financing charges

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

Depreciation
andamortisation
US$m

Operating(loss)/
profitUS$m

Net
financingcharges
US$m

Tax
US$m

Net
(loss)/
profit
US$m– Asia0.7(10.2)

(9.5)

(1.6)

2.4

(8.7)

– EMEA

(4.4)

(0.4)

(4.8)

(0.1)

–

(4.9)

– America

(8.9)

(2.7)

(11.6)(1.6)–(13.2)(12.6)(13.3)(25.9)(3.3)

2.4(26.8)(12.9)(12.7)(25.6)(3.2)

2.4(26.4)

0.3

(0.6)

(0.3)

(0.1)

–

(0.4)

(12.6)(13.3)(25.9)(3.3)

2.4(26.8)– Asia16.7(11.1)

5.6

(1.8)

(0.3)

3.5

– EMEA

(4.0)

(0.4)

(4.4)

–

–

(4.4)

2020
Analysis by geographical area

Analysis by activity– Hotel ownership– Other

2019
Analysis by geographical area

– America

4.3

(2.7)

1.6

(2.4)

–

(0.8)

17.0

(14.2)

2.8

(4.2)

(0.3)

(1.7)

15.8

(13.5)

2.3

(4.1)

(0.2)

(2.0)

1.2

(0.7)

0.5

(0.1)

(0.1)

0.3

17.0

(14.2)

2.8

(4.2)

(0.3)

(1.7)

Analysis by activity– Hotel ownership– Other

For the year ended 31st December 2020, the results of associates and joint ventures included the Group’s share ofgovernment grants, the majority of which were in support of employee retention of US$3.7 million. In addition,
there were rent concessions of US$0.1 million. Both amounts were in relation to the COVID-19 pandemic.

Annual Report 202043

Notes to the Financial Statements Continued

6 Tax
2020
US$m

2019
US$m

– current tax

0.6(12.7)– deferred tax (refer note 15)

18.8

2.5

19.4

(10.2)– Asia0.5(4.0)– EMEA

20.6

(5.0)

– America

(1.7)

(1.2)

19.4

(10.2)

19.5

(6.0)

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

Analysis by geographical area

Analysis by activity– Hotel ownership– Hotel & Residences branding and management

(0.1)

(4.2)

19.4

(10.2)

122.7

10.6

Reconciliation between tax expense and tax at the applicable tax rate*:
Tax at applicable tax rate
Income not subject to tax– change in fair value of other investments

0.1–– other items

0.4

1.5

(78.3)(11.1)– change in fair value of other investments

–

(0.2)

– closure of The Excelsior, Hong Kong

–

(1.9)

Expenses not deductible for tax purposes– change in fair value of investment property under development– impairment of Mandarin Oriental, Geneva

(6.3)

–

– other items

(5.0)

(3.3)

Tax losses and temporary differences not recognised(24.6)

(7.1)

0.4

0.7

–

0.7

Deferred tax assets written off

(2.2)

–

Deferred tax liabilities written back in relation to the impairment of
Mandarin Oriental, Geneva

14.4

–

Withholding tax

(2.6)

(2.9)

Over provision in prior years

0.4

2.1

–

0.7

19.4

(10.2)

Remeasurements of defined benefit plans

(0.9)

(0.6)

Cash flow hedges

1.9

0.1

1.0

(0.5)

Utilisation of previously unrecognised tax losses and temporary differences
Recognition of previously unrecognised tax losses

Other

Tax relating to components of other comprehensive income is analysed as follows:

Deferred tax in 2020 included a credit of US$14.4 million in relation to the impairment of Mandarin Oriental, Geneva(refer note 3).
The results of associates and joint ventures included the Group’s share of tax credits of US$2.4 million (2019: tax charges
of US$0.3 million) (refer note 5).
* The applicable tax rate for the year was 18% (2019: 24%) and represents the weighted average of the rates of taxation prevailing in the

territories in which the Group operates.
44 Mandarin Oriental International Limited7 (Loss)/earnings per share
Basic loss per share is calculated using loss attributable to shareholders of US$680.1 million (2019: US$55.5 million) andthe weighted average number of 1,263.2 million (2019: 1,262.9 million) shares in issue during the year.
Diluted loss per share is calculated using loss attributable to shareholders of US$680.1 million (2019: US$55.5 million)
and the weighted average number of 1,263.2 million (2019: 1,263.2 million) shares in issue after adjusting for thenumbers of shares which are deemed to be issued for no consideration under the share-based long-term incentive plans
based on average share price during the year.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2020
2019

Weighted average number of shares for basic loss/earnings per share calculation

1,263.2

1,262.9–

0.3

1,263.2

1,263.2

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/earnings per share calculation

Additional basic and diluted loss/earnings per share are also calculated based on underlying loss/profit attributable toshareholders. A reconciliation of loss/earnings is set out below:

US$m

2020
Basic
loss
per share
US¢

Dilutedloss
per share
US¢

2019
Basic
Diluted(loss)/earnings (loss)/earnings
per shareper share
US$m
US¢
US¢

Loss attributable to shareholders(680.1)(53.84)(53.84)(55.5)

Non-trading items (refer note 8)474.2

Underlying (loss)/profit attributable
to shareholders(205.9)(4.39)(4.39)

3.26

3.26

96.7
(16.30)(16.30)41.2

8 Non-trading items
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
2020
US$m

2019
US$m

– repair expenses and write-off of tangible assets and other incidental expenses

–

(8.3)

– insurance recovery for replacement of tangible assets and other incidental expenses

–

9.0

–

(22.8)

Fire at Mandarin Oriental Hyde Park, London

Closure of The Excelsior, Hong Kong
– accelerated depreciation and amortisation– other costs
Change in fair value of investment property under development
Change in fair value of other investments

–

(5.8)

(474.9)(67.3)

0.7(1.5)(474.2)(96.7)

Annual Report 202045

Notes to the Financial Statements Continued

9 Intangible assets
Goodwill
US$m

Computersoftware
US$m

Development
project
contract costs
US$m

Total
US$m

2020
23.9

28.0

25.7

77.6

Amortisation and impairment–(17.1)(7.5)(24.6)Net book value at 1st January

23.9

10.9

18.2

53.0

–

0.1

0.1

0.2

Cost

Exchange differences
Additions

–

3.8

2.1

5.9

Amortisation charge

–

(5.8)

(7.9)

(13.7)Net book value at 31st December

23.9

9.0

12.5

45.4

Cost

23.9

32.7

25.3

81.9

–

(23.7)(12.8)(36.5)

23.9

9.0

12.5

45.4

23.9

28.1

21.8

73.8

Amortisation and impairment–(18.7)(5.8)(24.5)Net book value at 1st January

23.9

9.4

16.0

49.3

Amortisation and impairment

2019
Cost

Exchange differences

–

–

(0.1)

(0.1)

Additions

–

3.3

4.1

7.4

Amortisation charge

–

(1.8)

(1.8)

(3.6)

Net book value at 31st December

23.9

10.9

18.2

53.0

Cost

23.9

28.0

25.7

77.6

–

(17.1)(7.5)(24.6)

23.9

10.9

18.2

53.0

Amortisation and impairment

Management has performed an impairment review of the carrying amount of goodwill at 31st December 2020.
For the purpose of impairment review, goodwill acquired has been allocated to the respective hotels and is reviewed
for impairment based on individual hotel forecast operating performance and cash flows. Cash flow projections forthe impairment reviews are based on value-in-use calculations using updated individual hotel forecasts (including
the following year’s individual hotel budgets) with assumptions updated for the prevailing market conditions, and are
discounted appropriately. Key assumptions used for value-in-use calculations include average annual growth rates of
15% to 20% to forecast cash flows over a five-year period with an assumed recovery of business following the COVID-19
pandemic, after which the growth rate is assumed to be up to 4% in perpetuity. Individual growth assumptions varyacross the Group’s geographical locations, and are based on management expectations for each market’s development.
Pre-tax discount rates of 7% to 13% are applied to the cash flow projections. The discount rates used reflect businessspecific risks relating to the business life-cycle and geographical location. On the basis of these reviews, management
concluded that no 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

46 Mandarin Oriental International Limited

3 to 5 years
20 to 40 years

10 Tangible assets

Freeholdproperties
US$m

Properties onleaseholdland &
leaseholdimprovements
US$m

Plant &
machinery
US$m

Furniture,equipment &motor vehicles
US$m

Total
US$m

840.6

462.7

114.1

250.5

1,667.9

2020
Cost
Depreciation and impairment(94.9)(173.8)(60.0)(164.6)(493.3)

Net book value at 1st January

745.7

288.9

54.1

85.9

1,174.6

Exchange differences

44.7

12.9

3.3

3.5

64.4

Additions

7.2

3.3

0.4

29.5

40.4

Disposals

–

–

–

(0.3)

(0.3)

Reclassification

50.6(52.4)

0.2

1.6

–

Depreciation and impairment charge(10.1)(57.3)(7.1)(23.1)(97.6)Net book value at 31st December

838.1

195.4

50.9

97.1

1,181.5

Cost

950.6

428.2

135.7

317.0

1,831.5

Depreciation and impairment(112.5)(232.8)(84.8)(219.9)(650.0)

838.1

195.4

50.9

97.1

1,181.5

Cost

837.1

539.4

132.0

273.6

1,782.1

Depreciation and impairment(87.4)(229.5)(71.7)(187.6)(576.2)Net book value at 1st January

749.7

309.9

60.3

86.0

1,205.9

2019

Exchange differences

0.1

5.5

(0.1)

0.9

6.4

Additions

1.6

17.6

1.5

21.6

42.3

Disposals

–

–

–

(0.1)

(0.1)

1.5

(4.0)

0.5

2.0

–

Reclassification
Depreciation and impairment charge(7.2)(40.1)(8.1)(24.5)(79.9)Net book value at 31st December

745.7

288.9

54.1

85.9

1,174.6

Cost

840.6

462.7

114.1

250.5

1,667.9

Depreciation and impairment(94.9)(173.8)(60.0)(164.6)(493.3)

745.7

288.9

54.1

85.9

1,174.6

Management has performed an impairment review of the carrying amount of Mandarin Oriental, Geneva because
impairment indicators exist. Cash flow projections for the impairment review are based on value-in-use calculations
using updated hotel forecasts (including the following year’s hotel budget) with assumptions updated for the prevailingmarket conditions, and are discounted appropriately. Key assumptions used for value-in-use calculations include
average annual growth rates of 22% to forecast cash flows over a five-year period with an assumed recovery of businessfollowing the COVID-19 pandemic, after which the growth rate is assumed to be nil until the expiry of the lease in
2040. A pre-tax discount rate of 12%, which reflects the remaining lease term and general business risks is applied to the
cash flow projections. On the basis of this review, management concluded that impairment charges of US$45.3 million(2019: nil) were required and recognised in profit and loss in 2020. These reflected in the accelerated depreciation
charge for the leasehold property of US$41.9 million and the accelerated amortisation charge for the leasehold landof US$3.4 million (refer note 11).

Annual Report 202047

Notes to the Financial Statements Continued

10 Tangible assets continued
Freehold properties include a hotel property of US$98.1 million (2019: US$102.1 million), which is stated net of tax
increment financing of US$18.8 million (2019: US$19.7 million) (refer note 22).
Rental income from properties and other tangible assets amounted to US$16.4 million (2019: US$19.8 million)(refer note 3).
The maturity analysis of the undiscounted lease payments to be received after the balance sheet date are as follows:
2020
US$m

2019
US$m

Within one year

19.7

21.0

Between one and two years

17.0

18.4

Between two and five years

31.4

21.4

Beyond five years

35.0

36.8

103.1

97.6

At 31st December 2020, the carrying amount of hotel properties pledged as security for bank borrowings amounted to
US$462.8 million (2019: US$441.2 million) (refer note 20).

48 Mandarin Oriental International Limited

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

Properties
US$m

Total
US$m

145.9

249.7

395.6

(9.9)

(85.4)(95.3)

136.0

164.3

300.3

0.7

8.1

8.8

–

1.2

1.2

(4.3)

(8.6)

(12.9)Net book value at 31st December

132.4

165.0

297.4

Cost

144.6

253.1

397.7

2020
Cost
Amortisation/depreciation and impairment
Net book value at 1st January
Exchange differences
Additions
Amortisation/depreciation and impairment charge

Amortisation/depreciation and impairment(12.2)(88.1)(100.3)

132.4

165.0

297.4

196.6

233.2

429.8

2019
Cost
Amortisation/depreciation and impairment(10.5)(76.4)(86.9)Net book value at 1st January

186.1

156.8

342.9

0.6

2.6

3.2

–

12.8

12.8

Exchange differences
Additions
Revaluation surplus before transfer to investment property
under development

2,943.4–

2,943.4

Transfer to investment property under development(2,993.6)–(2,993.6)

(0.5)

(7.9)

(8.4)

Net book value at 31st December

136.0

164.3

300.3

Cost

145.9

249.7

395.6

(9.9)

(85.4)(95.3)

136.0

164.3

300.3

Amortisation/depreciation and impairment charge

Amortisation/depreciation and impairment

The amortisation/depreciation charge in 2020 included an accelerated amortisation of US$3.4 million related to theimpairment of the leasehold land of Mandarin Oriental, Geneva (refer note 10).
Upon the closure of The Excelsior, Hong Kong on 31st March 2019, its use was changed from a hotel property to acommercial property for redevelopment (the Causeway Bay site under development). Prior to the change in use, the site
was revalued by independent valuers, Jones Lang LaSalle, resulting in a revaluation surplus of US$2,943.4 million, which
was recognised in the asset revaluation reserves through other comprehensive income on 31st March 2019. The revalued
carrying amount of US$2,993.6 million was transferred to investment property under development (refer note 12).
At 31st December 2020, the carrying amount of leasehold land pledged as security for bank borrowings amounted to
US$123.2 million (2019: US$126.3 million) (refer note 20). None of the other right-of-use assets have been pledged at
31st December 2020 and 2019.
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 202049

Notes to the Financial Statements Continued

12 Investment property under development
Under development leaseholdcommercial property
2020
2019
US$m
US$m

At 1st January
Transfer from right-of-use assets on 31st March

2,967.7––

2,993.6

Exchange differences

12.1

25.5

Additions

23.4

15.9

Change in fair value(474.9)(67.3)At 31st December

2,528.3

2,967.7

The Group measures its investment property at fair value. The fair value of the Group’s investment property underdevelopment has been determined on the basis of a valuation carried out by independent valuers who hold a recognised
relevant professional qualification and have recent experience in the location and segment of the investment property
valued. The Group employed Jones Lang LaSalle to value its commercial investment 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 direct comparison and the residual method. The Reportof the Valuers is set out on page 109. The valuation is comprehensively reviewed by the Group.

Fair value measurements of under development leasehold commercial property using significant
unobservable inputs
Fair value of investment property under development is derived using the direct comparison method and the residual
method. The direct comparison method is based on comparing the property to be valued directly with other comparable
properties, which have recently sold. The residual method is essentially a means of valuing the land by reference to its
development potential by deducting development costs together with developer’s profit and risk from the estimatedcapital value of the proposed development assuming completion as at the date of valuation. For the direct comparison
method and the estimated capital value of the residual method, 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 beachieved by the property under consideration.
Information about fair value measurements of the Group’s under development leasehold commercial property using
significant unobservable inputs as 31st December 2020:
Range of significant unobservable inputs

Hong Kong

Fair value
US$m

Valuation method

Average unit priceUS$

Capitalisation rate%

2,528.3

Direct comparison

4,462.0
per square footn/aResidual*

3,568.2 to 4,262.7
per square foot

2.4 to 3.8

Average unit prices are estimated based on independent valuers’ view of recent transactions of comparable properties.
The higher the unit prices, the higher the fair value.
Capitalisation rates are estimated by independent valuers based on the risk profile of the property being valued. The lower
the rates, the higher the fair value.
* In using the residual method to make fair value measurements of the under development leasehold commercial property, unobservable

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

50 Mandarin Oriental International Limited

13 Associates and joint ventures
2020
US$m

2019
US$m

8.0

14.4

Associates
Listed associate – OHTL
Unlisted associates

47.3

60.0

Share of attributable net assets

55.3

74.4

Notional goodwill

5.5

5.5

Goodwill on acquisition

1.5

–

62.3

79.9

Amounts due from associates

42.7

34.1

105.0

114.0

(18.3)(12.3)

6.8

6.2(11.5)

(6.1)

138.1

95.2

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

Amounts due from joint ventures

126.6

89.1

231.6

203.1

Amounts due from associates are interest free, unsecured and have no fixed terms of repayment.
Amounts due from joint ventures bear interest at rates ranging from approximately 1.15% to 5.00% (2019: 1.15% to5.00%) per annum and are repayable within one to six years.
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$346.4 million (2019: US$312.9 million).
Associates

Joint ventures

2020
US$m

2019
US$m

2020
US$m

2019
US$m

114.0
–

116.5

89.1

79.6

–

11.4

(1.6)

(21.9)

2.7

(4.9)

(4.4)

1.8

3.1

–

–

–

(5.9)

–

–

Acquisition of an associate (refer note 28d)

2.0

–

–

–

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

9.1

0.8

31.4

15.9

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

–

(3.2)

(0.4)

(0.4)

At 31st December

105.0

114.0

126.6

89.1

Fair value of listed associate

211.9

214.1

n/a

n/a

Movements of associates andjoint ventures during the year:
At 1st January
Exchange differences
Share of results after tax andnon-controlling interests
Share of other comprehensive income
after tax and non-controlling interests
Dividends received

Annual Report 202051

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 2020 and 2019:
Country of incorporation andprincipal place of business/place of listing% of ownership interest
2020
2019

Name of entity

Nature of business

OHTL PCL (‘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 2020, the fair value of the Group’s interest in OHTL, which is listed on the Thailand Stock Exchange,
was US$211.9 million (2019: US$214.1 million) and the carrying amount of the Group’s interest was US$13.4 million(2019: US$19.9 million).
Summarised financial information for material associates
Summarised balance sheet at 31st December
2020
US$m

OHTL
2019
US$m

Marina Bay Hotel
2020
2019
US$m
US$m

2020
US$m

2019
US$m

149.7

141.9

117.9

118.9

267.6

260.8

Cash and cash equivalents

3.6

3.7

24.9

23.1

28.5

26.8

Other current assets

4.6

5.4

2.0

5.1

6.6

10.5

Total current assets

8.2

9.1

26.9

28.2

35.1

37.3

Financial liabilities*(72.6)(57.9)––(72.6)(57.9)

Other non-current liabilities*(29.4)(33.6)

(3.0)

(3.2)

(32.4)(36.8)

Total non-current liabilities(102.0)(91.5)

(3.0)

(3.2)

(105.0)(94.7)

Financial liabilities*(34.9)(26.9)(7.2)(11.5)(42.1)(38.4)

Other current liabilities*

(4.3)

(2.4)

(3.4)

(6.7)

(7.7)

(9.1)

Total current liabilities(39.2)(29.3)(10.6)(18.2)(49.8)(47.5)Net assets

16.7

30.2

131.2

125.7

147.9

155.9

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.

52 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
OHTL
2020
US$m

2019
US$m

Marina Bay Hotel
2020
2019
US$m
US$m

Total
2020
US$m

2019
US$m

Revenue

29.2

42.1

27.5

85.0

56.7

127.1

Depreciation and amortisation(10.7)(12.3)

(5.6)

(6.7)

(16.3)(19.0)

Interest expense

(1.6)

(2.3)

–

–

(1.6)

(2.3)

(Loss)/profit from underlying
business performance(16.6)(13.9)

1.8

20.4(14.8)

6.5

Income tax credit/(expense)

3.4

3.3

0.5

(3.7)

3.9

(0.4)

(Loss)/profit after tax(13.2)(10.6)

2.3

16.7(10.9)

6.1

Other comprehensive (expense)/income

(0.3)

3.3

3.2

2.1

2.9

5.4

Total comprehensive (expense)/income(13.5)

(7.3)

5.5

18.8

(8.0)

11.5

–

4.3

–

7.8

–

12.1

Dividends received from associates

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.

Annual Report 202053

Notes to the Financial Statements Continued

13 Associates and joint ventures continueda) Investment in associates continued
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:
2020
US$m

OHTL
2019
US$m

Marina Bay Hotel
2020
2019
US$m
US$m

2020
US$m

2019
US$m

Net assets at 1st January

30.2

41.8

125.7

114.7

155.9

156.5

(Loss)/profit for the year

(13.2)(10.6)

2.3

16.7(10.9)

6.1

Other comprehensive (expense)/income

(0.3)

3.3

3.2

2.1

2.9

5.4

–

(4.3)

–

(7.8)

–

(12.1)Net assets at 31st December

16.7

30.2

131.2

125.7

147.9

155.9

Effective interest in associates (%)

47.6

47.6

50.0

50.0

Group’s share of net assets in associates

7.9

14.4

65.6

62.9

73.5

77.3

Notional goodwill*

5.5

5.5

–

–

5.5

5.5

Carrying value

13.4

19.9

65.6

62.9

79.0

82.8

Fair value

211.9

214.1

n/a

n/a

211.9

214.1

Dividends paid

Total

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.
2020
US$m

2019
US$m

(16.7)(0.5)

Share of other comprehensive income

0.4

0.4

Share of total comprehensive expense(16.3)(0.1)

Carrying amount of interests in these associates

26.0

31.2

Share of loss

* OHTL repurchased some of its own shares in 2013 which were subsequently cancelled in 2016. The number of OHTL shares held by theGroup 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%.

Contingent liabilities relating to the Group’s interest in associates

Financial guarantee in respect of facilities made available to an associate

2020
US$m

2019
US$m

20.3

20.3

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

54 Mandarin Oriental International Limited

13 Associates and joint ventures continuedb) Investment in joint ventures
The material joint venture of the Group is listed below. This joint venture has share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investment in material joint venture in 2020 and 2019:
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
2020
2019

50.0%

50.0%

Summarised financial information for material joint venture
Summarised balance sheet at 31st December
Ritz Madrid

Non-current assets

2020
US$m

2019
US$m

286.9

204.9

20.7

11.2

Current assets
Cash and cash equivalents
Other current assets

1.9

1.0

Total current assets

22.6

12.2

Financial liabilities*†(276.2)(190.4)

Other non-current liabilities*(44.8)(35.9)

Total non-current liabilities(321.0)(226.3)

Other current liabilities*(25.0)(15.4)Net liabilities(36.5)(24.6)

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$276.2 million (2019: US$190.4 million).

Summarised statement of comprehensive income for the year ended 31st December
Ritz Madrid
2020
US$m

2019
US$m

Revenue

0.1

0.3

Depreciation and amortisation

(0.9)

(0.9)

Interest expense

(0.2)

–

Loss after tax(10.2)(8.8)

Other comprehensive (expense)/income

(1.7)

0.4

Total comprehensive expense(11.9)(8.4)

The information contained in the summarised balance sheet and statement of comprehensive income reflects theamounts presented in the financial statements of the joint ventures adjusted for differences in accounting policies
between the Group and the joint ventures, fair value of the joint ventures at the time of acquisition, and eliminationof interest on shareholders’ loan.

Annual Report 202055

Notes to the Financial Statements Continued

13 Associates and joint ventures continuedb) Investment in joint ventures continued
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
2020
US$m

2019
US$m

Net liabilities at 1st January(24.6)(16.2)

Loss for the year

(10.2)(8.8)

Other comprehensive (expense)/income

(1.7)

0.4

Net liabilities at 31st December(36.5)(24.6)

Effective interest in joint venture (%)

50.0

50.0

Group’s share of net liabilities in joint venture(18.3)(12.3)

6.8

6.2

Shareholders’ loans

138.1

95.2

Carrying value

126.6

89.1

2020
US$m

2019
US$m

7.8

30.3

Goodwill on acquisition

The Group has no other joint ventures other than Ritz Madrid.
Commitments and contingent liabilities in respect of joint venture
The Group has the following commitments relating to its joint venture as at 31st December:Commitment to provide funding if called

There were no contingent liabilities relating to the Group’s interest in its joint venture at 31st December 2020 and 2019.

14 Other investments
2020
US$m

2019
US$m

16.1

15.9

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.

56 Mandarin Oriental International Limited

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

Fair value
gains/(losses)
US$m

Losses
US$m

Employeebenefits
US$m

Unremitted
earnings inassociates/
joint ventures
US$m

Provisions
and other
temporarydifferences
US$m

Total
US$m

2020
At 1st January(55.7)

(0.1)

8.1

(0.3)

(0.9)

0.1

(48.8)

Exchange differences

(1.0)

–

0.8

–

–

(0.1)

(0.3)

Credited/(charged) to
profit and loss

13.2

–

6.6

(0.1)

–

(0.9)

18.8

–

1.9

–

(0.9)

–

–

1.0

At 31st December(43.5)

1.8

15.5

(1.3)

(0.9)

(0.9)

(29.3)

Deferred tax assets

0.3

1.8

15.5

–

–

0.2

17.8

Deferred tax liabilities(43.8)

–

–

(1.3)

(0.9)

(1.1)

(47.1)(43.5)

1.8

15.5

(1.3)

(0.9)

(0.9)

(29.3)

At 1st January(57.4)

(0.1)

9.0

(0.1)

(1.6)

0.1

(50.1)

Exchange differences

(0.8)

(0.1)

0.2

0.1

(0.1)

–

(0.7)

Credited/(charged) to
profit and loss

2.5

–

(1.1)

0.3

0.8

–

2.5

–

0.1

–

(0.6)

–

–

(0.5)

At 31st December(55.7)

(0.1)

8.1

(0.3)

(0.9)

0.1

(48.8)

Deferred tax assets

0.6

0.1

8.1

0.3

–

1.5

10.6

Deferred tax liabilities(56.3)

(0.2)

–

(0.6)

(0.9)

(1.4)

(59.4)(55.7)

(0.1)

8.1

(0.3)

(0.9)

0.1

(48.8)

Credited/(charged) to othercomprehensive income

2019(Charged)/credited to othercomprehensive income

Deferred tax balances predominantly comprise non-current items. Deferred tax assets and liabilities are netted when
the taxes relate to the same taxation authority and where offsetting is allowed.
Deferred tax assets of US$71.5 million (2019: US$47.1 million) arising from unused tax losses of US$329.6 million(2019: US$224.0 million) have not been recognised in the financial statements. Included in the unused tax losses,
US$289.0 million have no expiry date and the balance will expire at various dates up to and including 2037. Following
a recoverability review performed in 2020, deferred tax assets of US$2.2 million were derecognised due to hotel losses
following the COVID-19 pandemic.
Deferred tax assets of US$2.4 million (2019: US$1.7 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 2020 and 2019.

Annual Report 202057

Notes to the Financial Statements Continued

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 a members’length of service and their salaries in the final years leading up to retirement. In Hong Kong, the pension benefits arepaid in one lump sum. With the exception of certain plans in Hong Kong, all the defined benefit plans are closed to
new members. In addition, although all plans are impacted by the discount rate, liabilities are driven by salary growth.
The Group’s defined benefit plans are either funded or unfunded, with the assets of the funded plans held independentlyof the Group’s assets in separate trustee administered funds. Plan assets held in trusts are governed by local regulations
and practice in each country. Responsibility for governance of the plans, including investment decisions and contribution
schedules, lies jointly with the Company and the boards of trustees. The Group’s major plans are valued by independentactuaries annually using the projected unit credit method.
The amounts recognised in the consolidated balance sheet are as follows:
2020
US$m

2019
US$m

Fair value of plan assets

52.4

49.8

Present value of funded obligations(46.9)(48.5)

5.5

1.3

Present value of unfunded obligations

(0.3)

(0.2)

Net pension assets

5.2

1.1

Pension assets

5.5

1.3

Pension liabilities

(0.3)

(0.2)

5.2

1.1

Analysis of net pension assets

58 Mandarin Oriental International Limited

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

49.8

(48.7)

1.1

–

(3.4)

(3.4)

Interest income/(expense)

1.4

(1.3)

0.1

Administration expenses

(0.3)

–

(0.3)

1.1

(4.7)

(3.6)

50.9

(53.4)

(2.5)

0.2

(0.2)

–

3.3

–

3.3

– change in demographic assumption

–

(0.1)

(0.1)

– change in financial assumptions

–

(0.7)

(0.7)

– experience gains

–

2.7

2.7

2020
At 1st January
Current service cost

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

3.3

1.9

5.2

Contributions from employers

2.5

–

2.5

Contributions from plan participants

0.6

(0.6)

–

Benefit payments

(4.2)

4.2

–

Transfer to other plans

(0.9)

0.9

–

At 31st December

52.4(47.2)

5.2

2019
At 1st January

62.9(63.1)(0.2)

Current service cost

–

(3.7)

(3.7)

Past service income*

–

4.0

4.0

Interest income/(expense)

1.7

(1.6)

0.1

Administration expenses

(0.4)

–

(0.4)

1.3

(1.3)

–

64.2

(64.4)

(0.2)

0.2

(0.3)

(0.1)

4.0

–

4.0

– change in financial assumptions

–

(1.0)

(1.0)

– experience gains

–

0.4

0.4

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

4.0

(0.6)

3.4

Contributions from employers

3.2

–

3.2

Contributions from plan participants

0.6

(0.6)

–

Benefit payments(17.1)

17.1–

Transfer from other plans

(0.1)

0.1

–

Surplus distribution to an employer*

(5.2)

–

(5.2)

At 31st December

49.8(48.7)

1.1* The surplus from the defined benefit plan of The Excelsior, Hong Kong was distributed to the Group upon its liquidation.

Annual Report 202059

Notes to the Financial Statements Continued

16 Pension plans continued
The weighted average duration of the defined benefit obligation at 31st December 2020 is 5.5 years (2019: 5.7 years).
Expected maturity analysis of undiscounted pension benefits at 31st December is as follows:
2020
US$m

2019
US$m

Within one year

4.8

6.5

Between one and two years

10.0

5.1

Between two and five years

14.9

4.7

Between five and ten years

23.6

25.8

Between ten and fifteen years

15.7

18.3

Between fifteen and twenty years

10.7

15.9

9.3

17.7

89.0

94.0

Beyond twenty years

The principal actuarial assumptions used for accounting purposes at 31st December are as follows:
Hong Kong
2020
%

2019
%

Discount rate

1.90

3.00

Salary growth rate

3.80

4.75

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

(2.7)

3.1

Salary growth rate

1

2.7

(2.5)

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.

60 Mandarin Oriental International Limited

16 Pension plans continued
The analysis of the fair value of plan assets at 31st December is as follows:
2020
US$m

2019
US$m

– Asia-Pacific

5.2

4.0

– Europe

4.0

4.0– North America

10.2

8.0

– Global

0.3

0.4

19.7

16.4

– Asia-Pacific

8.3

9.9

– Europe

6.5

7.5– North America

11.4

12.7

– Global

4.8

4.3

31.0

34.4

Total investments

50.7

50.8

Cash and cash equivalents

3.8

0.9

Benefits payable and other

(2.1)

(1.9)

52.4

49.8

Equity investments

Investment funds

As at 31st December 2020, 100% of equity investments and 95% of investment funds were quoted on active markets(2019: 100% and 98% 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 2018, withmodified strategic asset allocation adopted in 2018. The next ALM review is scheduled for 2021.
As at 31st December 2020, the Hong Kong plans had assets of US$52.4 million (2019: US$49.8 million).
The Group maintains an active and regular contribution schedule across all the plans. The contribution to all its plans
in 2020 were US$2.5 million and the estimated amount of contributions expected to be paid to all its plans in 2021
is US$2.3 million.

Annual Report 202061

Notes to the Financial Statements Continued

17 Debtors
2020
US$m

2019
US$m

20.4

40.6

Trade debtors– third parties

0.3

3.8

20.7

44.4

(3.1)

(3.6)

17.6

40.8

– third parties*

59.7

61.7

– associates and joint ventures

1.5

2.4

61.2

64.1

– associates and joint ventures– provision for impairment

Other debtors

(2.0)

(1.5)

59.2

62.6

76.8

103.4

Non-current

5.1

6.2

Current

71.7

97.2

76.8

103.4

– Asia29.5

34.2– EMEA

41.6

54.1– America

5.7

15.1

76.8

103.4

– provision for impairment

Analysis by geographical area

* Included deposit of US$18.4 million (2019: US$16.6 million) in respect of the expansion project of Mandarin Oriental, Munich, pendingtransfer of title in the underlying land.

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.
2020
US$m

2019
US$m

17.6

40.8

42.9

43.8

60.5

84.6

Fair value– trade debtors– other debtors††

Excluding prepayments.

62 Mandarin Oriental International Limited

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:
2020
US$m

2019
US$m

–

1.5

Other amounts due from associates and joint ventures

1.5

2.4

Rental and other deposits

22.5

21.7

Other receivables

18.9

18.2

Derivatives financial instruments (refer note 29)

Financial assets

42.9

43.8

Prepayments

16.3

18.7

–

0.1

59.2

62.6

Other

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 2020 and 2019 were determined as follows:
Below
30 days

Between
31 and60 days

Between
61 and120 daysMore than
120 days

Total

–

–

–

89%

15%

15.0

1.2

1.0

3.5

20.7

–

–

–

3.1

3.1

–

–

3%

100%

8%

28.2

9.0

3.7

3.5

44.4

–

–

0.1

3.5

3.6

2020
Expected loss rate
Gross carrying amount – trade debtors (US$m)
Loss allowance (US$m)
2019
Expected loss rate
Gross carrying amount – trade debtors (US$m)
Loss allowance (US$m)

Annual Report 202063

Notes to the Financial Statements Continued

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

Other debtors

2020
US$m

2019
US$m

2020
US$m

2019
US$m

At 1st January

(3.6)

(3.4)

(1.5)

(1.4)

Additional provisions

(0.6)

(0.7)

(1.3)

(0.3)

Unused amounts reversed

1.0

0.5

0.8

0.2

Amounts written off

0.1

–

–

–

At 31st December

(3.1)

(3.6)

(2.0)

(1.5)

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 Bank and cash balances
2020
US$m

2019
US$m

Deposits with banks and financial institutions

75.3

146.4

Bank balances

88.6

123.3

Cash balances

0.7

1.0

164.6

270.7

– Euro24.4

39.1– Hong Kong dollar

15.7

13.9

– Indonesian rupiah

7.7

13.3

– Japanese yen

9.3

25.4

Analysis by currency– Swiss franc

2.2

4.7

– United Kingdom sterling

22.6

40.8

– United States dollar

75.8

126.2

– Other

6.9

7.3

164.6

270.7

The weighted average interest rate on deposits with banks and financial institutions at 31st December 2020 was 1.0%
(2019: 2.3%) per annum.

64 Mandarin Oriental International Limited

19 Creditors
2020
US$m

2019
US$m

Trade creditors

15.0

21.6

Accruals

62.5

75.5

Rental and other refundable deposits

6.7

6.4

Derivative financial instruments (refer note 29)

10.9

0.9

Other creditors

23.5

28.9

Financial liabilities

118.6

133.3

Contract liabilities (refer note 2)

31.1

31.1

Rental income received in advance

5.8

2.5

155.5

166.9

Non-current

10.9

0.9

Current

144.6

166.0

155.5

166.9

74.2

75.6

Analysis by geographical area
– Asia– EMEA

38.2

45.9– America

43.1

45.4

155.5

166.9

Derivative financial instruments are stated at fair value. Other creditors are stated at amortised cost. The fair values ofthese creditors approximate their carrying amounts.
Provision for reinstatement and restoration costs comprised the estimated costs, to be incurred by the Group as lessees,in dismantling and removing the underlying assets, restoring the sites on which they are located or restoring theunderlying assets to the condition required by the terms and conditions of the leases. The costs of US$0.8 million(2019: US$0.8 million) were included in accruals at 31st December 2020.

Annual Report 202065

Notes to the Financial Statements Continued

20 Borrowings
2020

2019

Carrying
amount
US$m

Fair
value
US$m

– bank loans

61.5

61.5

–

–

– other borrowings

2.7

2.7

2.5

2.5

Current borrowings

64.2

64.2

2.5

2.5

605.2

605.2

567.2

567.2

1.4

1.4

1.4

1.4

606.6

606.6

568.6

568.6

670.8

670.8

571.1

571.1

Carrying
amount
US$m

Fair
value
US$m

Current portion of long-term borrowings

Long-term borrowings– bank loans– other borrowings
Long-term borrowings

The fair values are estimated using the expected future payments discounted at market interest rate from 0.3% to 3.5%
(2019: 0.3% to 3.5%) 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.
2020
US$m

2019
US$m

Secured

606.8

549.1

Unsecured

64.0

22.0

670.8

571.1

Borrowings of US$606.8 million (2019: US$549.1 million) were secured against the tangible fixed assets and right-of-use
assets of certain subsidiaries at 31st December 2020. The book value of these tangible fixed assets and right-of-use assets
at 31st December 2020 was US$586.0 million (2019: US$567.5 million).

66 Mandarin Oriental International Limited

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

Weighted
average period
outstanding
Years

Euro

0.5

Hong Kong dollar

US$m

Floating rateborrowings
US$m

Total
US$m

–

–

61.5

61.5

1.7

2.7

216.1

279.3

495.4

Swiss franc

2.3

11.0

1.6

2.5

4.1

United Kingdom sterling

1.5

3.4

54.5

55.3

109.8

272.2

398.6

670.8

2020

2019
Euro

0.5

–

–

19.5

19.5

Hong Kong dollar

2.9

3.7

215.2

226.8

442.0

Swiss franc

2.4

12.0

1.5

2.4

3.9

United Kingdom sterling

1.9

4.4

52.5

53.2

105.7

269.2

301.9

571.1

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:
2020
US$m

2019
US$m

398.6

301.9

–

–

– Between one and two years

54.8

–

– Between two and three years

–

54.6

– Between three and four years

215.8

–

–

213.1

1.6

1.5

272.2

269.2

670.8

571.1

Floating rate borrowings
Fixed rate borrowings– Within one year

– Between four and five years– Beyond five years

Annual Report 202067

Notes to the Financial Statements Continued

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

Short-termborrowings
US$m

Total
US$m

568.6

2.5

571.1

2020
At 1st January
Exchange differences

11.1

0.3

11.4

Transfer(61.5)

61.5–

Drawdown of borrowings

88.4

–

88.4

Repayment of borrowings

–

(0.1)

(0.1)

606.6

64.2

670.8

At 1st January

7.3

524.2

531.5

Exchange differences

5.6

0.5

6.1

Transfer

(0.1)

0.1

–

At 31st December
2019

Drawdown of borrowings

555.8

–

555.8

Repayment of borrowings–(522.3)(522.3)

568.6

2.5

571.1

2020
US$m

2019
US$m

175.4

167.0

At 31st December

21 Lease liabilities
At 1st January
Exchange differences

8.8

2.8

Additions

1.2

12.0

Lease payments

(7.9)

(8.8)

Interest expense

1.9

2.4

Modification of lease terms and other

(2.3)

–

At 31st December

177.1

175.4

Non-current

170.1

168.4

Current

7.0

7.0

177.1

175.4

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 2020 and 2019.
There is no lease contract entered but not commenced at 31st December 2020 and 2019.

68 Mandarin Oriental International Limited

22 Tax increment financing
Netted off against the net book value of the property (refer note 10)

2020
US$m

2019
US$m

18.8

19.7

A development agreement was entered into between one of the Group’s subsidiaries and the District of Columbia(‘District’), pursuant to which the District agreed to contribute to the subsidiary US$33.0 million out of the net proceeds
obtained through the issuance and sale of certain tax increment financing bonds (‘TIF Bonds’) for the development
and construction of Mandarin Oriental, Washington D.C.
The receipt of the TIF Bonds has been treated as a government grant and netted off against the net book value in respectof the property. The TIF Bonds are being amortised over 39 years up to February 2043.

23 Segment information
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.
2020
US$m

2019
US$m

Analysis by geographical area
– Asia3,060.3

3,506.7– EMEA

839.2

841.7

– America

211.4

227.7

4,110.9

4,576.1

24 Share capital
Ordinary shares in millions
2020

2019

2020
US$m

2019
US$m

1,500

1,500.0

75.0

75.0

1,263.2

1,261.4

63.2

63.1

–

1.8

–

0.1

1,263.2

1,263.2

63.2

63.2

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

Annual Report 202069

Notes to the Financial Statements Continued

25 Share premium
2020
US$m

2019
US$m

499.7

497.8

Issued under share-based long-term incentive plans–

0.1

Transfer from capital reserves

–

1.8

499.7

499.7

At 1st January

At 31st December

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 2020 and 2019
under the 2014 Plan.
Movements of the outstanding conditional awards during the year:
Conditional awards in millions
2020

2019

At 1st January–

1.5

Released–(1.5)

At 31st December––

70 Mandarin Oriental International Limited

26 Share-based long-term incentive plans continuedii) Prior to the adoption of the 2014 Plan, The Mandarin Oriental International Share Option Plan 2005 provided
selected executives with options to purchase ordinary shares in the Company. The exercise price of the granted
options was based on the average market price for the five trading days immediately preceding the date of grantof the options. Options are vested over a period of up to three years and are exercisable for up to ten years following
the date of grant.
Movements of the outstanding options during the year:
2020
Weighted average
exercise priceUS$

At 1st January
Exercised
At 31st December

Optionsin millions

2019
Weighted average
exercise price
US$

Optionsin millions

1.72

4.2

1.66

4.7

–

–

1.20

(0.5)

1.72

4.2

1.72

4.2

The average share price during the year was US$1.61 (2019: US$1.77) per share.
Outstanding options at 31st December:
Ordinary shares in millions
Exercise price
US$

2020

2019

2021

1.99

1.3

1.3

2022

1.61

1.9

1.9

2023

1.57

1.0

1.0

Total outstanding

4.2

4.2

of which exercisable

4.2

4.2

Expiry date

Annual Report 202071

Notes to the Financial Statements Continued

27 Dividends
2020
US$m

2019
US$m

Final dividend in respect of 2019 of nil (2018: US¢1.50 per share)

–

18.9

Interim dividend in respect of 2020 of nil (2019: US¢1.50 per share)

–

19.0

–

37.9

In light of the substantially reduced levels of business due to the impact of COVID-19 pandemic, the Directors withdrew
their recommendation of a final dividend in respect of the 2019 financial year. No dividend in respect of the 2020
financial year has been declared or proposed by the Board.

28 Notes to consolidated cash flow statementa) Other non-cash items
2020
US$m

2019
US$m

474.9

67.3

Fair value (gain)/loss on other investments

(0.7)

1.5

Gain on modification of lease terms

(2.3)

–

Fair value loss on investment property under development

–

0.9

0.9

(0.7)

472.8

69.0

2020
US$m

2019
US$m

Decrease in stocks

0.5

0.4

Decrease/(increase) in debtors

29.1

(0.7)

Decrease in creditors(29.3)(4.9)

Share-based payment
Otherb) Movements in working capital

Increase in pension obligations

72 Mandarin Oriental International Limited

1.1

2.1

1.4

(3.1)

28 Notes to consolidated cash flow statement continuedc) The Group did not pay any instalment in respect of the land purchase price and related cost for the expansion of
Mandarin Oriental, Munich in 2020 (2019: US$1.1 million). As at 31st December 2020, cumulative costs paid by
the Group amounted to US$21.1 million (2019: US$21.1 million), the majority of which have been included within
Other Debtors (refer note 17) pending transfer of title in the underlying land.
d) In December 2020, the Group acquired a 16.7% interest in Stay One Degree Limited (‘S1D’) for a consideration of
US$2.0 million. The principal activity of S1D is developing and operating an online booking service platform forluxury homes. The Group has appointed two of five directors to the board of S1D and has exercised significant
influence on the decisions about the operation of S1D.
e) During 2020, the Group provided shareholder loans to Mandarin Oriental, New York of US$8.6 million(2019: US$0.8 million), Mandarin Oriental Ritz, Madrid of US$31.4 million (2019: US$15.9 million) andMandarin Oriental, Miami of US$0.5 million (2019: nil).
f) During 2020, the Group received repayments on its shareholder loans previously provided to Mandarin Oriental Ritz,
Madrid of US$0.4 million. In 2019, the Group received repayment on its shareholders loans previously provided to
Mandarin Oriental Ritz, Madrid of US$0.4 million and Mandarin Oriental, Miami of US$3.2 million.
g) Cash outflows for leases
2020
US$m

2019
US$m

(10.5)(15.9)– operating activities

(4.5)

(9.5)

– financing activities

(6.0)

(6.4)

(10.5)(15.9)

2020
US$m

2019
US$m

164.6

270.7

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

Bank and cash balances (refer note 18)

Annual Report 202073

Notes to the Financial Statements Continued

29 Derivative financial instruments
The fair values of derivative financial instruments at 31st December are as follows:
2020

2019

Positive
fair value
US$m

Negative
fair value
US$m

Positive
fair value
US$m

Negative
fair value
US$m–(10.9)

1.5(0.9)

Designated as cash flow hedges– interest rate swaps and caps

The notional principal amounts of the outstanding interest rate swap contracts at 31st December 2020 were
US$270.6 million (2019: US$267.7 million).
At 31st December 2020, the fixed interest rates relating to interest rate swaps and caps varied from 1.2% to 1.8%
(2019: 1.2% to 1.8%) per annum.
The fair values of interest rate swaps at 31st December 2020 were based on the estimated cash flows discounted atmarket rates ranging from 0.9% to 1.0% (2019: 0.7% to 2.9%) per annum.
An outstanding interest rate swap contract of a notional principal and contract amount of US$54.6 million at
31st December 2020 is impacted by the IBORs reform and will mature after 2022.

30 Commitments
2020
US$m

2019
US$m

618.4

713.9

7.8

30.3

102.5

21.4

110.3

51.7

728.7

765.6

Capital commitments
Authorised not contracted– other
Contracted not provided– joint ventures– otherThis primarily related to capital commitments for the Causeway Bay site under development, which is expected tocomplete in 2025.
2020
US$m

2019
US$m

–

0.1

Operating lease commitments for short-term leases
Total commitments– due within one year

No future sublease payments are receivable relating to the above operating leases (2019: nil).

74 Mandarin Oriental International Limited

31 Related party transactions
The parent company of the Group is Jardine Strategic Holdings Limited (‘JSH’) and the ultimate holding company of
the Group is Jardine Matheson Holdings Limited (‘JMH’). Both companies are incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety of transactions with its associates and joint ventures
and with JMH’s subsidiaries, associates and joint ventures. The more significant of these transactions are described below:
During 2020, the Group managed six (2019: six) associate and joint venture hotels and received management fees of
US$4.2 million (2019: US$14.5 million) based on long-term management agreements on normal commercial terms.
The Group provided hotel management services to Hongkong Land (‘HKL’), a subsidiary of JSH. Total management
fees received from HKL in 2020 amounted to US$1.2 million (2019: US$1.9 million), based on long-term managementagreements 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 2020
(due to underlying losses). In 2019, the fee was US$0.1 million.
In respect of the Causeway Bay site under development, the Group paid consultancy fees of US$2.1 million(2019: US$2.0 million) to HKL in consideration for project management consultancy services. In addition,
Gammon Construction Limited (‘GCL’), an associate of JMH, completed value of works of US$16.3 million(2019: US$8.0 million). The HKL agreement and GCL contract were arranged on normal commercial terms.
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 120 under
the heading of ‘Remuneration in 2020’.

32 Summarised balance sheet of the Company
Included below is certain summarised balance sheet information of the Company disclosed in accordance with
Bermuda Law.
2020
US$m

2019
US$m

1,308.3

982.2

(1.6)

(2.6)

1,306.7

979.6

Share capital (refer note 24)

63.2

63.2

Share premium (refer note 25)

499.7

499.7

743.8

416.7

1,306.7

979.6

Subsidiaries
Net current liabilities
Net assets

Revenue and other reserves
Shareholders’ funds

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

Annual Report 202075

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 2020 are set out below.
Proportion of ordinary sharesand voting powers
at 31st December 2020 held byPrincipal placeof business

Name of entity

Nature of business

Attributable interest %
2020

2019

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

–

494 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

Indonesia

P.T. Jaya Mandarin Agung

Owner: Mandarin Oriental, Jakarta

96.9

96.9

96.9

3.1

272 rooms. Lease expiry 2023

United Kingdom

Mandarin Oriental Hyde Park Limited

Owner: Mandarin Oriental Hyde Park, London

100

100

100

–

Owner: Mandarin Oriental, Geneva

85.3

85.3

85.3

14.7

100

100

100

–

181 rooms

100

100

100

–

73 rooms. Freehold

Switzerland

Société Immobilière de Mandarin Oriental (Genèva) SA

Switzerland

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

Germany

Dinavest International Holdings B.V.

Owner: Mandarin Oriental, Munich

181 rooms. Freehold
Lease expiry 2040

FranceMOHG Hotel (Paris) Sarl

Owner: Mandarin Oriental, Paris

100

100

100

–

135 rooms. Freehold

United States

Boylston Street Hotel LLC

Owner: Mandarin Oriental, Boston

100

100

100

–

148 rooms. Freehold

United States

Portals Hotel Site LLC

Owner: Mandarin Oriental, Washington D.C.

100

94.6

100

–

373 rooms. Freehold

Associates and joint ventures
Singapore

Marina Bay Hotel Private Limited

Owner: Mandarin Oriental, Singapore

50

50

50

50

ThailandOHTL PCL

Owner: Mandarin Oriental, Bangkok

47.6

47.6

47.6

52.4

Malaysia

Asas Klasik Sdn Bhd

Owner: Mandarin Oriental, Kuala Lumpur

25

25

25

75

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

25

25

75

244 rooms. Freehold

25

25

25

75

16.7

–

16.7

83.3

United States

Swire Brickell Key Hotel Limited

Owner: Mandarin Oriental, Miami

Hong Kong

Stay One Degree Limited

Online booking service platform for luxury homes

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

TaiwanMandarin Oriental, Taipei

–

–

–

–

294 rooms

Czech Republic

Mandarin Oriental, Prague

–

–

–

–

99 rooms

Spain

Mandarin Oriental, Barcelona

–

–

–

–

120 rooms

TurkeyMandarin Oriental, Bodrum

–

–

–

–

130 rooms

Italy

Mandarin Oriental, Milan

–

–

–

–

104 rooms

Italy

Mandarin Oriental, Lago di Como

–

–

–

–

75 rooms

MoroccoMandarin Oriental, Marrakech

–

–

–

–

63 rooms

Qatar

Mandarin Oriental, Doha

–

–

–

–

249 rooms

United Arab Emirates Mandarin Oriental Jumeira, Dubai

–

–

–

–

256 rooms

United Arab Emirates Emirates Palace, Abu Dhabi

–

–

–

–

394 rooms

Chile

Mandarin Oriental, Santiago

–

–

–

–

310 rooms

Saint Vincent and
the Grenadines

Mandarin Oriental, Canouan

–

–

–

–

35 rooms

In March 2021, the Group has taken over the management of the 321-room Al Faisaliah Hotel in Riyadh, Saudi Arabia.
76 Mandarin Oriental International Limited

Annual Report 202077

Notes to the Financial Statements Continued

34 Principal 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.

78 Mandarin Oriental International Limited

34 Principal 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 fair value through other comprehensive income are recognised in other comprehensive income as part of the gains
and losses arising from changes in their fair value. All other 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.

Annual Report 202079

Notes to the Financial Statements Continued

34 Principal 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. Grants related to tangible assets are deducted in arriving at
the carrying amount of the assets. Other tangible fixed assets are stated at cost less amounts provided for depreciation.
Depreciation of tangible fixed assets is calculated on the straight-line basis to allocate the cost or valuation of each asset to
its residual value over its estimated useful life. The residual values and useful lives are reviewed at each balance sheet date.
The estimated useful lives are as follows:
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.

80 Mandarin Oriental International Limited

34 Principal accounting policies continued
Leases continuedi) As a lessee continued
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.
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.

Annual Report 202081

Notes to the Financial Statements Continued

34 Principal accounting policies continued
Investment property under development
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 property under development is carried at fair value, representing estimatedopen market value determined annually by independent qualified valuers who have recent experience in the location andsegment of the investment property being valued.
The market value of investment property under development is derived using the direct comparison method and theresidual method. The direct comparison method is based on market evidence of transaction prices for similar properties
which recently transacted. The residual method is based on the estimated capital value of the proposed development
assuming completion as at the date of valuation, after deducting development costs together with developer’s profit andrisk. The direct comparison method and the estimated capital value of the residual method are adjusted to reflect theconditions of the subject property including property site and location. Changes in fair value are recognised in profit
and loss.

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.

82 Mandarin Oriental International Limited

34 Principal accounting policies continued
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 costs 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.

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

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.

Annual Report 202083

Notes to the Financial Statements Continued

34 Principal accounting policies continued
Government grants
Grants from governments are recognised at their fair value when there is reasonable assurance that the grant will bereceived, and the Group will comply with the conditions associated with the grants.
Grants that compensate the Group for expenses incurred are recognised in the profit and loss as other operating income
on a systematic basis in the period in which the expenses are recognised. Unconditional grants are recognised in the profit
and loss as other income on a systematic basis in the period in which the expenses are recognised. Unconditional grants
are recognised in the profit and loss as other operating income when they become receivable.
Grants related to assets are deducted in arriving at the carrying value of the related assets.

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 direct 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.

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.

84 Mandarin Oriental International Limited

34 Principal accounting policies continued
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.
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.

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

Annual Report 202085

Notes to the Financial Statements Continued

34 Principal accounting policies continued
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 property
under development and investments which are measured at fair value through profit and loss; gains and losses arisingfrom the 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.

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) Receipts under operating leases are accounted for on an accrual basis over the lease terms.

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

86 Mandarin Oriental International Limited

35 Standards and amendments issued but not yet effective
A number of new standards and amendments effective for accounting periods beginning after 2020 have been publishedand will be adopted by the Group from their effective dates. The Group is currently assessing the potential impact ofthese standards and amendments but expects their adoption will not have a significant impact on the Group’s consolidated
financial statements. The relevant standard and amendments are set out below.
i) Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16(effective from 1st January 2021) provides a number of practical expedients as a result of the reform which affectthe measurement of financial assets, financial liabilities and lease liabilities, and a number of reliefs for hedging
relationships. The Group will apply the amendments from 1st January 2021, but it is not expected the adoption will
have a significant impact on the Group’s consolidated financial statements.
ii) Amendment to IFRS 9: ‘Fees in the ’10 per cent’ Test for Derecognition of Financial Liabilities’ (effective from
1st January 2022) clarifies the requirement to derecognise the original financial liability and recognise a new financial
liability where there is an exchange between an existing borrower and lender of debt instrument with substantiallydifferent terms. The amendments clarifies that the terms are substantially different if the discounted present valueof the cash flows under the new terms using the original effective interest rate, including any fees paid net of any fees
received, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original
financial liability. The Group will apply the amendment from 1st January 2022, but it is not expected the adoption
will have a significant impact on the Group’s consolidated financial statements.
iii) Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (effective from 1st January 2022)
clarifies that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes
both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling
contracts. The Group will apply the amendment from 1st January 2022, but it is not expected the adoption will havea significant impact on the Group’s consolidated financial statements.
iv) IFRS 17 ‘Insurance Contracts’ (effective from 1st January 2023) – The Group is assessing the potential impact on
the Group’s consolidated financial statements.

Annual Report 202087

Notes to the Financial Statements Continued

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.
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; andiii) The effects of the forthcoming reforms to IBORs, because these might take effect at a different time and have a
different impact on the hedged item (the floating-rate debt) and the hedging instrument (the interest rate swap used
to hedge the debt).
The ineffectiveness during 2020 or 2019 in relation to the interest rate swaps was not material.

88 Mandarin Oriental International Limited

36 Financial risk management continued
Financial risk factors continuedi) 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 2020 and 2019, the Group’s principal foreign exchange exposure was with
the Euro. At 31st December 2020, 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$0.2 million (2019: US$1.1 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$0.2 million (2019: US$1.1 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 2020 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.

Annual Report 202089

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 2020, the Group’s interest rate
hedge was 41% (2019: 47%), with an average tenor of 2.9 years (2019: 3.9 years). The interest rate profile of theGroup’s borrowings after taking into account hedging transactions are set out in note 20.
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 and caps are set out in note 29.
At 31st December 2020, 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$2.6 million (2019: US$1.1 million) higher/lower, and hedging reserves
would have been US$6.6 million (2019: US$8.4 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 profit/(loss) after tax sensitivities. Changes in the market interest rate of financial
instruments that were designated as hedging instruments in a cash flow hedge to hedge payment fluctuations
resulting from interest rate movements affect the hedging reserves and are therefore taken into consideration in
the equity-related sensitivity calculations.

90 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 2020, 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$4.0 million (2019: US$4.0 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 2020,
90% (2019: 96%) of deposits and balances with banks and financial institutions were made to institutions with credit
ratings of no less than A- (Fitch). Similarly transactions involving derivative financial instruments are with bankswith 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.

Annual Report 202091

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 2020, total available borrowing facilities amounted to US$834 million (2019: US$820 million)of which US$671 million (2019: US$571 million) was drawn down. Undrawn committed facilities, in the form of
revolving credit and term loan facilities totalled US$163 million (2019: US$249 million), in addition to cash balancesof US$165 million (2019: US$271 million).
In February 2021, the Group entered into new committed facilities of US$260 million. The facilities have a tenor of
two years and are available for general corporate funding.
The table below analyses the Group’s non-derivative financial liabilities and net settled derivative financial liabilities
into relevant maturity groupings based on the remaining period at 31st December 2020 and 2019 to the contractual
maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential
for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Within
one
year
US$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

Borrowings

74.6

9.8

9.6

608.6

0.2

1.2

704.0

Lease liabilities

9.3

9.4

9.7

9.4

9.4

160.6

207.8

107.7

–

–

–

–

–

107.7

3.7

3.6

2.8

0.8

–

–

10.9

Borrowings

17.3

34.4

15.0

15.1

554.1

1.3

637.2

Lease liabilities

9.3

8.8

8.8

9.0

8.7

162.6

207.2

132.4

–

–

–

–

–

132.4

0.2

0.2

0.2

0.2

0.1

–

0.9

2020

Creditors
Net settled derivative
financial instruments
2019

Creditors
Net settled derivative
financial instruments

Included in the total undiscounted borrowings at 31st December 2020, US$115.3 million are impacted by the
IBORs reform.

92 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 2020 and 2019 are as follows:
2020

2019

– based on shareholders’ funds

14%

7%

– based on adjusted shareholders’ funds

10%

5%

n/a

5.4 times

Gearing ratio

Interest cover

Annual Report 202093

Notes to the Financial Statements Continued

36 Financial risk management continued
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.
The table below analyses financial instruments carried at fair value at 31st December 2020 and 2019, by the levels in
the fair value measurement hierarchy.
Observablecurrent market
transactions
US$m

Unobservable
input
US$m

Total
US$m

5.4

10.7

16.1

(10.9)–(10.9)

4.6

11.3

15.9

1.5

–

1.5

6.1

11.3

17.4

(0.9)

–

(0.9)

2020
AssetsOther investments
Liabilities
Derivative financial instruments at fair value– through other comprehensive income
2019
AssetsOther investments
Derivative financial instruments at fair value– through other comprehensive income

Liabilities
Derivative financial instruments at fair value– through other comprehensive income

There were no transfers among the two categories during the year ended 31st December 2020 and 2019.

94 Mandarin Oriental International Limited

36 Financial risk management continued
Fair value estimation continuedi) Financial instruments that are measured at fair value continued
Movements of financial instruments which are valued based on unobservable inputs during the year ended
31st December are as follows:
Unlisted investments
2020
2019
US$m
US$m

At 1st January

11.3

9.1

Additions

0.6

2.2

Disposals

(1.2)

–

At 31st December

10.7

11.3

ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank and cash 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.

Annual Report 202095

Notes to the Financial Statements Continued

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 2020 and2019 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

2020
Financial assets measured at fair value
–

16.1

–

–

16.1

16.1

Debtors

–

–

60.5

–

60.5

60.5

Bank and cash balances

–

–

164.6

–

164.6

164.6

–

–

225.1

–

225.1

225.1

(10.9)–––(10.9)(10.9)

Borrowings

–

–

–

(670.8)(670.8)(670.8)

Lease liabilities

–

–

–

(177.1)(177.1)(177.1)

Trade and other payables excluding
non-financial liabilities

–

–

–

(107.7)(107.7)(107.7)–––(955.6)(955.6)(955.6)

Other investments
Financial assets not measured at fair value

Financial liabilities measured at fair value
Derivative financial instruments
Financial liabilities not measured
at fair value

2019
Financial assets measured at fair value
Other investments

–

15.9

–

–

15.9

15.9

1.5

–

–

–

1.5

1.5

1.5

15.9

–

–

17.4

17.4

Debtors

–

–

83.1

–

83.1

83.1

Bank and cash balances

–

–

270.7

–

270.7

270.7

–

–

353.8

–

353.8

353.8

(0.9)

–

–

–

(0.9)

(0.9)

Borrowings

–

–

–

(571.1)(571.1)(571.1)

Lease liabilities

–

–

–

(175.4)(175.4)(175.4)

Derivative financial instruments

Financial assets not measured at fair value

Financial liabilities measured at fair value
Derivative financial instruments
Financial liabilities not measured
at fair value

Trade and other payables excluding
non-financial liabilities

96 Mandarin Oriental International Limited

–

–

–

(132.4)(132.4)(132.4)–––(878.9)(878.9)(878.9)

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 the COVID-19
pandemic have been considered when applying estimates and assumptions in the preparation of the financial statements,
including the Group’s assessment of impairment of assets and the independent valuers’ valuation of the Group’s
investment property under development. Given the uncertainty of the impact of COVID-19 pandemic, the actual
results may differ from these accounting estimates.
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 property under development
The fair value of investment property under development is determined by independent valuers on an open market basis
using the direct comparison method and the residual method. The direct comparison method and the estimated capitalvalue of the residual method are made by reference to comparable market transactions and adjusted for property-specificqualitative factors. 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 and capitalisation rates.
Consideration has been given to assumptions that are mainly based on market conditions existing at the balance sheet date.

Impairment of assets
The Group tests annually whether goodwill and other assets that have indefinite useful lives suffered any impairment.
Other assets such as tangible fixed assets and development project contract costs are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the asset exceeds its recoverable amount. The
recoverable amount of an asset or a cash generating unit is determined based on the higher of its fair value less cost to selland its value in use, calculated on the basis of management’s assumptions and estimates. Changing the key assumptions,
including the discount rates or the growth rate assumptions in the cash flow projections, could materially affect thevalue-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.

Annual Report 202097

Notes to the Financial Statements Continued

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.

98 Mandarin Oriental International Limited

37 Critical accounting estimates and judgements continued
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.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgementin evaluating whether it is reasonably certain to exercise the option to renew. That is, the Group considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Groupreassesses the lease term if there is a significant event or change in circumstances that is within its control and affects
its ability to exercise or not to exercise the option to renew. The assessment of whether the Group is reasonably certain
to exercise the options impacts the lease terms, which significantly affects the amount of lease liabilities and right-of-use
assets recognised.

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 202099

Notes to the Financial Statements Continued

37 Critical accounting estimates and judgements continued
Interest rate benchmark reform
Following the 2007-2008 financial crisis, the reform and replacement of benchmark interest rates such as US$ LIBOR
and other interbank offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty
around the timing and precise nature of these changes.
To transition existing contracts and agreements that reference IBORs (including US$ LIBOR) to risk free rates (‘RFRs’)such as US$ LIBOR to Secured Overnight Financing Rate, adjustments for term differences and credit differences mightneed to be applied to RFRs, to enable the two benchmark rates to be economically equivalent on transition.
The Group’s treasury function is managing the Group’s IBORs transition plan. The greatest change will be amendments
to the contractual terms of the IBORs-referenced floating-rate debt and the associated swap and the corresponding
update of the hedge designation. However, the changed reference rate may also affect other systems, processes, risk andvaluation models, as well as having tax and accounting implications.
Relief applied
The Group has applied the following reliefs that were introduced by the amendments made to IFRS 9 ‘Financial
Instruments’ in September 2019:i) When considering the ‘highly probable’ requirement, the Group has assumed that the IBORs interest rate on which
the Group’s hedged debt is based does not change as a result of IBORs reform.
ii) In assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed
that the IBORs interest rate on which the cash flows of the hedged debt and the interest rate swap that hedges
it are based is not altered by IBORs reform.
iii) The Group has not recycled the cash flow hedge reserve relating to the period after the reforms are expected totake effect.
Assumptions madeIn calculating the change in fair value attributable to the hedged risk of floating-rate debt, the Group has made thefollowing assumptions that reflect its current expectations:i) The IBORs-referenced floating-rate debt will move to RFRs during 2023 and the spread will be similar to the spread
included in the interest rate swap used as the hedging instrument.
ii) No other changes to the terms of the floating-rate debt are anticipated.
iii) The Group has incorporated the uncertainty over when the IBORs-referenced floating-rate debt will move to RFRs,
the resulting adjustment to the spread, and the other aspects of the reform that have not yet been finalised by adjusting
the discount rate used in the calculation.

100 Mandarin Oriental International Limited

Independent Auditors’ Report

To the members of Mandarin Oriental International Limited
Report on the audit of the Group financial statements
OpinionIn our opinion, Mandarin Oriental International Limited’s Group (the ‘Group’) financial statements(the ‘financial statements’):give a true and fair view of the state of the Group’s affairs as at 31st December 2020 and of its loss and cash flows
for the year then ended;have been properly prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as issued by
the International Accounting Standards Board (IASB); andhave been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated
Balance Sheet as at 31st December 2020; the Consolidated Profit and Loss Account, the Consolidated Statementof Comprehensive Income, the Consolidated Cash Flow Statement, and the Consolidated Statement of Changes in
Equity for the year then ended; and the Notes to the Financial Statements, which include a description of the significant
accounting policies (the ‘Principal Accounting Policies’).
Certain required disclosures have been presented in the Corporate Governance section of the Annual Report rather thanin the Notes to the Financial Statements. These disclosures are cross-referenced from the financial statements and are
identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the Financial Reporting Council’s (‘FRC’s’) Ethical Standard as
applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Materiality
Overall Group materiality: US$11.4 million (2019: US$2.7 million)
Based on 5% of underlying loss before tax (2019: 5% of underlying profit before tax)
Audit scope
A full scope audit of seven of the Mandarin Oriental hotels and two entities engaged in hotel management services
and holding the investment property under development was performed. These hotels and entities, together withprocedures performed over specific balances and transactions for a further two of the Mandarin Oriental hotels andon central functions and at the Group level, accounted for 87% of the Group’s revenue, 93% of the Group’s loss
before tax, 75% of the Group’s underlying loss before tax and 93% of the Group’s total assets.
Key audit matters
Impact of COVID-19
Valuation of investment property under development
Recoverability of the carrying amounts of hotel properties

Annual Report 2020101Independent Auditors’ Report Continued

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in thefinancial statements.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in linewith our responsibilities, outlined in the Auditors’ responsibilities for the audit of the financial statements section, todetect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capableof detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance withlaws and regulations related to, but were not limited to, the Companies Act 1981 (Bermuda), the Listing Rules, tax
regulations, employment regulation, health and safety regulations and equivalent local laws and regulations applicableto significant reporting component teams, and we considered the extent to which non-compliance might have a material
effect on the financial statements. We also considered those laws and regulations that have a direct impact on the
preparation of the financial statements such as the Companies Act 1981 (Bermuda).
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements(including the risk of override of controls), and determined that the principal risks were related to posting of
inappropriate journal entries and management bias in accounting estimates and judgements. The Group engagement
team shared this risk assessment with the component auditors so that they could include appropriate audit proceduresin response to such risks in their work. Audit procedures performed by the Group engagement team and/or component
auditors included:•••

Gaining an understanding of the legal and regulatory framework applicable to the Group and considering the risk ofany acts by the Group which may be contrary to applicable laws and regulations, including fraud;
Discussions with management, internal audit and Group legal counsel, including consideration of known orsuspected instances of non-compliance with laws and regulation and fraud;
Review of reporting component auditors’ work, including any matters reported by component auditors’ relating to
non-compliance with laws and regulations or fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates thatinvolved making assumptions and considering future events that are inherently uncertain, particularly in relation to
the valuation of investment property under development and the impairment assessments related to the carrying
value of hotel properties (see related key audit matters below); andIncorporating elements of unpredictability in the audit procedures we performed.

We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits we also addressed
the risk of management override of internal controls, including testing journals, and evaluated whether there was evidenceof bias by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance withlaws and regulations is from the events and transactions reflected in the financial statements, the less likely we would
become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of notdetecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentionalmisrepresentations, or through collusion.

102 Mandarin Oriental International Limited

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the auditof the financial statements of the current period and include the most significant assessed risks of material misstatement(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The impact of COVID-19 is a new key audit matter this year. Otherwise, the key audit matters below are consistent withlast year.
Key audit matters

How our audit addressed the key audit matters

Impact of COVID-19
The COVID-19 pandemic has had a significant impact
on the performance of the Group. The extent of thenegative impact of the pandemic on future trading
performance is difficult to predict. Therefore, there isinherent uncertainty in determining the impact of thepandemic on certain aspects of the financial statements.
The key impact of COVID-19 on the financial
statements are:
The assumptions supporting the valuation of theinvestment property under development has been
updated to reflect management’s best estimate of the
impact of COVID-19.
Management’s assessment of the carrying value of theGroup’s hotel properties as a result of a reduction to
the valuations at the year end, in part due to theimpact of COVID-19 on the underlying businesses,
as described in the related key audit matter below.
The Directors have concluded that it is appropriate toprepare the financial statements on a going concern basis
and that no material uncertainty exists that may castsignificant doubt about the Group’s ability to continue
as a going concern. In performing their assessment,
the Directors have included their best estimate of the
impacts of COVID-19.
Management’s way of working, including the operationof controls, has been impacted by COVID-19 as a resultof a number of staff working remotely. For example,
this has meant virtual review meetings replaced
in-person meetings.

Our procedures in respect of the valuation of investment
property under development and the recoverability of thecarrying amounts of hotel properties are covered in therelated key audit matters below.
We performed additional procedures to assess any
control implications arising from the impact of
COVID-19, including inquiries with respect to theoperation of IT and business process controls, andwhether there has been any impact on the Group.
We instructed our component teams to perform
additional procedures to understand if there were
any changes to management’s planned operationof controls or monitoring activities. We did not
identify any evidence of material deterioration in
the control environment.
We increased the frequency and extent of our oversightover component audit teams, using video conferencing
and remote working paper reviews, to satisfy ourselves
as to the appropriateness of audit work performed atsignificant and material components.
We considered the appropriateness of disclosures in
the financial statements in respect of the impact of
the current environment and the increased uncertainty
on certain accounting estimates and consider these to
be appropriate.
We have examined the Group’s liquidity forecasts in lightof the impact of COVID-19. Our conclusions in respectof going concern are set out separately within this report.

Annual Report 2020103

Independent Auditors’ Report Continued

Key audit matters

How our audit addressed the key audit matters

Valuation of investment property under development
Refer to note 34 (Principal accounting policies),
note 37 (Critical accounting estimates and judgements)
and note 12 (Investment property under development)
to the financial statements.
The fair value of the Group’s investment property
under development amounted to US$2,528.3 million
at 31st December 2020, with a revaluation loss of
US$474.9 million recognised as a non-trading item in
the Consolidated Profit and Loss Account for the year.
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 valuer makeassumptions, judgements and estimates in key areas.
The valuation was derived using the direct comparison
method and residual method. Judgement is required inselecting appropriate land sale comparable transactions
for the direct comparison method valuation; and thedetermination of the gross development value, estimatedcosts to complete and expected developer’s profit margin
in the residual method valuation.
We focused on the valuation of investment property
under development due to the significant judgements
and estimates involved in determining the valuations.

We understood management’s controls and processes fordetermining the valuation of investment property underdevelopment 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 valuation 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, including:for the direct comparison method valuation, assessed
the appropriateness of the comparable transactions
adopted in the valuation;
for the residual method valuation:– assessed the appropriateness of the key assumptions
adopted in the assessment of the gross development
value by comparing them to available market dataon yields and unit rentals;– for developer’s profit and other ancillary fees,
compared the adopted parameters to the market
norm in the industry; and– for the construction costs to complete, examined
the approved project budget, and evaluated pastbudget to actual variance to assess the reliability ofthe project budget.
We concluded that the methodology used in preparing
the valuation was appropriate and that the key assumptions
applied in the valuation were supportable in light ofavailable evidence.
We also assessed the adequacy of the disclosures related
to the valuation of the investment property underdevelopment in the context of IFRS disclosure
requirements and were satisfied that appropriate
disclosure has been made.

104 Mandarin Oriental International Limited

Key audit matters

How our audit addressed the key audit matters

Recoverability of the carrying amounts of hotel properties
Refer to note 34 (Principal accounting policies),
note 37 (Critical accounting estimates and judgements),
note 10 (Tangible assets), note 11 (Right-of-use assets)
and note 13 (Associates and joint ventures) to thefinancial statements.
The Group’s hotel properties are stated at cost lessdepreciation and impairment. As at 31st December 2020,
the carrying values of the hotel properties held throughthe Group’s subsidiaries, classified under tangible assets
and right-of-use assets, amounted to US$1,181.5 million
and US$297.4 million respectively. The Group also
holds interests in a number of hotel properties
through its associates and joint ventures amounting
to US$346.4 million.
Management considers each hotel to be a separate
cash-generating unit (‘CGU’) and performs an
impairment assessment, where impairment indicators
exist, to determine the recoverable amount of the hotel
properties. The recoverable amount is determined as
the higher of the CGU’s value-in-use and fair value lesscosts to sell. In determining the fair value less costs tosell, a third-party valuer (the ‘valuer’) is engaged by theGroup to perform the valuation of the hotel property.
Management concluded that an impairment chargeof US$45.3 million was required for the Mandarin
Oriental, Geneva hotel property and leasehold land.
We focused on this area as the impairment assessment
involves significant judgements and estimation
uncertainty in respect of future business performanceand key assumptions including discount rates, terminal
yield, occupancy rate, sales growth rate and capital
expenditure necessary to maintain the service standard.

We assessed the inherent risk of material misstatementby considering the degree of estimation uncertainty andthe judgement involved in determining assumptions tobe applied.
We have understood and reviewed management’s
impairment assessment process, including the identificationof indicators of impairment and appropriateness ofthe valuation models used, including the assessmentof the future impact of COVID-19 and inspection of
the operating results of the respective hotels.
Where there were indicators of impairment, we assessed
the assumptions used by the valuer and management in
the calculation of the recoverable amounts. This included
the involvement of our valuation experts to assess thecountry specific discount rate applied and appropriatenessof the terminal yield with reference made to market data.
We assessed the reasonableness of the forecast occupancy
rates, sales growth rate and capital expenditure bycomparing them to historical results and latest economic
and industry forecasts.
We assessed the qualifications, competence andobjectivity of the valuer, discussed the key assumptions
and methodology with the valuers and read thevaluation reports prepared by the valuer andconsidered the appropriateness and consistencyof valuation methodologies.
We evaluated management’s future cash flow forecasts
and the process by which they were prepared, including
testing the mathematical accuracy of the underlying
calculations and compared the future cash flow forecasts
to the Board approved budgets.
We performed sensitivity analyses by making
adjustments to the key assumptions in management’s
impairment assessments and considered whether, in
isolation or as a combination, any reasonably possible
adjustments would result in a material impairment.
We found that the methodologies were applied consistently
and appropriately, and the significant judgements andestimates adopted by management were appropriate.
We also assessed the adequacy of the disclosures includedin the financial statements and were satisfied that these
are appropriate.

Annual Report 2020105

Independent Auditors’ Report Continued

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and theindustry in which it operates.
The Group’s accounting processes are structured around entities’ finance functions, which are responsible for theirown accounting records and controls, which in turn report financial information to the Group’s finance function in
Hong Kong to enable them to prepare financial statements.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed bymembers of the Group engagement team or by component auditors from member firms within the PwC Network andother auditors operating under our instruction. Where the work was performed by component auditors, we determined
the level of involvement we needed 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 entities in scope for Group reporting during theaudit cycle through a combination of virtual meetings and conference calls. Due to the current restrictions on traveland social distancing measures, enacted as a response to COVID-19, the lead group audit partner and other seniorteam members were involved throughout the year through the regular use of video conference calls and other formsof communication to direct and oversee the audit, including the remote review of the work of component teams.
A full scope audit on seven of the Mandarin Oriental hotels and two entities engaged in the hotel management services
and holding the investment property under development was performed. These hotels and entities, together withprocedures performed over specific balances and transactions for a further two of the Mandarin Oriental hotels and on
central functions and at the Group level, accounted for 87% of the Group’s revenue, 93% of the Group’s loss before tax,
75% of the Group’s underlying loss before tax and 93% of the Group’s total assets. This gave us the evidence we neededfor our opinion on the financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds formateriality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality

US$11.4 million (2019: US$2.7 million)

How we determined it

5% of underlying loss before tax (2019: 5% of underlying profit before tax)

Rationale for benchmark applied

Based on the benchmarks used in the Annual Report, underlying loss before tax
is the primary measure used in assessing the performance of the Group.

For each component in the scope for our Group audit, we allocated a materiality that was less than our overall Groupmateriality. The range of overall materiality allocated across components was US$1.2 million to US$8.0 million.

106 Mandarin Oriental International LimitedWe use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing of account balances, classes of transactions anddisclosures, for example in determining sample sizes. Our performance materiality was 75% of overall materiality,
amounting to US$8.6 million for the Group financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount in the middle of ournormal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
US$1.1 million (2019: US$0.3 million) as well as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis ofaccounting included:
Evaluating the inherent risks to the Group’s and its businesses’ business models and analysed how those risks might
affect the Group’s financial resources or ability to continue operations over the going concern period.
Considering sensitivities over the level of available financial resources indicated by the Group’s financial forecasts
taking account of reasonably possible, but not unrealistic, adverse effects that could arise from adverse trading
conditions as a result of COVID-19 and impact the Group’s liquidity position over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern fora period of at least 12 months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s
ability to continue as a going concern.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements andour auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or any form ofassurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatementof the financial statements or a material misstatement of the other information. 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 havenothing to report based on these responsibilities.

Annual Report 2020107

Independent Auditors’ Report Continued

Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Responsibility Statement and the Corporate Governance section, the Directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due tofraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unlessthe Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK)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 financial statements.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample
is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, 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 save where expressly agreed by our prior consent in writing.
The engagement partner responsible for this independent auditors’ report is John Waters.

PricewaterhouseCoopers LLP
Chartered Accountants
London11th March 2021
a) The maintenance and integrity of the Mandarin Oriental International Limited website is the responsibility of
the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial statements since they
were initially presented on the website.
b) Legislation in Bermuda governing the preparation and dissemination of financial statements may differ fromlegislation in other jurisdictions.

108 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 ‘The Excelsior’ redevelopment site
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 2020 was US$2,528,300,000(United States Dollar Two Billion Five Hundred Twenty-Eight Million and Three 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 direct comparison method and the residual method. The direct comparison method is basedon comparing the property to be valued directly with other comparable properties. The residual method is based on anassessment of the completed gross development value and the deduction of development costs and the developer’s returnto arrive at the residual value of a development property. For the direct comparison method and the assessment of thecompleted gross development value, given the heterogeneous nature of real estate properties, appropriate adjustments areusually required to allow for any qualitative differences that may affect the price likely to be achieved by the property
under consideration.

Yours faithfully

Jones Lang LaSalle Limited
Hong Kong
19th February 2021

Annual Report 2020109

Five Year Summary

Consolidated Profit and Loss AccountRevenue

2016
US$m

2017
US$m

2018
US$m

2019
US$m

2020
US$m

597.4

610.8

613.7

566.5

183.7

Operating profit/(loss)

68.0

69.0

70.7

(29.0)(660.0)Net financing charges(10.8)(11.0)(14.2)(14.7)(12.6)

Share of results of associates and joint ventures

10.9

11.5

5.7

(1.7)

(26.8)

Profit/(loss) before tax

68.1

69.5

62.2

(45.4)(699.4)Tax(13.7)(15.0)(19.0)(10.2)

19.4

Profit/(loss) after tax

54.4

54.5

43.2

(55.6)(680.0)

Profit/(loss) attributable to shareholders

55.2

54.9

43.4

(55.5)(680.1)

Underlying profit/(loss) attributable to shareholders

57.3

54.9

64.9

41.2

(205.9)Earnings/(loss) per share (US¢)

4.40

4.37

3.44

(4.39)(53.84)

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

4.56

4.37

5.15

3.26

(16.30)

Dividends per share (US¢)

4.00

3.00

3.00

1.50

–

2016
US$m

2017
US$m

2018
US$m

2019
US$m

2020
US$m

Intangible assets

44.3

43.8

49.3

53.0

45.4

Tangible assets

1,352.1

1,272.0

1,205.9

1,174.6

1,181.5

–

284.2

342.9

300.3

297.4

Consolidated Balance Sheet

Right-of-use assets

–

–

–

2,967.7

2,528.3

Associates and joint ventures

163.8

195.7

196.1

203.1

231.6

Other investments

10.7

11.0

15.2

15.9

16.1

Deferred tax assets

2.6

11.0

11.5

10.6

17.8

Pension assets

–

4.9

0.2

1.3

5.5

Non-current debtors

–

0.5

5.1

6.2

5.1

Investment property under development

Net current assets/(liabilities)

136.6

118.5

(359.4)

181.4

19.5

Long-term borrowings(477.4)(508.1)(7.3)(568.6)(606.6)–(100.6)(161.3)(168.4)(170.1)

Deferred tax liabilities(56.1)(58.6)(61.6)(59.4)(47.1)

Pension liabilities

(3.2)

(0.6)

(0.4)

(0.2)

(0.3)

–

(0.2)

–

(0.9)

(10.9)Net assets

1,173.4

1,273.5

1,236.2

4,116.6

3,513.2

Share capital

62.8

62.9

63.1

63.2

63.2

Non-current lease liabilities

Non-current creditors

Share premium

490.4

493.9

497.8

499.7

499.7

Revenue and other reserves

616.2

710.6

671.5

3,550.1

2,946.6

1,169.4

1,267.4

1,232.4

4,113.0

3,509.5

4.0

6.1

3.8

3.6

3.7

1,173.4

1,273.5

1,236.2

4,116.6

3,513.2

0.93

1.01

0.98

3.26

2.78

2016
US$m

2017
US$m

2018
US$m

2019
US$m

2020
US$m

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

Consolidated Cash Flow Statement
Cash flows from operating activities

107.7

119.9

152.6

112.9

(83.5)Cash flows from investing activities(222.8)(102.0)(69.0)(80.4)(108.5)

Net cash flow before financing activities(115.1)

17.9

83.6

32.5

(192.0)

8.58

9.53

12.11

8.94

(6.61)Cash flow per share from operating activities (US¢)

110 Mandarin Oriental International Limited

Responsibility Statement

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

For and on behalf of the Board

James Riley
Craig Beattie
Directors
11th March 2021

Annual Report 2020111

Corporate Governance

Overview of governance approach
The Mandarin Oriental Hotel Group (Mandarin Oriental International Limited and its subsidiaries together known
as the ‘Group’) understands the value of good corporate governance to long-term sustainable success and attaches
importance to the corporate stability that strong governance brings, as well as 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 which both the Group and its stakeholders regard as
appropriate to the nature of its business and the long-term strategy it pursues in its Asian markets, and is tailored to theGroup’s size, ownership structure, complexity and breadth of business. It enables the Company to benefit from Jardine
Matheson’s strategic guidance and professional expertise, while at the same time ensuring that the independence of theBoard is respected and clear operational accountability rests with the Company’s executive management teams. Having
an effective corporate governance framework supports the Board in the delivery of the Group’s strategy and supports
long-term sustainable growth.

Group structure
Jardine Matheson is the ultimate holding company of the Group. The structural relationship between Jardine Matheson
group and the Group is considered to be a key element of the Group’s success. By coordinating objectives, establishingcommon values and standards, and sharing experience, contacts and business relationships, the Jardine Matheson groupcompanies aim to optimise their opportunities across the Asian countries where they operate.
The Company is incorporated in Bermuda, and was established as an Asian-based hotel group and has since extended
its operations to key locations around the world. The Company’s equity shares have as their primary listing a standard
listing on the Main Market of the London Stock Exchange (the ‘LSE’), and the Company’s primary regulator is the
Financial Conduct Authority of the United Kingdom (the ‘FCA’).
The Disclosure Guidance and Transparency Rules (the ‘DTRs’) issued by the FCA require that this Report addresses
all relevant information about the corporate governance practices applied by the Company and the Group beyond therequirements under Bermuda law.
The Company also has secondary listings in Singapore and Bermuda. As the Company has only secondary listings onthese exchanges, the listing rules of such exchanges are not generally applicable. Instead, the Company must release
the same information as it is required to release under the rules applicable to it as a standard listed company on the LSE,
in compliance with the rules applicable to those exchanges in Singapore and Bermuda.

112 Mandarin Oriental International Limited

Governance and legal framework
As a company incorporated in Bermuda, the Company is governed by:
The Bermuda Companies Act 1981 (the ‘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 established; andThe Company’s Memorandum of Association and Bye-laws.
The Bye-laws of the Company can be amended by the shareholders by way of a special resolution at a general meeting of
the Company.
The Company's standard listing in London means that it is bound by many of the same rules as premium-listed companies
under the UK Listing Rules, the DTRs, the Market Abuse Regulation1 (‘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 offering securities to the
public. The Company is subject to regulatory oversight from the FCA, as the Company’s principal securities regulator,
and is required to comply with the Admission and Disclosure Standards of the Main Market of the LSE. The Company
and its Directors are also subject to legislation and regulations in Singapore relating to insider dealing.
The Company is not required to comply with the UK Corporate Governance Code (the ‘Code’), which applies to all
premium-listed companies and sets out the governance principles and provisions which are expected to be followed bycompanies which are subject to the Code.
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 on the basis as was then applicable to the Company’s
premium listing. As a result, the Company has adopted a number of governance principles (the ‘Governance Principles’)based on the then applicable requirements for a premium listing, which go further than the standard listing requirements.
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 afairness 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 thatthe terms of the transaction are fair and reasonable as far as the shareholders of the Company are concerned.
Further, as soon as the terms of a significant transaction or a related party transaction are agreed, an announcement
will be issued by the Company providing such details of the transaction as are necessary for investors to evaluate
the effect of the transaction on the Company.
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.

1

The EU Market Abuse Regulation and, with effect from 1st January 2021, the UK Market Abuse Regulation.
Annual Report 2020113

Corporate Governance Continued

The management of the Group
The Board
The Board is responsible for ensuring that the Group is appropriately managed and achieves the strategic objectives it
sets, in a way that is supported by the right culture, values and behaviours throughout the Group.
The Directors have the 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 forwhich the Directors are responsible include:
Responsibility for 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 final financial statements upon recommendation from the Audit Committee, and interim
management statements;
Approval of Annual Report and Accounts;
Approval of dividend policy and amount and form of interim and final dividend payments for approval byshareholders as required;
Any significant changes to the Company’s accounting policies or practices upon recommendation from the
Audit Committee;
Appointment, reappointment or removal of the external auditor, subject to shareholder approval, upon recommendationfrom the Audit Committee;
Approval of matters relating to the 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 (other thanmajor capital expenditure which is required to be approved by the Board) has been delegated to the finance committee
established within the Hong Kong-based Group management company, Mandarin Oriental Hotel Group International
Limited (‘MOHG’).

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. Reflecting this, and the Jardine Matheson group’s 79% interest in the Company’s share capital,
the Group Chief Executive and the Managing Director meet regularly. Similarly, the board of MOHG, and its financecommittee are chaired by the Managing Director and include Mandarin Oriental Hotel Group executives as well as
Jardine Matheson’s deputy managing director, group finance director and group general counsel.

114 Mandarin Oriental International Limited

Board composition and operational management continued
The presence of Jardine Matheson representatives on the Board of the Company and on the board of MOHG, as wellas on its audit and finance committees, provides an added element of stability to the Company’s financial planning andsupervision, enhancing its ability to raise finance and take a long-term view of business development. The presence ofJardine Matheson representatives on the Company's Board and nominations committee and MOHG's audit, finance andremuneration committees also strengthens the ability of management to work effectively together in exploiting the fullrange of the Jardine Matheson group’s commercial strengths.
As at 11th March 2021, the Company comprises 13 Directors, two of whom (15%) – Jack Chen and Archie Keswick– are regarded as Independent Non-Executive Directors. Five further Non-Executive Directors – Julian Hui, Lincoln
K.K. Leong, Anthony Nightingale, James Watkins and Percy Weatherall – do not have any executive responsibilities,
nor have they been an employee of the Company or the Group within the past five years, and they are sufficiently
distanced from the day-to-day operations of the Company for the Company to take the view that they are independent
Directors, even though they have served on the Board for over nine years. The names of all the Directors and brief
biographies appear on pages 30 and 31 of this 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. James Riley has been Group Chief Executive since 1st April 2016. Ben Keswick previously held
the roles of Chairman and Managing Director on a combined basis from 16th May 2013. The Board considers that
there is a clear division of responsibilities among the Chairman, the Managing Director and the Group Chief Executive,
in order to ensure an appropriate balance of power and authority.

Chairman
The Chairman’s role is to lead the Board, ensuring its effectiveness while taking account of the interests of the Group’s
various stakeholders, and promoting high standards of corporate governance. The Chairman’s principal responsibilities
are in the areas of strategy, relationships, governance and people. He leads the Board in overseeing the long-term strategic
direction of the Group and approving its key business priorities. His key responsibilities also include:-

Leading 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 strong governance framework;
Ensuring all Directors effectively contribute to discussions and feel comfortable in engaging in healthy debate andconstructive challenge;
Ensuring all Directors receive accurate, timely and clear information; andPromoting effective communication between Executive and Non-Executive Directors.

Annual Report 2020115

Corporate Governance Continued

Managing Director
The Managing Director acts as chairman of MOHG and of its finance committee, as well as being a member of theCompany's nominations committee and the remuneration committee established in MOHG. He has responsibility for
representing Jardine Matheson, as the major shareholder in the Company, in its oversight of the day-to-day managementby the Group Chief Executive and his leadership team of the business.

Group Chief Executive
The responsibility for running the Group’s business and all the executive matters affecting the Group rests with theGroup Chief Executive. The implementation of the Group’s strategy is delegated to the Company’s executive management,with decision-making authority within designated financial parameters delegated to the MOHG finance committee.
The Group Chief Executive has day-to-day responsibility for:
The 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 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.

Board meetings
The Board usually holds four meetings each year and ad hoc procedures are adopted to deal with urgent matters whicharise between scheduled meetings. The majority of Board meetings are usually held in different locations around Asia andone Board meeting is usually held in Bermuda, at the same time as the Company’s AGM each May.
In 2020, due to travel restrictions imposed as a result of the pandemic, it was necessary to hold all four Board meetings
virtually. The Board receives high quality, up to date information for each of its meetings, which is provided to Directors
via a secure online board information portal.
The Directors of the Company who do not serve on the board of MOHG and who are based outside Asia will usually
visit Asia and Bermuda to discuss the Group’s business, as well as to participate in the four strategic reviews that precede
the regular Board meetings. In 2020, all of these strategic reviews were held virtually as a result of the pandemic. These
Directors are not directly involved in the operational management of the Group’s business activities, but their knowledgeof the Group’s affairs, as well as their experience of the wider Jardine Matheson group, provide significant value to theongoing review by the Company of the Group’s business and reinforces the Board oversight process.

116 Mandarin Oriental International Limited

Board and Committee attendanceDirectors are expected to attend all Board and Audit Committee meetings. The table below shows the attendanceat the scheduled Board and Audit Committee meetings:
Board

Audit Committee

Current Directors of the Company
Ben Keswick

4/4–

John Witt

2/2

2/2

James Riley

4/4–

Craig Beattie

4/4–

Jack Chen

3/4–

Julian Hui

4/4–

Adam Keswick

4/4–

Archie Keswick

4/4–

Lincoln K.K. Leong

4/4–

Anthony Nightingale

3/4–

Y.K. Pang

4/4

2/2

James Watkins

4/4–

Percy Weatherall

4/4–Graham Baker1–

1/1

Jeremy Parr2

4/4

2/2

Edouard Ettedgui3

2/2–

Mark Greenberg4

4/4

1/2

Lord Sassoon5

1/1–

Directors of MOHG

Former Directors of the Company

Graham Baker joined the board of MOHG on 15th June 2020.
Jeremy Parr stepped down as a Director of the Company on 3rd December 2020, who remains a director of MOHG.
3 Edouard Ettedgui retired from the Board on 6th May 2020.
4 Mark Greenberg stepped down as a Director on 31st December 2020.
5 Lord Sassoon retired from the Board on 9th April 2020.
1
2

Appointment and retirement of Directors
Each new Director is appointed by the Board and the Nominations Committee has been established to assist the Boardin such matters. In accordance with the Company’s Bye-laws, each new Director is subject to retirement and re-appointment
at the first AGM after appointment. Thereafter, Directors are subject to retirement by rotation requirements under the
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.
Simon Keswick, Lord Sassoon and Edouard Ettedgui retired from the Board with effect from 1st January, 9th April and6th May 2020, respectively. Ben Keswick stepped down as Managing Director of the Company on 15th June 2020 andremains as the Chairman. John Witt joined the Board and took on the role of Managing Director of the Company witheffect from 15th June 2020. Jeremy Parr and Mark Greenberg stepped down from the Board with effect from 3rd and31st December 2020, respectively.
In accordance with Bye-law 85, Anthony Nightingale, Y.K. Pang and Percy Weatherall retire by rotation at this year’s
AGM and, being eligible, offer themselves for re-election. In accordance with Bye-law 92, John Witt will also retire and,being eligible, offers himself for re-election. None of the Directors proposed for re-election has a service contract with
the Company or its subsidiaries.

Company Secretary
All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all
governance matters.
Annual Report 2020

117

Corporate Governance Continued

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 its respective terms of reference. Copies of these documents can be obtained from theCompany’s website at www.mandarinoriental.com.
Nominations Committee
The Board established a Nominations Committee (the ‘Nominations Committee’) in March 2021. The key responsibilitiesof the Nominations Committee are to:
Review the structure, size and composition of the Board and its committees and make recommendations on any
appointments in order to maintain a balance of skills, knowledge and experience, as well as a diversity of perspectives;
Lead the process for Board appointments and nominate suitable candidates to the Board;
Assess suitable candidates based on merit and objective criteria (giving consideration to the promotion of diversity ofbackgrounds, 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 at least annually andmore often if necessary. It plays a key role in the process of recruiting senior executives. Candidates for appointment as
Executive Directors of the Company or for other senior management positions may be sourced internally or externally,
including by using 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, andfamiliarity with, or adaptability to, Asian markets. When appointing Non-Executive Directors, the Committee pays
particular attention to the Asian business experience and relationships that they can bring.
Remuneration Committee
The Board established a Remuneration Committee (the ‘Remuneration Committee’) within MOHG in March 2021.
The key responsibilities of the Remuneration 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 as they relate to
the Group'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 Committee. The current members of the Remuneration Committee are
Ben Keswick, John Witt and Graham Baker. The Group Chief Executive and the Chief Human Resources Officer will
generally attend meetings of the Remuneration Committee. The Remuneration Committee meets at least twice annuallyand more often if necessary, with its meetings aligned with the key events in the Group’s annual remuneration cycle.

118 Mandarin Oriental International Limited

Committees continued
Audit Committee
The Board has established within MOHG an Audit Committee (the ‘Audit Committee’), the current members of which
are Y.K. Pang, Graham Baker, Jeremy Parr and John Witt. None of them is directly involved in operational management.
Graham Baker was appointed as a member of the Audit Committee with effect from 15th June 2020. Mark Greenberg
retired as a member of the Audit Committee on 31st December 2020.
The chairman, group chief executive and chief financial officer of MOHG, together with representatives of the internaland external auditors, also attend the Audit Committee meetings by invitation. Other individuals may attend part ofa meeting for specific agenda items as appropriate. The Audit Committee meets twice a year and reports to the Board
after each meeting.
The role of the Audit Committee is governed by its terms of reference. The Committee’s remit includes:
Independent oversight and assessment of financial reporting processes including related internal controls;
Risk management and compliance;
Overseeing 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.
Prior to completion and announcement of the half-year and year-end results, a review of the financial information and of
any issues raised in connection with the preparation of the results, including the adoption of new accounting policies, isundertaken by the Audit Committee with the executive management and a report is received from the external auditors.
The external auditors also have access to the full Board when necessary, in addition to the Group Chief Executive,
Chief Financial Officer and other senior executives.
The matters considered by the Audit Committee during 2020 included:-

Reviewing the 2019 annual financial statements and 2020 half-yearly financial statements, with particular focus on
the impact of COVID-19, provisioning and impairment assessments, assumptions that underpinned key valuation
models and effectiveness of financial controls;- Reviewing the actions and judgements of management in relation to changes in accounting policies and practices,to ensure clarity of disclosures and compliance with new accounting standards;- Receiving reports from the internal audit function on the status of the control environment of the Group 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, 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 and approving the revised terms of reference of the Group's internal audit and risk management functions;- 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; and- Conducting a review of the terms of reference of the Audit Committee.

Annual Report 2020

119Corporate Governance Continued

Remuneration
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 Company’s policy is to offer competitive remuneration packages to its senior
executives. It is recognised that, due to 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 toreflect this. Executive Directors joining from outside the Group may be offered an initial fixed-term service contract
to reflect any requirement for them to relocate.
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.
Remuneration in 2020
For the year ended 31st December 2020, the Directors received from the Group US$6.0 million (2019: US$6.5 million)
in Directors’ fees and employee benefits, being:
US$0.4 million (2019: US$0.8 million) in Directors’ fees;
US$5.5 million (2019: US$5.6 million) in short-term employee benefits including salary, bonuses, accommodationand deemed benefits in kind;
US$0.1 million (2019: US$0.1 million) in post-employment benefits; andNo share-based payments (2019: nil).
The information set out in the section above headed ‘Remuneration in 2020’ 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. Share options and share awards are granted by the scheme trustee after consultation between the Chairman
and the Group Chief Executive as well as other Directors as they consider appropriate. Share options are granted at thethen prevailing market prices, while share awards will vest free of payment. The share options and share awards normallyvest on or after the third anniversary of the date of grant. Grants may be made in a number of instalments. Share options
and share awards are not granted to Non-Executive Directors.

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 law, the Company also indemnifies its Directors. Neither insurance nor indemnity provides
cover where the Director has acted fraudulently or dishonestly.

Risk management and internal control
The Board has overall responsibility for the Group’s systems of risk management and internal control. The Board hasdelegated to the Audit Committee responsibility for providing oversight in respect of risk management activities. The
Audit Committee considers the Group’s principal risks and uncertainties and potential changes to the risk profile andreviews the operation and effectiveness of the Group’s systems of internal control (financial, operational and compliance)
and the procedures by which these risks are monitored and mitigated.
The Audit Committee considers the systems and procedures on a regular basis, and reports to the Board semi-annually.
The systems of internal control are designed to manage, rather than eliminate, business risk; to help safeguard theGroup’s assets against fraud and other irregularities; and to give reasonable, but not absolute, assurance against material
financial misstatement or loss. Executive management is responsible for the implementation of the systems of internal
control throughout the Group.

120 Mandarin Oriental International Limited

Risk management and internal control continued
The Group has an established risk management process which is reviewed on a regular basis and covers all business units
within the Group. This includes the maintenance of risk registers which detail the emerging and existing risks to the
future success of the business and the relevant key controls and mitigating factors which address those risks. These arereviewed 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 principal risks and uncertainties facing the Company are set out on pages 123 and 124.

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 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.

Whistleblowing policy
The Group has a whistleblowing policy covering the process by which employees can report, in confidence, matters ofserious concern. The Audit Committee has responsibility for overseeing the effectiveness of the formal procedures for
employees to raise such matters and is required to review any reports made under those procedures which are referred
to it by the internal audit function.

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

Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are clearly set
out in its Code of Conduct, which is a set of guidelines to which every employee must adhere and is reinforced andmonitored by an annual compliance certification process, and is modelled on the Jardine Matheson group’s code of
conduct. The Code of Conduct requires that all Group companies comply with all laws of general application, all rules
and regulations that are industry specific and proper standards of business conduct. The Code of Conduct prohibits thegiving or receiving of illicit payments and requires that all managers must be fully aware of their obligations under the
Code of Conduct and establish procedures to ensure compliance at all levels within their organisations.
The Company’s policy on commercial conduct underpins the Group’s internal control process, particularly in the areaof compliance. The policy is also set out in the Group’s Code of Conduct.

Annual Report 2020121Corporate Governance Continued

Inclusion and diversity
The Code of Conduct encourages inclusion and diversity, and requires all employees to be treated fairly, impartiallyand with dignity and respect. As a global hospitality employer, the Group believes in promoting equal opportunities
in recruiting, developing and rewarding its people regardless of race, gender, nationality, religion, sexual orientation,
disability, age or background. The high service expectations and overall quality of the Mandarin Oriental brandnecessitates that the Group seeks the best people from the communities in which it operates most suited to its needs.

Directors’ share interests
The Directors of the Company in office on 11th March 2021 had interests* as set out below in the ordinary sharecapital of the Company. These interests include those notified to the Company in respect of the Directors’ closely
associated persons*.
John Witt

4,894,068

James Riley

180,450

Julian Hui

10,294

Lincoln K.K. Leong

129,756* Within the meaning of MAR

Substantial shareholders
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 the Company that
person holds. The obligation to notify arises if that person acquires or disposes of shares in the Company which results inthe 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 Holdings Limited (‘Jardine Strategic’), which is directly interested in
1,003,691,509 ordinary shares carrying 79.46% 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 notaware of any holders of voting rights of 5% or more attaching to the issued ordinary share capital of the Company as
at 11th March 2021.
There were no contracts of significance with corporate substantial 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 75.

Securities purchase arrangements
The Directors have the power under the 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 theissued share capital of the Company. When the Board reviews the possibility for share repurchases, it will take into
consideration the potential for the enhancement of earnings or asset values per share. When purchasing such shares,
the Company is subject to the provisions of MAR.

Annual General Meeting
The 2021 AGM will be held on 5th May 2021. The full text of the resolutions and explanatory notes in respect of themeeting are contained in the Notice of Meeting which accompanies this Report. A corporate website is maintained
containing a wide range of information of interest to investors at www.mandarinoriental.com.

122 Mandarin Oriental International Limited

Principal Risks and Uncertainties

The Board has overall responsibility for risk management and internal control. The process by which the Group identifies
and manages risk is set out in more detail on pages 120 and 121 of the Corporate Governance section of this Report.
The following are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to theDisclosure Guidance and Transparency Rules issued by the Financial Conduct Authority in the United Kingdom andare in addition to the matters referred to in the Chairman’s Statement, Group Chief Executive’s Review and other partsof the Report.

Economic and financial risk
The Group’s business is exposed to the risk of negative developments in global and regional economies and financial
markets, either directly or through the impact on the Group’s investment partners, third-party hotel owners anddevelopers, bankers, suppliers or customers. These developments can result in recession, inflation, deflation, currency
fluctuations, restrictions in the availability of credit, business failures, or increases in financing costs. Such developments
may increase operating costs, reduce revenues, lower asset values or result in the Group being unable to meet in full its
strategic objectives. These developments could also adversely affect travel patterns which would impact demand for theGroup’s products and services.
The steps taken by the Group to manage its exposure to financial risk are set out in the Financial Review on page 29 andnote 36 to the financial statements on pages 88 to 96.

Commercial and market risk
Risks are an integral part of normal commercial activities, and where practicable steps are taken to mitigate such risks.
The Group operates within the global hotel industry which is highly competitive. Failure to compete effectively in termsof quality of product, levels of service or price can have an adverse effect on earnings. This may also include failure toadapt to rapidly evolving customer preferences and expectations. Significant competitive pressure or the oversupplyof hotel rooms in a specific market can lead to reduced margins. Advances in technology creating new or disruptivecompetitive pressures might also negatively affect the trading environment.
The Group competes with other luxury hotel operators for new opportunities in the areas of hotel management,
residences management and residences branding. Failure to establish and maintain relationships with hotel owners
or developers could adversely affect the Group’s business.
The Group also makes investment decisions in respect of acquiring new hotel properties and undertaking majorrenovations or redevelopments in its owned properties, exposing it to construction risks. The success of these investments
is measured over the longer term and as a result is subject to market risk.
Mandarin Oriental’s continued growth depends on the opening of new hotels and branded residences. Most of theGroup’s new developments are controlled by third-party owners and developers and can be subject to delays due toissues attributable to planning and construction, sourcing of finance, and the sale of residential units. In extreme
circumstances, such factors might lead to the cancellation of a project.

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

Annual Report 2020123Principal Risks and Uncertainties Continued

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

Reputational risk and value of the brand
The Group’s brand equity and global reputation is fundamental in supporting its ability to offer premium products andservices and to achieving acceptable revenues and profit margins. Any damage to the Group’s brand equity or reputation,
including as a result of negative effects relating to health and safety, acts or omissions by Group personnel, information
system and cybersecurity breaches, loss or misuse of personal data, 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.

Regulatory and political risk
The nature of the Group’s global operations mean that it is subject to numerous laws and regulations, including but
not limited to those covering employment, competition, taxation, data privacy, foreign ownership, town planning,anti-bribery, money laundering and exchange controls. Changes to laws and regulations have the potential to impact
the operations and profitability of the Group’s business. Non-compliance with laws and regulations could result infines and/or penalties. Changes in the political environment, including prolonged civil unrest in the territories where
the Group operates, could adversely affect the Group’s business.

Cybersecurity risk
The Group’s business is ever more reliant on technology in its operations and faces increasing numbers of cyberattacks
from groups targeting both individuals and businesses. The privacy and security of guests and corporate information
is at risk of being compromised through a breach of our or our suppliers’ IT systems or the unauthorised or inadvertent
release of information, resulting in brand damage, impaired competitiveness or regulatory action. Cyberattacks may also
adversely affect the Group’s ability to manage its business operations or operate information technology and businesssystems, resulting in business interruption, lost revenues, repair or other costs.

124 Mandarin Oriental International Limited

Shareholder Information

Financial calendar
2020 full-year results announced
Annual General Meeting to be held
2021 half-year results to be announced
Shares quoted ex-dividend
Share registers to be closed
2021 interim dividend payable

11th March 2021
5th May 2021
29th July 2021*
19th August 2021*
23rd to 27th August 2021*
13th October 2021** Subject to change

Dividends
In light of the substantially reduced levels of business, no final dividend in respect of the 2020 financial year will be paid.

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, 12 Castle Street, St Helier, Jersey JE2 3RT, Channel Islands

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

United Kingdom Transfer Agent
Link Group, The Registry, 10th Floor, 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 2020

125

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
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
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

126 Mandarin Oriental International Limited

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 , M I DDL E E A ST A N D A F R IC A
Emirates Palace, Abu Dhabi
West Corniche Road
Abu Dhabi, United Arab Emirates
Telephone +971 2 690 8888
Emailepauh-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
Göltürkbükü Mahallesi 314.
Sokak No. 10, 48483
Bodrum, Mugla, Turkey
Telephone +90 (252) 311 18 88
Emailmobod-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, Lago di Como
Via Caronti, 69
22020 Blevio (Co)
Italy
Telephone +39 031 32 511
Emailmocmo-reservations@mohg.com
Mandarin Oriental Hyde Park, London
66 Knightsbridge
London, SW1X 7LA
United Kingdom
Telephone +44 (0) 20 7235 2000
Emailmolon-reservations@mohg.com

Annual Report 2020127

Mandarin Oriental Hotel Group Contact Addresses Continued

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 +420 233 088 600
Emailmoprg-reservations@mohg.com
Al Faisaliah Hotel, Riyadh
PO Box 4148
King Fahad Road, Al Olaya
Riyadh 11491
Saudi Arabia
Telephone +966 11 273 2000
Emailreservations.riyadh@alfaisaliahhotels.com

128 Mandarin Oriental International Limited

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, Washington D.C.
1330 Maryland Avenue SW
Washington, DC 20024, USA
Telephone +1 (202) 554 8588
Emailmowas-reservations@mohg.com

Mandarin Oriental International Limited
mandarinoriental.com