Annual Report 2021
Mandarin Oriental Hotel Group is an international hotel investment and management group
with luxury hotels, resorts and residences in sought-after destinations around the world. Having
grown from its Asian roots over 50 years ago into a global brand, the Group now operates 36 hotels
and seven residences in 24 countries and territories, with each property reecting the Group’s oriental
heritage and unique sense of place. Mandarin Oriental regularly receives international recognition
and awards for outstanding service and quality management, and has a strong pipeline of hotels and
residences under development. e Group has equity interests in a number of its properties and
adjusted net assets worth approximately US$5.0 billion as at 31st December 2021.
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
protability and long-term shareholder value.
e parent company, Mandarin Oriental International Limited, is incorporated in Bermuda and has
a primary 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
8 Group Chief Executive’s Review
14 Operating Summary
16 Development Portfolio
18 International Brand Recognition
20 Our Sustainability Roadmap
25 Financial Review
31 Directors’ Proles
33 Financial Statements
100 Independent Auditors’ Report
108 Report of the Valuers
109 Five Year Summary
110 Responsibility Statement
111 Corporate Governance
129 Shareholder Information
130 Mandarin Oriental Hotel Group Contact Addresses
2 Mandarin Oriental International Limited
Mandarin Oriental Hotel Group
International Limited
Directors
John Witt Chairman
James Riley Group Chief Executive
Craig Beattie
(stepped down as Chief Financial Officer and
director on 31st August 2021)
Matthew Bishop Chief Financial Officer
(appointed as Chief Financial Officer and
director on 1st September 2021)
Graham Baker
Kieren Barry
Paul Clark
Joanna Flint
(joined the board on 1st July 2021)
Jill Kluge
(stepped down on 30th September 2021)
Christoph Mares
Vincent Marot
Paul Massot
Anne O’Riordan
Y.K. Pang
Jeremy Parr
Company Secretary
Jonathan Lloyd
Directors
Ben Keswick Chairman
John Witt Managing Director
James Riley Group Chief Executive
Craig Beattie
(stepped down on 31st August 2021)
Matthew Bishop
(joined the Board on 1st September 2021)
Jinqing Cai
(joined the Board on 1st December 2021)
Jack Yilun Chen
(retired on 1st December 2021)
Julian Hui
(retired on 1st December 2021)
Adam Keswick
Archie Keswick
Lincoln K.K. Leong
(retired on 1st December 2021)
Anthony Nightingale
(retired on 1st December 2021)
Y.K. Pang
Richard Solomons
(joined the Board on 1st December 2021)
James Watkins
(stepped down on 29th July 2021)
Percy Weatherall
(retired on 1st December 2021)
Company Secretary
Jonathan Lloyd
Registered Office
Corporate Information
3Annual Report 2021
Highlights
Mandarin Oriental International Limited
Much improved performance
Pandemic continues to impact results
Strong liquidity and funding position
Four hotels opened and five new projects announced
Results
Year ended 31st December
2021
US$m
2020
US$m
Change
%
Combined total revenue of hotels under management
1
1,053.5 593.0 78
Revenue 316.9 183.7 73
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)
2
40.7 (74.2) n/a
Underlying loss attributable to shareholders
3
(68.1) (205.9) 67
Revaluation loss on investment property under development (73.9) (474.9) 84
Loss attributable to shareholders (141.4) (680.1) 79
US¢ US¢ %
Underlying loss per share
3
(5.39) (16.30) 67
Loss per share (11.19) (53.84) 79
Dividends per share
4
– – –
US$ US$ %
Net asset value per share 2.62 2.78 (6)
Adjusted net asset value per share
5
3.93 4.09 (4)
Net debt/shareholders’ funds 16% 14%
Net debt/adjusted shareholders’ funds
5
10% 10%
1
Combined revenue includes turnover of the Group’s subsidiary hotels in addition to 100% of revenue from associate,
joint venture and managed hotels.
2
EBITDA of subsidiaries plus the Group’s share of EBITDA of associates and joint ventures.
3
e Group uses ‘underlying prot/loss’ in its internal nancial reporting to distinguish between ongoing business performance
and non-trading items, as more fully described in note 34 to the nancial statements. Management considers this to be a key
measure which provides additional information to enhance understanding of the Group’s underlying business performance.
4
In light of the substantially reduced levels of business due to the impact of COVID-19 pandemic, no interim and nal
dividends in respect of the 2021 and 2020 nancial years have been declared or proposed by the Board.
5
e Group’s investment property under development is carried at fair value on the basis of a valuation carried out by independent
valuers at 31st December 2021. e other freehold and leasehold interests are carried at amortised cost in the consolidated
balance sheet. Both the adjusted net asset value per share and net debt/adjusted shareholders’ funds have included the market
value of the Group’s freehold and leasehold interests.
4 Mandarin Oriental International Limited
Net debt/adjusted shareholders’ funds
Underlying EBITDA and net interest expense
US$m
US$m
US$m
US$m
Net debt
Adjusted shareholders’ funds
Net interest expense
IFRS 16 ‘Leases’ impact on EBITDA and
interest on lease liabilities
Underlying earnings before interest, tax, depreciation
and amortisation (EBITDA)
Asia
America
Europe, Middle East and Africa (EMEA)
Rooms
Food and beverage
Others
2021
593.0
278.6
76.2
238.2
2020
1,325.1
636.1
348.6
340.4
2019
1,397.6
758.7
358.0
280.9
2018
1,380.4
718.9
358.2
303.3
2017
2021
275.5
239.0
593.0
78.5
2020
718.1
491.8
1,325.1
115.2
2019
763.1
514.8
1,397.6
119.7
2018
737.4
516.9
1,380.4
126.1
2017
2021 2021
1,053.5
354.0
170.4
529.1
565.3
360.0
1,053.5
128.2
(85.4)
14.2
(74.2)
1.7
15.9
11.2
144.0
16.2
154.5
2.7
18.9
10.5
157.9
14.8
179.1
16.4
1.6
18.0
187.9
8.8
30.7
14.6
40.7
2.6
17.2
10.0
506.2
5,170.9
9.8%
300.4
5,936.1
5.1%
326.8
5,740.0
5.7%
284.7
5,826.6
4.9%
517.5
4,965.7
10.4%
Combined total revenue
by type of business
Combined total revenue
by geographical area
2017 2018 2019
2020
2020201920182017
5Annual Report 2021
Chairman’s Statement
Overview
e Group’s nancial performance in 2021 improved signicantly compared with 2020, although results remained
materially below pre-pandemic levels, with underlying losses of US$68 million. Combined total revenue of hotels
under management increased by 78% in 2021 compared to the prior year, benetting from the relaxation of travel
restrictions in most parts of the world in the second half of 2021. Travel restrictions, however, in most of East Asia
remained in place throughout the year.
Results were boosted by COVID-19-related receipts that included government support, primarily in Europe,
rent concessions in Tokyo, and business interruption insurance proceeds for hotels in the United States.
At 31st December 2021, the Group’s liquidity position remained robust.
2021 Financial performance
Underlying earnings before interest, tax, depreciation and amortisation (‘EBITDA’) were US$41 million, compared
to EBITDA losses of US$74 million in 2020. e Group’s underlying losses were reduced to US$68 million for the
year, from US$206 million in 2020. e 2020 result included a US$31 million post-tax impairment of the carrying
value of the leasehold interest in the Geneva hotel.
ere was a non-trading loss of US$74 million (US$475 million in 2020), due to a 3% decrease in the fair valuation
of the Causeway Bay site, which is being developed into a new oce and retail complex (compared with a decrease
of 15% in 2020). Accordingly, losses attributable to shareholders were US$141 million, compared to losses of
US$680 million in 2020.
e adjusted net asset value per share, which reects both the independent valuation of the Group’s owned hotel
properties and of the Causeway Bay site, was US$3.93 at 31st December 2021, a 4% decrease compared with
US$4.09 per share at the end of 2020.
At 31st December 2021, net debt was US$517 million, compared to US$506 million at the end of 2020. Gearing as
a percentage of adjusted shareholders’ funds was 10%, unchanged from 2020. e Group remains well funded with
a robust liquidity position that was strengthened with the addition of new committed facilities in 2021.
No dividend will be paid in respect of 2021.
Year in review
Performance in 2021 was better than 2020, as restrictions on travel and hospitality operations were gradually
relaxed in most countries. Performance varied by region, however, as demand remained heavily inuenced by the
extent and pace with which these restrictions were lessened.
In East Asia, restraints on international travel remained in place throughout the year, limiting most hotels to
domestic demand. In Europe and the United States, a relaxation of travel restrictions in the second half of the year
allowed business levels to improve.
EBITDA for most of the Group’s owned hotels improved, driven by both better trading conditions and government
support in some countries. Results were notably better in Hong Kong, London, Munich, Geneva, Paris, Boston and
New York. e EBITDA from the Group’s property interests in 2021 was US$24 million, compared to a loss of
US$62 million in 2020. After depreciation and interest charges, there was an underlying loss from the Group’s
property interests of US$71 million in 2021, compared to a loss of US$174 million in the prior year.
Performance of the management business improved substantially, producing an EBITDA of US$17 million
compared to a loss of US$12 million in 2020. Particularly strong management fees were earned in resort
destinations such as Bodrum and Dubai. ere was an underlying prot of US$5 million in 2021, compared
to a loss of US$30 million in the 2020.
Whilst the Group continues to maintain cost control and to seek permanent savings, its main focus is now on
rebuilding revenues and business activity levels. Capital expenditure continues to be closely scrutinised.
6 Mandarin Oriental International Limited
Development
e Group’s total number of hotels under operation has increased to 36, following the opening of its latest property
in Shenzhen in January 2022. In 2021, the Group took over the management of the Al Faisaliah Hotel in Riyadh
and opened a new hotel on the Bosphorus in Istanbul, both under management contracts. e Group also reopened
Mandarin Oriental Ritz, Madrid, in which it owns a 50% interest, after an extensive programme of restoration
and refurbishment.
e Group’s development pipeline remains robust, with 24 projects expected to open in the next ve years.
In 2021, new management contracts were announced in Da Nang, Vietnam and Hangzhou, China, in addition to
a standalone residences project in Beverly Hills. Two new deals in Costa Navarino and the Maldives have recently
been announced since the start of 2022.
Two hotels and three standalone residences projects are scheduled for opening in 2022, while the Group also
expects to rebrand the Al Faisaliah Hotel in Riyadh, as well as Emirates Palace in Abu Dhabi.
In Hong Kong, the Causeway Bay site under development remains on track to complete in 2025.
Governance enhancements
e Group has an ongoing focus on enhancing its governance, and in the past year it has made changes to the
composition of its Board, to reduce its size and to increase its diversity and bring greater sector expertise through
the appointment of new independent non-executive directors. e Group has also established formal Audit,
Remuneration and Nominations Committees.
People
On behalf of the Board, I would like to take this opportunity to express my sincere appreciation to all our colleagues
for their continuing commitment and dedication during these very challenging times. e contributions of our
colleagues are central to the Mandarin Oriental guest experience and we will remain focused on ensuring Mandarin
Oriental is an employer of choice.
Jack Chen, Julian Hui, Lincoln K.K. Leong, Anthony Nightingale and Percy Weatherall retired from the Board
in December 2021. We thank each of them for their valuable contributions over many years. With eect from
1st December 2021, Jinqing Cai and Richard Solomons have joined the Board as Independent Non-Executive
Directors and bring a wealth of relevant experience.
Craig Beattie stepped down as Chief Financial Ocer at the end of August and was succeeded by Matthew Bishop.
We would like to thank Craig for his contribution to Mandarin Oriental.
Outlook
2021 was a challenging year, as the impact and uncertainties of COVID-19 continued to restrict global travel.
However, performance improved in the second half as barriers to travel were gradually reduced in most parts of the
world. is, together with government and other pandemic-related support enabled the Group to signicantly reduce
underlying losses. Trading conditions, however, remain dicult, particularly in East Asia, and an underlying loss
is expected for the rst half of 2022. e outlook for the full year is dependent on the level of travel restrictions
implemented by governments. With its strong, globally recognised brand, loyal customer base and robust
development pipeline, Mandarin Oriental remains well positioned for long-term growth.
Ben Keswick
Chairman
3rd March 2022
7Annual Report 2021
Group Chief Executive’s Review
Key highlights
In a year that has seen continuing disruption and uncertainty as a result of the pandemic, we are pleased that the
Group has made good progress in a number of areas and was able to deliver an improved operational and nancial
performance, although results remained materially behind pre-pandemic levels.
All of our hotels were open at the end of 2021, after numerous closures and interruptions to their business during
the two preceding years. Mandarin Oriental Ritz, Madrid reopened in April to great acclaim after an extensive
restoration, a property that is sure to be a landmark European destination for many years to come. We also took
over management of the Al Faisaliah Hotel in Riyadh, opened a hotel on the Bosphorus in Istanbul and, at the start
of 2022, opened a hotel in Shenzhen. ree new deals were announced in 2021, including a standalone branded
residences project in Beverly Hills, and a further two deals have already been announced so far in 2022, adding to
the strong pipeline that we have diligently built over the last few years.
We made signicant investments in the period in our digital platforms, including the re-design of
mandarinoriental.com, and through our renewed marketing eorts were able to pass the milestone of one million
Fans of M.O., underlining the success of a programme that was rst launched in 2018. We also strengthened our
leadership team by bringing on board Joanna Flint as Chief Commercial Ocer, a new role which oversees the
development and execution of the Group’s commercial strategy while also taking executive responsibility for all
aspects of Mandarin Oriental’s customer experience. We are also delighted by the substantial progress we have
made in eectively eliminating single-use non-reusable plastics from the operations of the Group.
Our operating performance was much improved, and our hotels continue to hold market-leading positions.
Financially, while performance remains well below pre-COVID-19 levels, we were able to produce signicantly
improved results, moving from an EBITDA loss of US$74 million in 2020 to an EBITDA prot of US$41 million
in 2021. As a consequence of our property interest in many of our hotels and the associated depreciation, we remain
in an underlying loss position, although we were able to reduce this loss by over 60%, from US$206 million to
US$68 million.
2021 Performance
2021 saw a signicant improvement in the nancial performance of the Group. It was, however, well below
pre-pandemic levels due to the continued disruption caused by COVID-19. e Group reported EBITDA of
US$41 million and an underlying loss of US$68 million, a marked improvement from 2020, albeit still signicantly
below 2019 levels. e Group recorded positive EBITDA in the third and fourth quarters, the rst such positive
performances since the fourth quarter of 2019. Revenue generation and innovation, as well as cost control, remained
as key areas of focus. Capital expenditure was tightly controlled. e combined total revenue from hotels under
management was US$1,054 million, an increase of 78% over 2020, but behind the US$1,325 million recorded
in 2019.
8 Mandarin Oriental International Limited
In East Asia, border controls and restrictions on mobility and hospitality operations were in place throughout the
year. e ability to travel domestically varied depending on the extent of restrictions and hotels remained reliant
on domestic demand. As a consequence, some hotels, such as Bangkok, Kuala Lumpur and Taipei, operated at
very low levels of occupancy. e best performances were achieved in the Chinese mainland, supported by steady
domestic demand, and occupancy in Hong Kong, Singapore and Jakarta was also commendable given the stringent
restrictions imposed by governments. Despite the challenging environment, occupancy for the region increased to
35%, from 27% in 2020, while average daily rates (‘ADR’) were broadly unchanged from 2020.
In the rest of the world, whilst border controls and restrictions were in place during the rst half of the year, these
started to lessen towards the end of the second quarter as vaccination programmes accelerated. is led to increased
travel and an improvement in trading conditions. e Group’s hotels benetted from pent-up leisure demand
and the relative strength of suite bookings. Several hotels in Europe also received government support, boosting
nancial performance. In Europe, Middle East and Africa (‘EMEA’), the Group recorded occupancy of 48% in
the second half of the year and RevPAR for EMEA was up 78% for the full year, driven by a strong increase in
ADR, which rose to US$983, ahead of 2019 levels. Similarly, in America, RevPAR and ADR for the region were
up 55% and 24% compared to 2020, with ADR at US$593, also ahead of 2019 levels.
Owned hotels performance
e Group’s nancial performance is heavily dependent on the performance of its owned and partially-owned
properties. ese hotels recorded a positive EBITDA of US$24 million, but an underlying loss of US$71 million,
due to the substantial amount of depreciation attributable to the properties.
Several of the Group’s owned or partially-owned hotels are in East Asia and continued to be signicantly impacted
by stringent government restrictions on travel and movement. In particular, Hong Kong eectively remained closed
to travel in 2021 and while our agship hotel there was able to deliver positive EBITDA by competing eectively
with attractive staycation rates, the hotel posted an underlying loss. e opening of both Hong Kong’s border with
the Chinese mainland and its international border are critical for this important hotel to substantially improve its
nancial performance. e Group’s hotels in Tokyo, Jakarta, Bangkok and Kuala Lumpur all incurred EBITDA
losses, while the hotel in Singapore was EBITDA positive.
In Europe, as restrictions eased, our hotels were able to perform better. London, Munich, Geneva and Paris
achieved positive EBITDA, driven by signicantly improved demand in the second half of the year, as well as
government nancial support totalling US$36 million. Most of the Group’s owned hotels in Europe were able to
achieve underlying prot, with the exception of Madrid and London, both of which carry substantial depreciation
charges following major recent renovations.
In America, there were mixed performances at individual hotels. Miami benetted from pent-up leisure demand
and was able to achieve a positive EBITDA and record an underlying prot. New York and Boston both improved
signicantly from 2020 and almost achieved positive EBITDA. Performance in Washington D.C. was more
challenging given the hotel’s size and historic reliance on corporate and group demand, which remained weak.
e Group also received some US$3 million in insurance proceeds for business interruption at its hotels in America.
9Annual Report 2021
Group Chief Executive’s Review Continued
Management business performance
e Group’s management business reported a positive EBITDA of US$17 million and an underlying prot of
US$5 million, a marked improvement from the prior year when an EBITDA loss of US$12 million and underlying
losses of US$30 million were incurred.
Particularly strong management fees were earned in several hotels. In East Asia, e Landmark Mandarin Oriental,
Hong Kong served as a quarantine hotel and benetted from strong demand, achieving occupancy of over 60%.
Hotels on the Chinese mainland, including Shanghai and Sanya, also delivered good performances. In EMEA,
several leisure and resort destinations experienced pent-up demand, especially in destinations where restrictions on
travel were limited. Dubai and Bodrum achieved occupancies and ADR that exceeded 2019 levels, delivering record
management fees.
Near-term priorities
Over the last two years or so, we have operated with highly uncertain market conditions and this seems likely to
continue for a while. We have, however, adapted our strategy, operating models and ways of working and we believe
we are now a far more exible and agile business than previously.
In the near-term, our priorities are to rebuild business levels and win new business, enhance our ‘Colleague Experience’,
uphold the brand’s reputation for quality, and maintain our agile approach to operations to improve protability.
1) Rebuilding business: We must ensure that, as demand returns, our hotels are winning market share. As we
have seen, demand can uctuate quickly, and it is therefore critical that we are proactive and exible in how
we reach and respond to customers. Consumer behaviour is changing: direct and omni-channel bookings
have increased substantially, corporate travel remains muted and demand for leisure-oriented experiences has
rebounded strongly. We have reorganised ourselves to adapt to customer behaviours more quickly yet also need
to be ready to adjust further as trends evolve.
2) Enhancing our ‘Colleague Experience’: Our colleagues have faced enormous pressure over the last two years.
roughout the pandemic, they have continued to serve customers with passion and pride, delivering the
exceptional experiences Mandarin Oriental is renowned for. It is critical that we recognise their contribution,
by improving compensation and benets, driving engagement and providing attractive learning and career
development opportunities. Hospitality talent is in high demand, across both hotels and other industries,
and we must focus on the attraction and retention of colleagues as a strategic priority.
3) Upholding exceptional quality: Long periods of low demand have sometimes made it dicult to maintain
quality standards. Exceptional quality in service standards underpins the Mandarin Oriental brand and
we must ensure that we maintain our reputation as a leader in luxury hospitality.
4) Maintaining operational agility: We continue to rene our operating model in hotels in response to
uctuating demand. is has included a review of organisation structures and the introduction of labour
management and productivity tools. Whilst these developments will help to rebuild protability, we will
balance their use with the need to maintain our exceptional service standards and colleague morale.
10 Mandarin Oriental International Limited
Strategy –
A World of Fans
Last year, we launched our new vision – A World of Fans – and we remain condent that this vision, underpinned
by our strategic priorities, will advance both the value of the brand and the protability of the Group. rough
A World of Fans, we see an opportunity to build meaningful and long-lasting relationships with a global community
of Fans. Every customer interaction, physical or digital, is an opportunity to create a Fan – someone who spends
with us, works with us, advocates for us or aspires to experience life exceptionally with Mandarin Oriental luxury.
We believe the priorities outlined below remain the right foundation to drive long-term business performance
and growth.
1) Elevating our brand: e brand is the Group’s most powerful asset. We will grow our brand by continuing to
drive the momentum of our hotel and residences pipeline, expanding the global footprint of Mandarin Oriental.
In addition, we are starting to establish a presence beyond the four walls of our hotels, both through local hotel
activities as well as continued investments in innovative partnerships that extend the reach and value of our
brand, such as our investment in StayOne, a peer-to-peer luxury holiday home rental platform, Shop M.O.,
our online retail store and the O&MO Alliance, our strategic alliance with e Oberoi Group.
2) Powering our core: We would like to have market-leading positions in all our hotels. To achieve this, our
commercial organisation has recently been optimised to ensure we leverage the full potential of the brand’s
extensive network, and to ensure that customers receive personalised access to our full range of bespoke luxury
experiences across our portfolio. rough Fans of M.O., our industry unique customer recognition programme,
we have over one million loyal Fans allowing us to create relevant, long-lasting and mutually benecial
relationships with our customers. We are continuing to invest heavily in our digital capabilities, and we expect
further signicant improvements in our digital experience through 2022. At our hotels, we are progressing well
with our roadmap to modernise core business systems and integrate insights drawn from data into our service
delivery to continually elevate customer experiences to even higher levels.
3) Lifting our people: Our people underpin the unique luxury experience that denes Mandarin Oriental’s
service proposition. e pandemic has brought new challenges, and we must respond to the increased pressures
on our colleagues by providing work environments that are attractive, engaging and exible. At the same time,
with a robust pipeline on the horizon, our Group will experience substantial growth over the next ve years
and it is essential that we retain our cultural DNA as we welcome new colleagues into Mandarin Oriental.
Our Mandarin Oriental colleagues are extremely loyal, and in turn we are determined to reward that loyalty
by a continued commitment to maintaining an exceptional colleague workplace experience.
4) Exceptional quality: Our unwavering focus on delivering the highest standards of luxury hospitality and
experiences is at the heart of the brand’s reputation and is a pivotal competitive dierentiator. is must remain
evident from the way we design our hotels, known for creating a unique sense of place, through to the delivery of
warm, personalised and exceptional service consistently throughout our portfolio. Reinforcing our product and
service standards is ever more critical as we plan for 21 hotels and 15 residences opening in the next ve years.
11Annual Report 2021
Group Chief Executive’s Review Continued
Core values
Our core values of customer focus and sustainability are central to the culture of Mandarin Oriental. ese cut
across all facets of our strategy and are deeply engrained in Mandarin Oriental’s culture.
Customer focus
As we extend the reach of our brand, serving an increasingly diverse customer base, we embed customer focus
throughout the organisation by removing the barriers to innovation, such as unnecessary hierarchies and bureaucracy,
and encouraging risk taking and entrepreneurialism. We foster and promote collaboration, to ensure that we enable
our colleagues to constantly focus on proactively delighting our customers.
Sustainability
Our culture extends to how we serve as stewards of our communities. e Group drives sustainability commitments
that align with the United Nations Sustainable Development Goals and we are focused on three areas: the planet,
community and customers. We have integrated sustainability throughout our operations and processes, from
sustainable development discussions with owners, to environmental management systems that ensure continuous
environmental performance improvements, daily procurement decisions that embed ethical and sustainability
considerations and the empowerment of our colleagues and guests to make a dierence to our planet and
communities. We were delighted that, with the support of our colleagues, we were largely able to substantially
reduce single-use plastics from the operation of our hotels in 2021, and are on track to eliminate them in 2022,
in spite of the increased pressure to return to relying on single-use plastics due to COVID-19.
Development strategy and business development
e Group operates 36 hotels today. In 2021, three new projects were announced in Hangzhou, Da Nang and
a standalone branded residences project in Beverly Hills and two further deals in Costa Navarino and the Maldives
have been announced since the start of 2022. Whilst there have been some delays in the progression of project
developments due to the pandemic, our pipeline remains robust with 24 announced projects to open in the next
ve years, comprising nine standalone hotel projects, 12 projects with hotel and residences components and three
standalone residences projects.
Historically, as the Group was starting out and expanding its brand into key gateway cities, it was sometimes
necessary to invest equity into the ownership of an asset to secure projects. Today, with the strength of the brand,
and our track record in creating market leading hotels, this is not usually necessary. Our strategy for portfolio
expansion is therefore focused on growing through management contracts. We are seeking to diversify into resort
destinations, broaden our reach in key cities where the brand is currently absent and consolidate the brand’s
position by adding second or third hotels in certain destinations. Our projects in the Maldives and Grand Cayman
(resort destinations), Zurich (a strategically important city) and Mayfair and Dubai (second hotel in these destinations)
are examples that illustrate this. Over many years, we have successfully built a portfolio of iconic hotels and are now
seeing the benets this can bring in terms of momentum for signing new projects. We expect this momentum to
build as we seek to secure more brand dening projects and new growth opportunities.
12 Mandarin Oriental International Limited
By focusing on the management business, the Group is seeking to accelerate its pace of growth and its scale,
transitioning the business away from a reliance on property and towards hotel and brand management. Property
ownership is still a strategic option for the Group, where it can play a key role in securing projects, but this will
be done sparingly and only where alternatives are scarce. Our current portfolio of owned hotels is continuously
reviewed and, provided we are able to retain long-term management contracts, we would consider opportunities
for value realisation. is will strengthen the Group’s balance sheet and enable us to accelerate the growth of our
management business.
During the year we completed an extensive restoration of Mandarin Oriental Ritz, Madrid. Good progress was
made with the redevelopment of the site in Causeway Bay, Hong Kong which used to house e Excelsior hotel.
Completion of a new Grade A oce and retail complex remains on schedule for 2025. ere has been no change
to the Group’s strategy for this site, which is a valuable non-core asset.
Looking ahead, we expect 2022 to be an extremely busy year. We plan to open two new hotels in Mayfair and
Luzern, three standalone residences projects in New York, Beverly Hills and Barcelona, and rebrand the Al
Faisaliah Hotel and Emirates Palace. In addition to the two recently announced projects, I would also expect
a number of further projects to be signed during the year.
Our people
I would like to take this opportunity to express my appreciation to each and every one of my colleagues for the
tireless eort and dedication they have demonstrated through the enormous challenges we have faced during the
upheavals of the last two years. e commitment shown by our colleagues to delivering exceptional service to our
customers underpins Mandarin Oriental’s brand promise and is central to achieving A World of Fans.
Looking ahead
ere continue to be numerous uncertainties associated with the pandemic. We have adapted well to these
conditions and taken important steps to keep up with trends in consumer behaviours that have been accelerated
by the pandemic. We see great opportunities ahead for the Group to grow rapidly on the foundations which have
been laid over the last few years. We are extremely well positioned to grow and achieve scale as a hotel management
and brand management company, by delivering on our pipeline, continuing to build deep relationships with our
Fans, investing in our digital reach and presence, reinforcing a strong ‘Colleague Experience’, and sustaining the
exceptional quality standards that the brand is known for.
We are condent in the recovery of luxury travel, and the ability of Mandarin Oriental to deliver meaningful
long-term growth. We at Mandarin Oriental look forward to delivering exceptional experiences to A World of Fans
as barriers to travel are gradually removed.
James Riley
Group Chief Executive
3rd March 2022
13Annual Report 2021
Group’s subsidiary hotels key statistics
ASIA
Total portfolio RevPAR
Occupancy is calculated based on the number of occupied rooms out of the total number of available rooms in which
the hotel is in operation during the period. e like-for-like RevPAR presented in the table above includes all hotels
that were in the Group’s portfolio and operating during both 2020 and 2021. As Mandarin Oriental Ritz, Madrid
was closed for restoration from 28th February 2018 to 14th April 2021, it has been excluded along with any new
openings or closures during the period.
Operating Summary
US dollar
2021
US$
2020
US$
% Change
Asia 86 65 32
Europe, Middle East
and Africa 400 225 78
America 220 142 55
Total 195 116 68
Constant currency
2021
US$
2020
US$
% Change
Asia 84 65 29
Europe, Middle East
and Africa 410 225 82
America 220 142 55
Total 196 116 69
Mandarin Oriental, Tokyo 100% leasehold
2021 2020 % Change
Available rooms 179 179 –
Average occupancy (%) 28.9 36.1 (20)
Average room rate (US$) 504 594 (15)
RevPAR (US$) 145 214 (32)
Mandarin Oriental, Hong Kong 100% ownership
2021 2020 % Change
Available rooms 494 494 –
Average occupancy (%) 30.2 15.8 91
Average room rate (US$) 315 345 (9)
RevPAR (US$) 95 54 76
Mandarin Oriental, Jakarta 96.9% ownership
2021 2020 % Change
Available rooms 272 272 –
Average occupancy (%) 49.1 26.0 89
Average room rate (US$) 92 82 12
RevPAR (US$) 45 21 114
14 Mandarin Oriental International Limited
Mandarin Oriental, Boston 100% ownership
2021 2020 % Change
Available rooms 148 148 –
Average occupancy (%) 38.3 18.7 104
Average room rate (US$) 666 612 9
RevPAR (US$) 255 115 122
Mandarin Oriental, Washington D.C. 100% ownership
2021 2020 % Change
Available rooms 373 373 –
Average occupancy (%) 29.9 25.1 19
Average room rate (US$) 339 284 20
RevPAR (US$) 101 71 43
EUROPE, MIDDLE EAST AND AFRICA AMERICA
Mandarin Oriental Hyde Park, London 100% ownership
2021 2020 % Change
Available rooms 181 181 –
Average occupancy (%) 30.7 29.9 3
Average room rate (US$) 1,281 1,002 28
RevPAR (US$) 393 300 31
Mandarin Oriental, Munich 100% ownership
2021 2020 % Change
Available rooms 73 73 –
Average occupancy (%) 40.1 35.8 12
Average room rate (US$) 906 882 3
RevPAR (US$) 363 316 15
Mandarin Oriental, Paris 100% ownership
2021 2020 % Change
Available rooms 135 135 –
Average occupancy (%) 34.0 20.4 67
Average room rate (US$) 1,094 1,013 8
RevPAR (US$) 372 207 80
Mandarin Oriental, Geneva 100% ownership
2021 2020 % Change
Available rooms 178 181 (2)
Average occupancy (%) 40.2 20.0 101
Average room rate (US$) 647 542 19
RevPAR (US$) 260 108 141
15Annual Report 2021
Development Portfolio
e following 21 hotels and 15 Residences at Mandarin Oriental are expected to open in the next ve 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 most
popular leisure destinations.
Mandarin Oriental, Hangzhou
A 194-room hotel in the new Westlake 66 luxury commercial and retail complex, located close to the West Lake, a UNESCO World Heritage Site and
one of China’s primary leisure destinations, with easy access to the city’s principal business hubs.
Mandarin Oriental, Makati
A 275-room hotel located within the Ayala Triangle in Manila’s central business district of Makati.
Mandarin Oriental, Maldives
A picturesque private island resort comprising 120 stand-alone villas, including 10 branded Residences at Mandarin Oriental, with panoramic views of
the Indian Ocean.
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.
Europe, Middle East and Africa
e 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, Costa Navarino
A stunning 99-villa beachfront resort in Greece, located on the southwest coast of the Peloponnese, one of the most breath-taking landscapes in
the Mediterranean.
Mandarin Oriental Downtown, Dubai
A 259-room hotel and 266 Residences at Mandarin Oriental, located on Sheikh Zayed Road, with views over downtown Dubai and direct access to the area’s
business and leisure attractions.
Mandarin Oriental Etiler, Istanbul
A 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.
16 Mandarin Oriental International Limited
Europe, Middle East and Africa continued
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, currently closed 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.
America
Mandarin Oriental, Boca Raton
A 163-room hotel and 88 Residences at Mandarin Oriental, part of a mixed-use complex, surrounded by Boca Raton’s most affluent, residential
neighbourhoods and a short walk from miles of pristine beaches.
Mandarin Oriental, Grand Cayman
A 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, Beverly Hills, at 9200 Wilshire Boulevard
54 elegantly-appointed residences centrally located in a sleek mid-rise property close to Rodeo Drive’s renowned shopping and entertainment choices.
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.
17Annual Report 2021
International Brand Recognition
Mandarin Oriental continues to be recognised as one of
the world’s most esteemed luxury hotel brands. In 2021,
the Group received numerous international awards and
accolades from leading publications, travel associations
and related platforms. Key achievements included the
Group’s recognition as one of the ‘Best Hotel Brands’
by Travel + Leisure and 25 properties featured in
Condé Nast Traveller’s ‘Readers’ Choice Awards’.
In 2021, the innovation of 16 restaurants across the
Group were honoured in the Michelin guides, with
25 stars granted, seven of which received the highly
coveted two-star rating. e Group’s continued
commitment to excellence in wellness was also
highlighted, including Forbes awarding 14 hotels
with ‘Five Star Spa’ status.
Mandarin Oriental Hotel Group
For almost 60 years, Mandarin Oriental Hotel Group
has been leading the way in luxury hospitality, gaining
accolades from its highly-rated service and hospitality
oerings. Delivering personal service, luxurious rooms
and suites and award-winning spas and hospitality
venues, Mandarin Oriental Hotel Group has long
been synonymous with luxury accommodation and
oriental charm.
The Market Herald, Australia
Mandarin Oriental, Hong Kong
ere are many reasons Mandarin Oriental has been
topping the world’s best hotels list for nearly seven
decades, but one is its location in Central, where it sits
at the heart of the city, both geographically and socially.
e lobby is a spectacle: lashings of black marble,
opulent chandeliers, magnicent artworks, smart
business people brokering deals and others clip-clopping
to the superb spa.
National Geographic Traveller
Mandarin Oriental, Tokyo
High above the city is Mandarin Oriental, Tokyo.
Slick, sexy and grown up, it boasts one of the nest spas
in the world, Michelin starred dining and ‘room fairies’
who leave gifts in your room. Heaven.
Country & Town House, UK
is is Japan, tip-top service is a given, but nowhere
does it better than Mandarin Oriental… this place
stands out high above the competition.
Condé Nast Traveler, US
Emirates Palace, Abu Dhabi
As the most recognizable landmark on Abu Dhabi’s
skyline, Emirates Palace embodies the opulence and
tradition of Arabic hospitality and the renowned
excellence of Mandarin Oriental in a one-of-a-kind
resort experience.
A&E, Middle East
Mandarin Oriental, Barcelona
Cleverly designed to be so central and yet so private,
Mandarin Oriental, Barcelona manages to strike the
balance between city break and tranquil retreat.
Luxury London, UK
Mandarin Oriental Jumeira, Dubai
With its drive to innovate and commitment to delight,
Mandarin Oriental Jumeira, Dubai is always a joy to
check in to. Overlooking the Arabian Gulf and in
a prime location facing a private beach, to absorb all
the energy of the Dubai skyline, this hotel provides
everything you could desire for a short or a longer visit.
Forbes
18 Mandarin Oriental International Limited
Mandarin Oriental Bosphorus, Istanbul
ere’s a new queen of the Bosphorus… Mandarin
Oriental has created a seamless experience for both
leisure and business travelers, cultivating an oasis of
calm with a frisson of exhilaration.
New York Post
For excitement of a totally cosmopolitan sort, look
to Istanbul, where the newest member of the Mandarin
Oriental stable has sprung up at the edge of the
Bosphorus. Long and low, it’s more urban resort than
metropolitan hotel, thanks not least to MO’s long and
superlative form with spa – here, there’s an impressive
3,500 sq m of it, including two hammams (naturally)
and water-based treatments, to complement the three
pools. e bars and restaurants come instead under
the aegis of Novikov – part Italian, part Asian and
wholly glam.
Financial Times
Mandarin Oriental, Lago di Como
Nestled between a luxuriant botanical park and the
lake, the resort is the embodiment of a seductive blend
of Italian style, oriental charm and natural beauty. It’s
the kind of place where you want to dress-for-dinner or,
better yet, lakeside aperitive.
Esquire, Hong Kong
Lady of the Lake: Located on the shores of one of Italy’s
most picturesque stretches of water, Mandarin Oriental,
Lago di Como blends Italian and Asian elegance in a
breathtaking historic location … Whether it’s for a stay,
a spa day or a sunset aperitivo, Mandarin Oriental,
Lago di Como is a must-visit for anyone exploring the
Lombardy region.
Prestige, Asia
Mandarin Oriental Ritz, Madrid
I had expected excellence when I arrived, but not to also
nd a hotel that felt so newly fresh and relevant while
recapturing what had originally made it so special.
DestinAsian
With what must be the best sta-to-guest ratio in Europe,
it is more than good, it is exemplary. Longstanding
sta have stayed and new ones, courtesy of Mandarin
Oriental, have arrived. It means the hotel ticks the
boxes on soul and service. Is it worth it? Denitely.
Condé Nast Traveller, UK
Mandarin Oriental, Milan
Location is everything…Sit outside in the tranquil,
secret courtyard for an aperitivo or a classic risotto alla
Milanese – you’d never guess you’re in the city centre…
it’s a top notch urban retreat.
Travel + Leisure
Mandarin Oriental, Boston
Mandarin Oriental, Boston allows guests to enjoy the
intimate service and luxury of the Mandarin Oriental
brand whilst residing in the most vibrant and stylish
parts of the city.
Durrah, Middle East
19Annual Report 2021
Our Sustainability Roadmap
In 2007, the Intergovernmental Panel on Climate
Change (‘IPCC’) declared global warming to be
unequivocal and that human activities were very likely
to be driving climate change. In the very same year,
Mandarin Oriental started taking steps to measure
and reduce our environmental footprint. is initial
focus on resource eciency was both in line with our
core Guiding Principle of ‘Acting with Responsibility’
and a pragmatic move that benets our bottom line.
As a pioneer in embracing environmental sustainability
within the luxury hospitality industry, our sustainability
programme has steadily progressed over the years to
incorporate a good balance of environmental, social
and governance components.
Mandarin Oriental’s goal is to pursue all things
Naturally Better for the Planet, Guests, Colleagues
and our Communities. In 2021, we renewed our
sustainability strategy. We reected on our past
learnings to enhance our governance structure and
processes, expanded our sustainability commitments
in alignment with our Naturally Better pillars and
the United Nations Sustainability Development Goals
(‘SDGs’), and set goals that are tailored to the Group
and the unique circumstances of each property for
greater success and impact.
With the passing of our 2020 Environmental Targets,
we established a new paradigm to push for greater
strides in environmental stewardship and identied
new 2030 Environmental Targets. In the past, we set
common targets for all hotels. Moving forward, every
hotel will work towards a specic set of environmental
targets that consider its unique circumstances and
priorities. Each year, every hotel will need to implement
an eciency initiative, or enhance an existing one,
that contributes to measurable improvements toward
its identied priority.
In 2021, despite the ongoing impact of the COVID-19
pandemic on our industry and daily lives, Mandarin
Oriental has remained steadfast in pursuing our
sustainability commitments and we are proud to
share our achievements. We had set an ambitious
goal of single-use plastic elimination by March 2021
before we realised that COVID-19 was going to hit.
We fell short of our original goal but are still pushing
through our commitment and aim to eliminate 99%
of single-use plastic by the end of 2022. Fullling
this commitment would mean an avoidance of over
921 tonnes of plastic waste every year. Some of the
continuing challenges we face include the hygiene
mandates of local authorities, guest perception of
single-use plastic products as a safer choice and the
diculty in addressing a myriad of plastic packaging
from suppliers. In response to these challenges, we have
communicated our rigorous cleaning and sanitisation
procedures with local authorities and guests, and
collaborated with suppliers to identify solutions. While
our relatively small footprint limits our contribution to
global plastic reduction, we are in a strong position to
drive important changes in the industry.
In the last few years, we have also been working to
source more responsibly across our priority categories.
Our procurement colleagues spend time understanding
the origins of our coee, tea, vanilla and cocoa to
ensure that they are ethically sourced. Every hotel
also has sustainable seafood goals, which include
not serving endangered seafood species identied by
the World Wildlife Fund (‘WWF’) to be of greatest
concern, and increasing their oerings of sustainable
seafood. We strive to oer seafood certied to
eco-labels of the highest level of credibility, recognised
by the Global Sustainable Seafood Initiative (‘GSSI’),
as a rst choice. Where such options are not readily
available, we explore other sustainability eco-labels
that are locally reputable and consider other sustainable
traits, such as species conservation status and shing
methods. Hotels use a variety of paper products across
their operations and we have actively reduced paper
usage through the introduction of new contactless
digital processes. We also source sustainably certied
paper wherever we can. Guests can expect to see us
deepen and expand our responsible procurement
commitments as we continue to advance on
this journey.
20 Mandarin Oriental International Limited
1
We exceeded some of our 2030 Environmental Targets due to reduced business levels in 2021 under the COVID-19 context. We recognise
use of renewables.
Performance highlights
FOR THE PLANET
Goals 2021 Achievements
1
Energy and carbon
By 2030:
• Reduce energy intensity by 30%
• Reduce carbon intensity by 50%
• Achieve at least 15% renewable energy use
• 31% energy intensity reduction against 2012 baseline
• 30% carbon intensity reduction against 2012 baseline
•
Water
By 2030, reduce water intensity by 40% • 17% water intensity reduction against 2012 baseline
• 100% of hotels offer a Green Linen Programme, where
linens are changed every third day by default unless the
guest has other preferences
Waste
By 2030, reduce waste intensity by 50% • 51% waste intensity reduction against 2012 baseline
Our people are our most prized assets. In 2021,
we continued to maintain the highest levels of health
and safety standards for our guests and colleagues
via our ‘We Care’ programme. We also took steps to
further embed diversity and inclusion within our
company culture. Initiatives included conversations on
the topic with senior leaders and various engagement
eorts to understand what diversity and inclusion
means to all colleagues. ese eorts would inform
our actions to better foster a harmonious, respectful,
passionate and nurturing culture in which everyone
feels personally valued.
is year, we expanded our brand standards,
Legendary Quality Experiences (‘LQEs’), with
a new set of four sustainability standards which
reect the four Naturally Better pillars. We also rolled
out sustainability content on our website for all hotels
to oer guests a better understanding of the sustainable
oerings unique to each. Prior to their arrival, guests
can choose to partake in our linen and towel reuse
programme, bring their own toiletries or request
accessible rooms via the Fans of M.O. programme.
21Annual Report 2021
Our Sustainability Roadmap Continued
FOR THE PLANET continued
Goals 2021 Achievements
1
Environmental project
By 2022, 100% of hotels to implement at least one
environmental project with measurable energy, carbon,
water or waste performance improvements
• 15% of hotels generate on-site renewable energy
• 71% of hotels promote use of electric cars by offering
charging stations
• Over 20% of hotels have installed food waste digesters
Single-use plastic
By 2022, eliminate 99% of single-use plastics • Addressed challenges including delays in plastic
stock depletion
• Encouraged suppliers to reduce plastic packaging
and switch to reusable alternatives
Responsible procurement
By 2022, offer 100% responsibly sourced coffee,
tea, vanilla and cocoa
• 90% responsibly sourced coffee
• 90% responsible sourced tea
• 94% responsible sourced cocoa
• 83% responsible sourced vanilla
•
guest rooms)
By 2022, stop serving MOHG Avoid List of endangered
seafood species
2
and increase sourcing of sustainably
• Expansion of MOHG Avoid List of endangered seafood
species to align with WWF’s Endangered Species Guide
•
by GSSI for the highest level of credibility worldwide
By 2023, offer 100% cage-free eggs
2
•
progress across our hotels
2
Goal is applicable across all Mandarin Oriental-operated food & beverage operations.
22 Mandarin Oriental International Limited
FOR GUESTS
Goals 2021 Achievements
Health, safety & security
Maintain world-class health, safety and security standards •
hygiene standards of our ‘We Care’ programme
• 100% of hotels are audited against our Safe and
Sound programme
Guest satisfaction & sustainability
Engage guests in sustainability •
four new Sustainability-related brand standards
• Achieved a guest satisfaction rate of 88% for MOHG’s
sustainability programme
• Introduced new sustainability webpages to inform guests
of every hotel’s sustainable offerings
FOR COLLEAGUES
Goals 2021 Achievements
Health, safety & well-being
Promote colleague health, safety and well-being • Introduced Mental Health First Aiders
• Ongoing implementation of ‘We Care’ programme of
enhanced health and safety protocols across all hotels
• 100% of hotels organised a wide range of colleague
wellness activities including Global Wellness Day and
Colleague Wellness Week to promote physical and
mental well-being
Learning & development
Support colleague learning of relevant sustainability issues • Sustainability e-learning rolled out to 100% of colleagues
• Mandatory training conducted on Data Security and
Code of Conduct, which include anti-harassment and
whistleblowing policy
Diversity & inclusion
Embed diversity and inclusion in our culture • Established a Lean In Circle for senior females to support
and learn from one another
• Conducted learn-and-listen sessions with colleagues to
understand what diversity and inclusion means to them
23Annual Report 2021
Our Sustainability Roadmap Continued
FOR COMMUNITIES
Goals 2021 Achievements
Social impact
100% of hotels to implement at least one social project
with measurable social impacts
• 153 social impact initiatives conducted by colleagues
• Over US$450,000
3
donated through concerted efforts
from colleagues and the Mandarin Oriental Foundation
• Over 3,000 volunteer hours dedicated by colleagues
•
crockery) donated
• Over 10,000 kg of food and beverages donated
• Over 600 kg of soap donated
through fund matching programme, FANtastic Match
• FANtastic Match bonus contribution of US$64,000 from
the Mandarin Oriental Foundation
•
Voices for the Children and Franciscan Children’s
Culture
Promote cultural preservation by maintaining strong
•
Fellowship 2021 was awarded to Wu Jian’an, a celebrated
artist who extends the traditional Chinese medium of
paper cut into contemporary art
3
Inclusive of FANtastic Match bonus contribution of US$64,000.
24 Mandarin Oriental International Limited
Financial Review
e Group uses underlying
1
earnings before interest,
tax, depreciation and amortisation (‘EBITDA’) to
analyse operating performance. As a result of improved
revenue in the year and continued cost control, as well
as government support received, the Group achieved
positive underlying EBITDA of US$41 million,
a signicant improvement compared to the underlying
EBITDA loss of US$74 million in 2020. Underlying
EBITDA, by business activity, including the Group’s
share of underlying EBITDA from associates and joint
ventures is shown below:
2021
US$m
2020
US$m
Owned hotels
– Subsidiary hotels 26 (49)
– Associates and joint ventures
2
(2) (13)
Management business 17 (12)
Underlying EBITDA 41 (74)
Owned hotels
e Group has an equity interest in 15 hotel properties,
which represent the majority of the Group’s
consolidated revenue and EBITDA. In 2021, the
Owned hotels reported EBITDA of US$24 million,
a signicantly improved performance compared to
an EBITDA loss of US$62 million in 2020. However,
operating and nancial performance remains behind
pre-COVID-19 levels as movement restrictions and
social distancing measures continue to have an impact.
EBITDA included US$41 million of government
nancial support and US$10 million of other income
from insurance proceeds and rental relief recognised
within EBITDA, compared to US$40 million of
government nancial support and US$6 million
of other income recognised in 2020.
Results
Overall
In 2021, the Group’s nancial performance continued
to be disrupted by the impact of COVID-19. Generally,
performance improved as the year progressed, but this
varied by region, depending on government measures
in response to the pandemic. In the rst half of
the year, governments in most markets restricted
international travel and hotels catered largely to
domestic demand, negatively impacting business
performance. Towards the end of the second quarter,
these restrictions were gradually lifted in Europe,
Middle East and Africa (‘EMEA’), and America,
and the Group’s hotels benetted from the return
of international travel. In Asia, restrictions remained
in place for most of the year which resulted in soft
performance with the exception of Mainland China
which continued to show robust domestic demand.
Combined total revenue from all hotels under
management was US$1,054 million, a 78% increase
over 2020 as the market recovered and trading
conditions improved, although still 20% below
pre-COVID-19 levels. e Group’s consolidated
revenue for 2021 was US$317 million, an increase
of 73% from 2020. Almost all of the Group’s owned
hotels achieved higher revenues in 2021, and revenue
from the managed hotels improved by 83%, compared
with 2020.
Most of the cost measures implemented at the
beginning of the pandemic continued into 2021 and
non-essential costs across hotels and the corporate
organisation remained tightly controlled. Payroll
measures implemented in select markets such as
furlough, reduced work schedules or unpaid leave were
relaxed in the second half of the year, as demand began
to return.
1
e Group uses ‘underlying prot/loss’ in its internal nancial reporting to distinguish between ongoing business performance and
non-trading items, as more fully described in note 34 to the nancial statements. Management considers this to be a key measure which
provides additional information to enhance understanding of the Group’s underlying business performance.
2
Associates and Joint Ventures results include contribution from Stay One Degree Limited, an online booking service platform for luxury
homes and Chaophaya Development Corporation Limited, part of the River City Shopping Complex in Bangkok.
25Annual Report 2021
Financial Review Continued
Subsidiary hotels
e Group’s results from its subsidiary hotels were
as follows:
2021
US$m
2020
US$m
Underlying EBITDA from
subsidiary hotels 26 (49)
Less: depreciation and amortisation (60) (107)
Underlying operating loss (34) (156)
Less: net financing charges (11) (11)
tax (5) 19
Underlying loss attributable
to shareholders (50) (148)
In 2021, the Group reported revenue of US$279 million
and EBITDA of US$26 million from subsidiary hotels,
compared to revenue of US$161 million and an EBITDA
loss of US$49 million in 2020.
In EMEA, London, Munich, Geneva and Paris achieved
signicantly higher revenues than 2020, particularly
in the second half of 2021 when international travel
restrictions were relaxed, and these hotels generated
the majority of the subsidiary hotels’ EBITDA.
ey benetted from government nancial support.
London also benetted from insurance proceeds
relating to the 2018 re.
In Asia, extensive border controls and social distancing
regulations remained broadly in place throughout
the year which signicantly restricted hospitality
operations. is aected the Group’s key revenue and
EBITDA generating hotels in Hong Kong and Tokyo.
Both hotels generated higher revenues than 2020 but
did not experience a signicant recovery. e Tokyo
hotel was challenged by long periods of closed borders
and signicant restrictions on domestic movement.
Whilst the Hong Kong hotel was able to achieve a
positive EBITDA performance, its results remained
signicantly lower than pre-COVID-19 levels.
In America, although restrictions were relaxed and
international travel recovered, corporate and group
demand was muted and this impacted the performance
of the Boston and Washington D.C. hotels.
Owned hotels’ depreciation and amortisation, which
is a non-cash item, was substantially lower than
2020 which included a US$45 million accelerated
depreciation and amortisation charges relating to the
impairment of the Geneva hotel.
Net nancing charges were in line with 2020. Taxation
for 2021 was US$5 million, compared to a tax credit of
US$19 million in 2020, which reected a deferred tax
credit of US$14 million in relation to the impairment
in Geneva as well as US$5 million of deferred tax
credits in the Hong Kong and London hotels.
Underlying losses incurred were US$50 million and
US$148 million in 2021 and 2020 respectively.
Associates and joint ventures
e Group’s share of results from associates and joint
ventures were as follows:
2021
US$m
2020
US$m
Underlying EBITDA from associates
and joint ventures (2) (13)
Less: depreciation and amortisation (15) (13)
Underlying operating loss (17) (26)
Less: net financing charges (5) (3)
tax – 2
Share of results of associates and
joint ventures (22) (27)
Revenue from associates and joint ventures was
US$194 million in 2021 compared to US$115 million
in 2020, an increase of 69%. is was driven by the
reopening of Mandarin Oriental Ritz, Madrid as
well as by the hotels in Miami and New York which
generated signicantly higher revenue from the
26 Mandarin Oriental International Limited
relaxation of restrictions on international travellers.
is was oset by soft revenues in Bangkok and Kuala
Lumpur. Bangkok was particularly aected by border
closures that were in place throughout the second,
third and most of the fourth quarter.
EBITDA losses from associates and joint ventures
were US$2 million compared to EBITDA losses of
US$13 million in 2020. e Bangkok and Madrid hotels
were the primary contributor to losses from associates
and joint ventures in 2021. e Madrid hotel was
closed for restoration work prior to the reopening in
mid-April 2021. Singapore and Miami produced positive
EBITDA. In Singapore, performance was improved by
government payroll support and third-party contracts
won to support Singapore’s quarantine centres. Miami
benetted from strong leisure demand, substantially
improving its performance compared to last year, when
it was near breakeven.
e Group’s share of depreciation, amortisation and
net nancing charges of associates and joint ventures
were broadly in line with 2021.
Management business
2021
US$m
2020
US$m
Underlying EBITDA from
management business 17 (12)
Less: depreciation and amortisation (9) (18)
Underlying operating profit/(loss) 8 (30)
Less: net financing charges (1) –
tax (2) –
Underlying profit/(loss) attributable
to shareholders 5 (30)
e management business, growth of which is a focus
of the Group, benets from hotel management fees and
residences branding fees. It contributed US$17 million
in underlying EBITDA, US$29 million higher than
the previous year.
Total management fees were 79% higher than the
prior year, reecting the improved market conditions
which allowed a recovery in combined total revenue.
Resort destinations were the key contributors to the
increase in total management fees collected with
strong performance in the Dubai and Bodrum hotels,
both of which exceeded pre-COVID-19 levels, and
also in the Abu Dhabi hotel. Hotels in Shanghai,
Sanya and Guangzhou also performed considerably
better than 2020 from improved domestic demand
within Mainland China. Landmark Hong Kong
benetted from the quarantine business and delivered
signicantly higher fees for the Group compared to
the previous year.
Residences branding fees are generally earned when
individual residences are sold or certain development
milestones are achieved. e majority of branding fees
received in 2021 and 2020 related to the Group’s
standalone residences project in Bangkok. Residences
branding fees were higher in 2021, compared to 2020,
benetting from the Group’s projects in Moscow,
Tel Aviv, Da Nang, and London. e Group has
a strong pipeline of residences projects to support
branding fees in the future.
Included in the management business is the net
cost of the Group’s central sales and marketing and
brand activities, which are funded by marketing
and advertising contributions from hotels based
on a percentage of hotel revenues. In 2021, sales
and marketing activities recorded a marginally
positive EBITDA.
Depreciation costs in the management business
decreased signicantly by US$9 million compared
to 2020. In 2020, depreciation costs included the
write-o of capitalised development project and
digital platform costs.
27Annual Report 2021
Financial Review Continued
Underlying earnings attributable to shareholders
e underlying loss attributable to shareholders is
as follows:
2021
US$m
2020
US$m
Subsidiary hotels (50) (148)
Share of results of associates and
joint ventures (22) (27)
Management business 5 (30)
Property development (1) (1)
Total underlying loss attributable
to shareholders (68) (206)
In 2021, the Group incurred an underlying loss of
US$68 million, including the Group’s ownership
share of associates and joint ventures, a substantial
improvement on the US$206 million underlying loss
recorded in 2020.
Non-trading items
2021
US$m
2020
US$m
Changes in fair value of investment
property under development (74) (475)
Changes in fair value of
other investments 1 1
Total (73) (474)
Net non-trading losses of US$73 million were
recorded in 2021, mainly related to a 3% decrease in
the fair market value of the Causeway Bay site under
development (previously the site of e Excelsior hotel
in Hong Kong), valued at US$2.5 billion at the end of
2021. In 2020, non-trading losses of US$474 million
were recognised also primarily in relation to the
Causeway Bay site under development, which
represented a 15% decrease of the valuation of the
site from some US$3.0 billion at the end of 2019.
Cash ow
e Group’s consolidated cash ows are summarised
as follows:
2021
US$m
2020
US$m
Operating activities 26 (84)
Investing activities
Capital expenditure on
existing properties (15) (39)
Redevelopment of the Causeway
Bay site (20) (22)
Refund on Munich expansion 13 –
Net advances to associates and
joint ventures (4) (40)
Purchase of intangible assets (6) (5)
Other – (2)
Financing activities
Net drawdown of borrowings 64 88
Other (3) (6)
Net increase/(decrease) in cash 55 (110)
Cash and cash equivalents
at 1st January 165 271
Effect of exchange rate changes (7) 4
Cash and cash equivalents
at 31st December 213 165
Gross debt at 31st December (730) (671)
Closing net debt at 31st December (517) (506)
e Group’s cash inows from operating activities were
US$26 million in 2021 compared to a cash outow
of US$84 million in 2020 primarily due to improved
operating performance.
Under investing activities, capital expenditure
on existing properties was US$15 million in 2021,
a signicant decrease compared to 2020. Capital
expenditure continues to be carefully controlled
and the Group aims to balance cash conservation
with investing for quality and long-term returns.
28 Mandarin Oriental International Limited
In 2021, capital expenditure primarily related to the
creation of new facilities at the Hong Kong hotel of
US$7 million and the new food and beverage oering
at the London hotel of US$3 million. During the year,
the Group decided to withdraw from the expansion
project of Mandarin Oriental, Munich and as a result
received a cash refund on the deposits of land and
related costs of US$13 million.
In 2021, US$20 million was invested into the
Causeway Bay site under development, similar to
the quantum of investment in 2020. e Group is
committed to investing another US$550 million to
the project from 2022 to 2025, which will be funded
through an appropriate mix of external debt and
existing cash reserves.
Net advances to associates and joint ventures of
US$4 million in 2021 were to fund operating losses
incurred in the New York and Madrid hotels. is is
substantially lower than US$40 million of advances
in 2020, which primarily related to a US$31 million
funding for the restoration of the Madrid hotel.
Dividends
In light of the continuing reduced levels of business
due to the impact of COVID-19 pandemic, no interim
and nal dividends in respect of the 2021 and 2020
nancial years have been declared or proposed by
the Board.
Treasury activities
e Group manages its exposure to nancial risk using
a variety of techniques and instruments. e main
objective is to manage exchange and interest rate risks
and to provide a degree of certainty in respect of costs.
At the end of 2021, the Group had xed or capped
interest rates on 37% of its gross borrowings. In respect
of specic hotel nancing, borrowings are normally
taken in local currency to hedge partially the investment
and the projected income. At 31st December 2021,
the Group’s net assets were denominated in the
following currencies:
Shareholders’ funds/
net assets
Adjusted
shareholders’ funds/
net assets*
US$m % US$m %
Hong Kong dollar 2,170 65 3,157 63
Euro 583 18 773 16
United States dollar 186 6 241 5
United Kingdom sterling 198 6 377 8
Singapore dollar 64 2 225 4
Thai baht 9 – 69 1
Swiss franc 62 2 63 1
Indonesian rupiah 9 – 28 1
Others 28 1 33 1
Total 3,309 100 4,966 100
* See supplementary information section below.
e Group, excluding associates and joint ventures,
had committed borrowing facilities totalling
US$1,024 million, of which US$730 million was
drawn at 31st December 2021. e principal amounts
due for repayment are as follows:
Facilities
committed
US$m
Facilities
drawn
US$m
Unused
facilities
US$m
Within one year 2 2 –
Between one and two years 258 87 171
Between two and three years 763 640 123
Between three and four years – – –
Between four and five years – – –
Beyond five years 1 1 –
1,024 730 294
29Annual Report 2021
Financial Review Continued
At 31st December 2021, consolidated net debt was
US$517 million and gearing was 16%, marginally
higher than consolidated net debt of US$506 million
at 31st December 2020 which was 14% of shareholders’
funds, as a result of substantially improved operating
cash ows in the year oset by continued investment in
the Causeway Bay site under development. Taking into
account the fair market value of the Group’s freehold
and leasehold interests (which are accounted for at
historical cost less depreciation) gearing was 10% of
adjusted shareholders’ funds at 31st December 2021,
compared to 10% in the prior year.
With US$294 million of committed, undrawn facilities
in addition to its cash balances of US$213 million,
the Group’s liquidity remains strong. e average tenor
of the Group’s borrowings was 2.1 years compared to
3.2 years in 2020.
Interest cover
EBITDA is used as an indicator of the Group’s
ability to service debt and nance its future capital
expenditure, although there are no cash-based
covenants in the Group’s debt facilities. Interest cover
3
in 2021 was 2.0 times compared with 8.6 times in
2019. Interest cover was not meaningful in 2020
due to the EBITDA loss incurred.
Supplementary information
Although the Group’s accounting policy in respect
of 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 on an annual basis the fair market values
in conjunction with independent appraisers. e fair
market value of both freehold and leasehold land and
buildings is used by the Group to calculate adjusted
net assets, which the Directors believe gives important
supplementary information regarding net asset value
per share and gearing as shown in the table adjacent.
e decrease in 2021 adjusted shareholders’ funds
was primarily due to the total loss attributable to
shareholders of US$141 million, more than half of
which was related to the 3% decrease in valuation of
the Causeway Bay site under development.
2021 2020
US$m
Per share
US$ US$m
Per share
US$
Shareholders’ funds/
net assets
3,309 2.62 3,510 2.78
Add: surplus for fair
market value of
freehold and leasehold
land and buildings
1,657 1.31 1,661 1.31
Adjusted shareholders’
funds/net assets
4,966 3.93 5,171 4.09
Principal risks and uncertainties
A review of the principal risks and uncertainties facing
the Group is set out on pages 125 to 128.
Accounting policies
e Directors continue to review the developments in
International Financial Reporting Standards (‘IFRS’)
and their impact on the Group’s accounting policies.
e accounting policies adopted are consistent with those
of the previous year, except that the Group has adopted
the ‘Interest Rate Benchmark Reform – Phase 2 :
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16’ in relation to measurement of nancial assets,
nancial liabilities and lease liabilities, and a number of
reliefs for hedging relationships, and ‘COVID-19 Related
Rent Concessions beyond 30th June 2021: Amendment
to IFRS 16 Leases’ in relation to rent concession, where
the Group is a lessee. is is more fully detailed in
the note 1(b) ‘Basis of preparation’ in the nancial
statements. e adoption of the amendment does not
have a material eect on the nancial statements.
Matthew Bishop
Chief Financial Ocer
3rd March 2022
3
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 nancing charges
(including the Group’s share of net nancing charges from associates and joint ventures) before the deduction of capitalised interest and
excluding interest on lease liabilities.
30 Mandarin Oriental International Limited
Ben Keswick Chairman
Ben Keswick, 49, 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
and Hongkong Land from 2012 to 2020. Ben has
held a number of executive positions since joining
the Jardine Matheson group in 1998, including
nance director and then chief executive ocer of
Jardine Pacic between 2003 and 2007 and group
managing director of Jardine Cycle & Carriage until
2012. He is executive chairman of Jardine Matheson
and chairman of Dairy Farm, Hongkong Land and
Jardine Cycle & Carriage. Ben is also a director of
Yonghui Superstores and a commissioner of Astra.
He has an MBA from INSEAD.
John Witt
*
Managing Director
John Witt, 58, rejoined the Board as Managing
Director in June 2020, having previously served as the
Chief Financial Ocer between 2000 and 2010.
He has been with the Jardine Matheson group since
1993 and has held a number of senior nance positions,
including group nance director of Jardine Matheson
from 2016 to 2020 and the chief nancial ocer of
Hongkong Land from 2010 to 2016. John is chairman
of Jardine Matheson Limited, group managing
director of Jardine Matheson and managing director
of Dairy Farm and Hongkong Land. He is also
a director of Jardine Pacic and Jardine Motors,
and a commissioner and chairman of the executive
committee of Astra. John is a Chartered Accountant
and has an MBA from INSEAD.
James Riley
*
Group Chief Executive
James Riley, 60, joined the Board as Group Chief
Executive in 2016. He has previously held a number
of senior executive positions in the Jardine Matheson
group since joining from Kleinwort Benson in 1993.
A Chartered Accountant, he was group nance director
of Jardine Matheson from 2005 to 2016. He has
been a director of Mandarin Oriental Hotel Group
International since 2005. He was a non-executive
director of the Hongkong and Shanghai Banking
Corporation from 2012 to 2016.
Matthew Bishop
*
Matthew Bishop, 45, joined the Board as Chief
Financial Ocer in September 2021. A Chartered
Accountant, he joined the Jardine Matheson group in
2009 and held a number of senior nance positions
across the group, including most recently group
treasurer of Jardine Matheson since January 2019.
He was previously a diplomat with the Foreign &
Commonwealth Oce in Beijing and London.
Jinqing Cai
Jinqing Cai, 54, joined the Board in December 2021.
She is the president, Greater China at Kering, a member
of international advisory board of the New York
Philharmonic Orchestra and a board member of Teach
for China. Jinqing was former president and chairman
of Christie’s China.
* Executive Director
Directors’ Profiles
31Annual Report 2021
Continued
Adam Keswick
Adam Keswick, 49, joined the Board in 2012. Having
joined Jardine Matheson in 2001, he was appointed to
the Jardine Matheson board in 2007 and was deputy
managing director from 2012 to 2016. Adam is a
director of Dairy Farm and Hongkong Land. He is
also a director of Ferrari NV, Schindler and Yabuli
China Entrepreneurs Forum and vice chairman of
the supervisory board of Rothschild & Co.
Archie Keswick
Archie Keswick, 41, joined the Board in 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 e Landmark Mandarin
Oriental, Hong Kong.
Y.K. Pang
Y.K. Pang, 61, joined the Board in 2016. He is deputy
managing director and chairman of Hong Kong of
Jardine Matheson, and chairman of Jardine Pacic.
He previously held a number of senior executive
positions in the Jardine Matheson group, which
he joined in 1984, including chief executive of
Hongkong Land between 2007 and 2016. Y.K. is also
deputy chairman of Jardine Matheson Limited, and
a director of Gammon, Hongkong Land, Jardine
Matheson (China) and Greatview. He is chairman of
the Hong Kong Tourism Board and the Hong Kong
Management Association, and a member of the
Council and General Committee of the Hong Kong
General Chamber of Commerce and the Employers’
Federation of Hong Kong.
Richard Solomons
Richard Solomons, 60, joined the Board in December
2021. He is the chairman of Rentokil Initial plc and
non-executive chairman of Hotelbeds Group S.L.U.
Richard was previously the chief executive ocer of
InterContinental Hotels Group plc and a non-executive
director of Aston Martin Lagonda Global Holdings plc
and Marks and Spencer Group plc.
32 Mandarin Oriental International Limited
for the year ended 31st December 2021
Consolidated Profit and Loss Account
2021 2020
Note
Underlying
business
performance
US$m
Non-trading
items
US$m
Total
US$m
Underlying
business
performance
US$m
Non-trading
items
US$m
Total
US$m
Revenue 2 316.9 316.9 183.7 183.7
Cost of sales (261.3 ) 261.3 ) (233.0 ) 233.0 )
Gross profit/(loss) 55.6 55.6 (49.3 ) 49.3 )
Selling and distribution costs (20.7 ) 20.7 ) (31.4 ) 31.4 )
Administration expenses (104.1 ) 104.1 ) (97.5 ) 97.5 )
Other operating income/(expense) 43.2 0.6 43.8 (7.6 ) 0.7 (6.9 )
Change in fair value of investment
property under development 12 73.9 ) (73.9 ) – (474.9 ) (474.9 )
Operating loss 3 (26.0 ) (73.3 ) (99.3 ) (185.8 ) (474.2 ) (660.0 )
Financing charges (13.8 ) 13.8 ) (14.2 ) 14.2 )
Interest income 1.1 1.1 1.6 1.6
Net financing charges 4 (12.7 ) 12.7 ) (12.6 ) 12.6 )
Share of results of associates
and joint ventures 5 (21.8 ) 21.8 ) (26.8 ) 26.8 )
Loss before tax (60.5 ) (73.3 ) (133.8 ) (225.2 ) (474.2 ) (699.4 )
Tax 6 (7.6 ) 7.6 ) 19.4 19.4
Loss after tax (68.1 ) (73.3 ) (141.4 ) (205.8 ) (474.2 ) (680.0 )
Attributable to:
Shareholders of the Company 7&8 (68.1 ) (73.3 ) (141.4 ) (205.9 ) (474.2 ) (680.1 )
Non-controlling interests 0.1 0.1
(68.1 ) (73.3 ) (141.4 ) (205.8 ) (474.2 ) (680.0 )
US¢ US¢ US¢ US¢
Loss per share 7
– basic (5.39 ) (11.19 ) (16.30 ) (53.84 )
– diluted (5.39 ) (11.19 ) (16.30 ) (53.84 )
33Annual Report 2021
Note
2021
US$m
2020
US$m
Loss for the year (141.4 ) (680.0 )
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans 16 3.5 5.2
Tax on items that will not be reclassified 6 (0.6 ) (0.9 )
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
– net (losses)/gains arising during the year (70.7 ) 80.0
Cash flow hedges
– net gains/(losses) arising during the year 11.6 (11.4 )
Tax relating to items that may be reclassified 6 (1.3 ) 1.9
Share of other comprehensive (expense)/income of associates and joint ventures (2.0 ) 1.8
(62.4 ) 72.3
Other comprehensive (expense)/income for the year, net of tax (59.5 ) 76.6
Total comprehensive expense for the year (200.9 ) (603.4 )
Attributable to:
Shareholders of the Company (200.7 ) (603.9 )
Non-controlling interests (0.2 ) 0.5
(200.9 ) (603.4 )
for the year ended 31st December 2021
Consolidated Statement of Comprehensive Income
34 Mandarin Oriental International Limited
at 31st December 2021
Consolidated Balance Sheet
Note
2021
US$m
2020
US$m
Net assets
Intangible assets 9 46.7 45.4
Tangible assets 10 1,098.2 1,181.5
Right-of-use assets 11 273.3 297.4
Investment property under development 12 2,462.0 2,528.3
Associates and joint ventures 13 201.5 231.6
Other investments 14 16.5 16.1
Deferred tax assets 15 13.7 17.8
Pension assets 16 7.1 5.5
Non-current debtors 17 8.9 5.1
Non-current assets 4,127.9 4,328.7
Stocks 5.3 6.0
Current debtors 17 68.8 71.7
Current tax assets 2.2 3.1
Bank and cash balances 18 212.8 164.6
Current assets 289.1 245.4
Current creditors 19 (157.2 ) (144.6 )
Current borrowings 20 (2.5 ) (64.2 )
Current lease liabilities 21 (6.3 ) (7.0 )
Current tax liabilities (9.9 ) (10.1 )
Current liabilities (175.9 ) (225.9 )
Net current assets 113.2 19.5
Long-term borrowings 20 (727.8 ) (606.6 )
Non-current lease liabilities 21 (147.4 ) (170.1 )
Deferred tax liabilities 15 (50.1 ) (47.1 )
Pension liabilities 16 (0.3 ) (0.3 )
Non-current creditors 19 (3.2 ) (10.9 )
Non-current liabilities (928.8 ) (835.0 )
Total equity
Share capital 24 63.2 63.2
Share premium 25 500.5 499.7
Revenue and other reserves 2,745.1 2,946.6
Shareholders’ funds 3,308.8 3,509.5
Non-controlling interests 3.5 3.7
Approved by the Board of Directors
James Riley
Matthew Bishop
Directors
3rd March 2022
35Annual Report 2021
for the year ended 31st December 2021
Consolidated Statement of Changes in Equity
Share
capital
US$m
Share
premium
US$m
Capital
reserves
US$m
Revenue
reserves
US$m
Asset
revaluation
reserves
US$m
Hedging
reserves
US$m
Exchange
reserves
US$m
Attributable to
shareholders of
the Company
US$m
Attributable to
non-controlling
interests
US$m
Total
equity
US$m
2021
At 1st January 63.2 499.7 260.3 (240.3 ) 2,943.4 (9.7 ) (7.1 ) 3,509.5 3.7 3,513.2
Total comprehensive
income
Transfer – 0.8 (1.2 ) 0.4 – – – – – –
At 31st December 63.2 500.5 259.1 (377.7 ) 2,943.4 0.9 (80.6 ) 3,308.8 3.5 3,312.3
2020
At 1st January 63.2 499.7 260.3 434.8 2,943.4 – (88.4 ) 4,113.0 3.6 4,116.6
Total comprehensive
income
Change in interest
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
Revenue reserves as at 31st December 2021 included cumulative fair value loss on the investment property under
development of US$616.1 million (2020: US$542.2 million).
36 Mandarin Oriental International Limited
for the year ended 31st December 2021
Consolidated Cash Flow Statement
Note
2021
US$m
2020
US$m
Operating activities
Operating loss 3 (99.3 ) (660.0 )
Depreciation, amortisation and impairment 68.5 124.2
Other non-cash items 28a 71.2 472.8
Movements in working capital 28b 0.9 1.4
Interest received 0.4 1.8
Interest and other financing charges paid (13.5 ) (14.1 )
Tax paid (1.8 ) (9.6 )
Cash flows from operating activities 26.4 (83.5 )
Investing activities
Purchase of tangible assets (15.3 ) (38.9 )
Additions to investment property under development (19.7 ) (21.6 )
Purchase of intangible assets (6.1 ) (5.3 )
Refund on Munich expansion 28c 13.0 –
Purchase of other investments (0.3 ) (0.6 )
Purchase of an associate 28d – (2.0 )
Advance to associates and joint ventures 28e (7.1 ) (40.5 )
Repayment of loans to associates and joint ventures 28f 3.0 0.4
Cash flows from investing activities (32.5 ) (108.5 )
Financing activities
Drawdown of borrowings 20 130.6 88.4
Repayment of borrowings 20 (66.4 ) (0.1 )
Principal elements of lease payments 28g (3.3 ) (6.0 )
Cash flows from financing activities 60.9 82.3
Net increase/(decrease) in cash and cash equivalents 54.8 (109.7 )
Cash and cash equivalents at 1st January 164.6 270.7
Effect of exchange rate changes (6.6 ) 3.6
Cash and cash equivalents at 31st December 28h 212.8 164.6
37Annual Report 2021
1 Going concern and basis of preparation
a) Going concern
e Group’s operations and nancial performance were severely impacted by the unprecedented decline in both
international and domestic travel since the COVID-19 pandemic began. Prior to the pandemic the Group had signicant
headroom in its committed debt facilities and cash balances available to nance operating losses, which was increased
with new debt facilities in February 2021.
Operating conditions generally improved towards the end of 2021, with 34 hotels open in the second quarter and
additions of two new hotels in Bosphorus, Istanbul and Shenzhen in August 2021 and January 2022 respectively.
In 2021, the Group recorded a total cash inow from operating activities of US$26 million, a signicant improvement
from a total cash outow from operating activities of US$84 million in 2020.
A return of protability by the Group will be dependent on the level of travel restrictions that are maintained by governments.
e Group’s balance sheet is underpinned by 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$5.0 billion at 31st December 2021.
At 31st December 2021, the Group had total liquidity of US$507 million, comprising US$294 million of undrawn
committed facilities and US$213 million of cash balances. e Group’s facilities are not subject to any cash ow
covenants and had an average remaining tenor of 2.1 years. is robust liquidity position enables the Group to sustain a
prolonged downturn in the hospitality industry should that eventuate as well as meet its capital commitments. Overall,
the Group’s balance sheet position remains strong.
In adopting the going concern basis for preparing the nancial statements, the Directors have considered a stress-test
cash ow forecast which assumes the majority of the Group’s hotels operate at substantially reduced levels of business as a
consequence of travel restrictions maintained by governments for a period of 12 months from the date of approval of the
nancial statements.
Having considered the outcome of the stress-test cash ow forecast, the Directors are of the opinion that the Group has
sucient nancial resources to continue operating for a period of at least 12 months from the date of approval of the
nancial statements. Accordingly, the nancial statements have been prepared on a going concern basis.
Notes to the Financial Statements
38 Mandarin Oriental International Limited
1 Going concern and basis of preparation continued
b) Basis of preparation
e nancial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’),
including International Accounting Standards (‘IAS’) and Interpretations adopted by the International Accounting
Standards Board. e nancial statements have been prepared on a going concern basis and under the historical cost
convention except as disclosed in the accounting policies.
Details of the Group’s principal accounting policies are included in note 34.
e Group has adopted the following amendments for the annual reporting period commencing 1st January 2021.
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
(eective 1st January 2021)
e amendments provide practical expedient from certain requirements under the IFRSs as a result of the reform which
aect the measurement of nancial assets, nancial liabilities and lease liabilities, and a number of reliefs for hedging
relationships. e Group applied the amendments from 1st January 2021 and there is no signicant impact on the
Group’s consolidated nancial statements.
COVID-19 Related Rent Concessions beyond 30th June 2021: Amendment to IFRS 16 Leases (eective 1st April 2021)
e Group adopted and applied the practical expedient of the COVID-19 Related Rent Concessions: Amendment to
IFRS 16 Leases, published in June 2020 (‘2020 amendment’), in the 2020 annual nancial statements. e 2021 amendment
extends the practical expedient in the 2020 amendment to eligible lease payments due on or before 30th June 2022. By
using the 2021 amendment, the Group continues to apply the practical expedient consistently to all lease contracts with
similar characteristics and in similar circumstances, and does not assess these concessions as lease modications.
Apart from the above, there are no other amendments which are eective in 2021 and relevant to the Group’s operations,
that have a signicant impact on the Group’s results, nancial position and accounting policies.
e Group has not early adopted any standard, interpretation or amendments that have been issued but not yet eective
(refer note 35).
e principal operating subsidiaries, associates and joint ventures have dierent functional currencies in line with the
economic environments of the locations in which they operate. e functional currency of the Company is United States
dollars. e consolidated nancial statements are presented in United States dollars.
e Group’s reportable segments are set out in note 2.
39Annual Report 2021
Notes to the Financial Statements Continued
2 Segmental information and revenue
Operating segments are identied 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.
e Group has three (2020: three) distinct business activities: Hotel ownership, Hotel & Residences branding and
management, and Property development which form the basis of its operating and reportable segments. e Property
development segment represents the redevelopment of e Excelsior site as a commercial building following the closure
of e Excelsior, Hong Kong on 31st March 2019 (the ‘Causeway Bay site under development’). e redevelopment is
expected to complete in 2025.
In addition, e Group is operated on a worldwide basis in three (2020: three) regions: Asia, Europe, Middle East and
Africa (‘EMEA’), and America. e Group’s segmental information for non-current assets is set out in note 23.
2021
US$m
2020
US$m
Analysis by business activity
– Hotel ownership 278.9 161.4
– Hotel & Residences branding and management 48.5 27.1
– Less: intra-segment revenue (10.5) (4.8)
316.9 183.7
Analysis by geographical area
– Asia 132.4 96.9
– EMEA 137.8 66.1
– America 46.7 20.7
316.9 183.7
From contracts with customers
– Recognised at a point in time 111.5 72.5
– Recognised over time 185.6 94.8
297.1 167.3
From other sources
– Rental income 19.8 16.4
316.9 183.7
Contract balances
Setup costs in order to secure long-term hotel management contracts are capitalised under intangible assets and amortised
in prot and loss when the related revenue is recognised. Management reviews the capitalised costs on a regular basis and
expects the setup costs to be recoverable.
Contract liabilities primarily relate to the advance consideration received from customers relating to gift cards and
advance customer deposits for hotel services, for which revenue is recognised when the goods and services are provided
to the customers.
Contract liabilities are further analysed as follows:
2021
US$m
2020
US$m
Contract liabilities (refer note 19)
– Gift cards 11.2 10.3
– Advance customer deposits and other 12.1 20.8
23.3 31.1
40 Mandarin Oriental International Limited
2 Segmental information and revenue continued
Revenue recognised in relation to contract liabilities
Revenue recognised in the current year relating to carried-forward contract liabilities:
2021
US$m
2020
US$m
Gift cards 10.0 10.4
Advance customer deposits and other 11.8 5.9
21.8 16.3
Revenue expected to be recognised on unsatised contracts with customers
Timing of revenue to be recognised on unsatised performance obligations:
Gift
cards
US$m
Advance
customer
deposits
and other
US$m
Total
US$m
2021
Within one year 4.3 16.4 20.7
Between one and two years 4.6 1.7 6.3
Between two and three years 1.4 – 1.4
Between three and four years 0.6 – 0.6
Between four and five years 0.3 – 0.3
11.2 18.1 29.3
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
41Annual Report 2021
Notes to the Financial Statements Continued
3 EBITDA (earnings before interest, tax, depreciation and amortisation)
and operating loss from subsidiaries
2021
US$m
2020
US$m
Analysis by business activity
– Hotel ownership 25.9 (49.2)
– Hotel & Residences branding and management 16.6 (12.4)
Underlying EBITDA from subsidiaries 42.5 (61.6)
Non-trading items (refer note 8)
Change in fair value of investment property under development (73.9) (474.9)
Change in fair value of other investments 0.6 0.7
(73.3) (474.2)
EBITDA from subsidiaries (30.8) (535.8)
Underlying depreciation, amortisation and impairment from subsidiaries (68.5) (124.2)
Operating loss (99.3) (660.0)
Analysis by business activity
– Hotel ownership 26.5 (48.5)
– Hotel & Residences branding and management 16.6 (12.4)
– Property development (73.9) (474.9)
EBITDA from subsidiaries (30.8) (535.8)
– Hotel ownership (34.0) (158.7)
– Hotel & Residences branding and management 8.6 (26.4)
– Property development (73.9) (474.9)
Operating loss (99.3) (660.0)
Analysis by geographical area
– Asia (8.6) (18.6)
– EMEA 59.7 (10.5)
– America (8.6) (32.5)
Underlying EBITDA from subsidiaries 42.5 (61.6)
e 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$30.9 million, which was reected in the underlying loss of 2020.
42 Mandarin Oriental International Limited
3 EBITDA (earnings before interest, tax, depreciation and amortisation)
and operating loss from subsidiaries continued
2021
US$m
2020
US$m
The following items have been credited/(charged) in arriving at operating loss:
Rental income (refer note 10) 19.8 16.4
Amortisation of intangible assets (refer note 9) (5.8) (13.7)
Depreciation and impairment of tangible assets (refer note 10) (55.0) (97.6)
Amortisation/depreciation and impairment of right-of-use assets (refer note 11) (7.7) (12.9)
Employee benefit (expense)/credit
– salaries and benefits in kind (192.2) (176.2)
– defined benefit pension plans (refer note 16) (3.4) (3.6)
– defined contribution pension plans (1.4) (1.6)
(197.0) (181.4)
Net foreign exchange (losses)/gains (1.3) 1.3
Expenses relating to low value leases (0.5) –
Expenses relating to short-term leases (0.9) (0.5)
Expenses relating to variable lease payments not included in lease liabilities (2.4) (2.1)
Subleases income – 0.2
Auditors’ remuneration
– audit (1.6) (1.7)
– non-audit services (0.7) (0.7)
(2.3) (2.4)
In relation to the COVID-19 pandemic, the Group received government grants and rent concessions of US$35.8 million
(2020: US$31.9 million) and US$3.4 million (2020: US$2.3 million) respectively for the year ended 31st December 2021.
ese subsidies were accounted for as other operating income.
43Annual Report 2021
Notes to the Financial Statements Continued
2021
US$m
2020
US$m
Interest expense
– bank loans (9.8) (11.2)
– interest on lease liabilities (2.2) (1.9)
Commitment and other fees (1.8) (1.1)
Financing charges (13.8) (14.2)
Interest income 1.1 1.6
Net financing charges (12.7) (12.6)
5 Share of results of associates and joint ventures
EBITDA
US$m
Depreciation
and
amortisation
US$m
Operating
(loss)/
profit
US$m
Net
financing
charges
US$m
Tax
US$m
Net
loss
US$m
2021
Analysis by business activity
– Hotel ownership (1.7) (14.5) (16.2) (4.5) (0.4) (21.1)
– Other (0.1) (0.6) (0.7) – – (0.7)
(1.8) (15.1) (16.9) (4.5) (0.4) (21.8)
Analysis by geographical area
– Asia (2.2) (10.0) (12.2) (2.3) 1.5 (13.0)
– EMEA (2.5) (2.8) (5.3) (0.7) (1.9) (7.9)
– America 2.9 (2.3) 0.6 (1.5) – (0.9)
(1.8) (15.1) (16.9) (4.5) (0.4) (21.8)
2020
Analysis by business activity
– Hotel ownership (12.9) (12.7) (25.6) (3.2) 2.4 (26.4)
– Other 0.3 (0.6) (0.3) (0.1) – (0.4)
(12.6) (13.3) (25.9) (3.3) 2.4 (26.8)
Analysis by geographical area
– Asia 0.7 (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)
In relation to the COVID-19 pandemic, the results of associates and joint ventures included the Group’s share
of government grants and rent concessions of US$1.4 million (2020: US$3.7 million) and US$0.1 million
(2020: US$0.1 million) respectively for the year ended 31st December 2021.
44 Mandarin Oriental International Limited
6 Tax
2021
US$m
2020
US$m
Tax (charged)/credited to profit and loss is analysed as follows:
– current tax (2.5) 0.6
– deferred tax (refer note 15) (5.1) 18.8
(7.6) 19.4
Analysis by business activity
– Hotel ownership (5.8) 19.5
– Hotel & Residences branding and management (1.8) (0.1)
(7.6) 19.4
Analysis by geographical area
– Asia (2.0) 0.5
– EMEA (4.8) 20.6
– America (0.8) (1.7)
(7.6) 19.4
Reconciliation between tax expense and tax at the applicable tax rate*:
Tax at applicable tax rate 27.3 122.7
Income not subject to tax
– change in fair value of other investments 0.1 0.1
– other items 3.3 0.4
Expenses not deductible for tax purposes
– change in fair value of investment property under development (12.2) (78.3)
– impairment of Mandarin Oriental, Geneva – (6.3)
– other items (3.5) (5.0)
Tax losses and temporary differences not recognised (18.9) (24.6)
Utilisation of previously unrecognised tax losses and temporary differences 1.3 0.4
Recognition of previously unrecognised tax losses and temporary differences 1.4 –
Deferred tax assets written off (2.9) (2.2)
Deferred tax liabilities written back
– impairment of Mandarin Oriental, Geneva – 14.4
– other items 1.4 –
Withholding tax (2.9) (2.6)
Overprovision in prior years 0.5 0.4
Change in tax rates (2.5) –
(7.6) 19.4
Tax relating to components of other comprehensive income is analysed as follows:
Remeasurements of defined benefit plans (0.6) (0.9)
Cash flow hedges (1.3) 1.9
(1.9) 1.0
Deferred tax in 2020 included a credit of US$14.4 million in relation to the impairment of Mandarin Oriental, Geneva
(refer note 3).
e results of associates and joint ventures included the Group’s share of tax charges of US$0.4 million (2020: tax credits
of US$2.4 million) (refer note 5).
* The applicable tax rate for the year was 24% (2020: 18%) and represents the weighted average of the rates of taxation prevailing in the
territories in which the Group operates.
45Annual Report 2021
Notes to the Financial Statements Continued
7 Loss per share
Basic loss per share is calculated using loss attributable to shareholders of US$141.4 million (2020: US$680.1 million)
and the weighted average number of 1,263.4 million (2020: 1,263.2 million) shares in issue during the year.
Diluted loss per share is calculated using loss attributable to shareholders of US$141.4 million (2020: US$680.1 million)
and the weighted average number of 1,263.8 million (2020: 1,263.2 million) shares in issue after adjusting for the
number of shares which are deemed to be issued for no consideration under the share-based long-term incentive plans
based on the average share price during the year.
e weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2021 2020
Weighted average number of shares for basic loss per share calculation 1,263.4 1,263.2
Adjustment for shares deemed to be issued for no consideration
under the share-based long-term incentive plans 0.4 –
Weighted average number of shares for diluted loss per share calculation 1,263.8 1,263.2
Additional basic and diluted loss per share are also calculated based on underlying loss attributable to shareholders.
A reconciliation of loss is set out below:
2021 2020
US$m
Basic loss
per share
US¢
Diluted loss
per share
US¢ US$m
Basic loss
per share
US¢
Diluted loss
per share
US¢
Loss attributable to shareholders (141.4) (11.19) (11.19) (680.1) (53.84) (53.84)
Non-trading items (refer note 8) 73.3 474.2
Underlying loss attributable
to shareholders (68.1) (5.39) (5.39) (205.9) (16.30) (16.30)
8 Non-trading items
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
2021
US$m
2020
US$m
Change in fair value of investment property under development (73.9) (474.9)
Change in fair value of other investments 0.6 0.7
(73.3) (474.2)
46 Mandarin Oriental International Limited
9 Intangible assets
Goodwill
US$m
Computer
software
US$m
Development
project
contract costs
US$m
Total
US$m
2021
Cost 23.9 32.7 25.3 81.9
Amortisation and impairment – (23.7) (12.8) (36.5)
Net book value at 1st January 23.9 9.0 12.5 45.4
Exchange differences – 0.1 (0.1) –
Additions – 4.4 2.7 7.1
Amortisation charge – (3.5) (2.3) (5.8)
Net book value at 31st December 23.9 10.0 12.8 46.7
Cost 23.9 29.2 28.2 81.3
Amortisation and impairment – (19.2) (15.4) (34.6)
23.9 10.0 12.8 46.7
2020
Cost 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
Exchange differences – 0.1 0.1 0.2
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
Amortisation and impairment – (23.7) (12.8) (36.5)
23.9 9.0 12.5 45.4
Management has performed an impairment review of the carrying amount of goodwill at 31st December 2021.
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 ows. Cash ow projections for
the 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
6% to 11% to forecast cash ows over a ve-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 vary
across 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 ow projections. e discount rates used reect business
specic risks relating to the business life-cycle and geographical location. On the basis of these reviews, management
concluded that no impairment exists.
e amortisation charges are all recognised in arriving at operating prot and are included in cost of sales, selling and
distribution costs, administration expenses and other operating expense.
e amortisation periods for intangible assets are as follows:
Computer software 3 to 5 years
Development project contract costs 20 to 40 years
47Annual Report 2021
Notes to the Financial Statements Continued
10 Tangible assets
Freehold
properties
US$m
Properties on
leasehold
land &
leasehold
improvements
US$m
Plant &
machinery
US$m
Furniture,
equipment &
motor vehicles
US$m
Total
US$m
2021
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)
Net book value at 1st January 838.1 195.4 50.9 97.1 1,181.5
Exchange differences (32.7) (4.2) (2.5) (2.9) (42.3)
Additions – 1.3 0.2 12.5 14.0
Reclassification – (0.7) (0.3) 1.0 –
Depreciation charge (11.8) (12.9) (5.6) (24.7) (55.0)
Net book value at 31st December 793.6 178.9 42.7 83.0 1,098.2
Cost 915.4 370.7 131.2 300.0 1,717.3
Depreciation and impairment (121.8) (191.8) (88.5) (217.0) (619.1)
793.6 178.9 42.7 83.0 1,098.2
2020
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)
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
Management performed an impairment review of the carrying amount of Mandarin Oriental, Geneva in 2020 because
impairment indicators existed. Cash ow projections for the impairment review were based on value-in-use calculations
using updated hotel forecasts (including the following year’s hotel budget) with assumptions updated for the prevailing
market conditions, and were discounted appropriately. On the basis of this review, management concluded that
impairment charges of US$45.3 million were required and recognised in prot and loss in 2020. ese were reected in
the accelerated depreciation charge for the leasehold property of US$41.9 million and the accelerated amortisation charge
for the leasehold land of US$3.4 million in 2020 (refer note 11).
48 Mandarin Oriental International Limited
10 Tangible assets continued
Freehold properties include a hotel property of US$93.5 million (2020: US$98.1 million), which is stated net of tax
increment nancing of US$18.0 million (2020: US$18.8 million) (refer note 22).
Rental income from properties and other tangible assets amounted to US$19.8 million (2020: US$16.4 million)
(refer note 3).
e maturity analysis of the undiscounted lease payments to be received after the balance sheet date are as follows:
2021
US$m
2020
US$m
Within one year 19.4 19.7
Between one and two years 18.7 17.0
Between two and five years 42.3 31.4
Beyond five years 27.1 35.0
107.5 103.1
At 31st December 2021, the carrying amount of hotel properties pledged as security for bank borrowings amounted to
US$449.0 million (2020: US$462.8 million) (refer note 20).
49Annual Report 2021
Notes to the Financial Statements Continued
11 Right-of-use assets
Leasehold
land
US$m
Properties
US$m
Total
US$m
2021
Cost 144.6 253.1 397.7
Amortisation/depreciation and impairment (12.2) (88.1) (100.3)
Net book value at 1st January 132.4 165.0 297.4
Exchange differences (0.8) (15.6) (16.4)
Additions – 0.2 0.2
Disposals – (0.2) (0.2)
Amortisation/depreciation charge (0.4) (7.3) (7.7)
Net book value at 31st December 131.2 142.1 273.3
Cost 143.6 228.2 371.8
Amortisation/depreciation and impairment (12.4) (86.1) (98.5)
131.2 142.1 273.3
2020
Cost 145.9 249.7 395.6
Amortisation/depreciation and impairment (9.9) (85.4) (95.3)
Net book value at 1st January 136.0 164.3 300.3
Exchange differences 0.7 8.1 8.8
Additions – 1.2 1.2
Amortisation/depreciation and impairment charge (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
Amortisation/depreciation and impairment (12.2) (88.1) (100.3)
132.4 165.0 297.4
e amortisation/depreciation charge in 2020 included an accelerated amortisation of US$3.4 million related to the
impairment of the leasehold land of Mandarin Oriental, Geneva (refer note 10).
At 31st December 2021, the carrying amount of leasehold land pledged as security for bank borrowings amounted to
US$122.3 million (2020: US$123.2 million) (refer note 20). None of the other right-of-use assets have been pledged at
31st December 2021 and 2020.
e typical lease term associated with the right-of-use assets are as follows:
Leasehold land 20 to 895 years
Properties 2 to 30 years
50 Mandarin Oriental International Limited
12 Investment property under development
Under development leasehold
commercial property
2021
US$m
2020
US$m
At 1st January 2,528.3 2,967.7
Exchange differences (15.0) 12.1
Additions 22.6 23.4
Change in fair value (73.9) (474.9)
At 31st December 2,462.0 2,528.3
e Group measures its investment property at fair value. e fair value of the Group’s investment property under
development has been determined on the basis of a valuation carried out by independent valuers who hold a recognised
relevant professional qualication and have recent experience in the location and segment of the investment property
valued. e Group employed Jones Lang LaSalle to value its commercial investment property in Hong Kong which is
held under leases with unexpired lease terms of more than 20 years. e 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. e Report
of the Valuers is set out on page 108. e valuation is comprehensively reviewed by the Group.
Fair value measurements of under development leasehold commercial property using signicant
unobservable inputs
Fair value of investment property under development is derived using the direct comparison method and the residual
method with equal weighting. e direct comparison method is based on comparing the property to be valued directly
with other comparable properties, which have recently sold. e residual method is essentially a means of valuing the
land by reference to its development potential by deducting development costs together with developer’s prot and risk
from the estimated capital 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 dierences that may aect the
price likely to be achieved by the property under consideration.
Information about fair value measurements of the Group’s under development leasehold commercial property using
signicant unobservable inputs as 31st December 2021:
Fair value
US$m
Valuation method
Range of significant unobservable inputs
Average unit price
US$
Capitalisation rate
%
Hong Kong 2,462.0 Direct comparison 4,066.0
per square foot
n/a
Residual* 3,480.2 to 4,156.8
per square foot
2.4 to 3.8
Average unit prices are estimated based on independent valuers’ view of recent transactions of comparable properties.
e higher the unit prices, the higher the fair value.
Capitalisation rates are estimated by independent valuers based on the risk prole of the property being valued. e 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.
51Annual Report 2021
Notes to the Financial Statements Continued
13 Associates and joint ventures
2021
US$m
2020
US$m
Associates
Listed associate – OHTL – 8.0
Unlisted associates 44.8 47.3
Share of attributable net assets 44.8 55.3
Notional goodwill 5.5 5.5
Goodwill on acquisition 1.5 1.5
51.8 62.3
Amounts due from associates 36.5 42.7
88.3 105.0
Joint ventures
Share of attributable net assets of unlisted joint ventures (25.6) (18.3)
Goodwill on acquisition 6.3 6.8
(19.3) (11.5)
Amounts due from joint ventures 132.5 138.1
113.2 126.6
201.5 231.6
Amounts due from associates are interest free, unsecured and have no xed terms of repayment.
Amounts due from joint ventures bear interest at rates ranging from approximately 1.15% to 5.00% (2020: 1.15% to
5.00%) per annum and are repayable within one to four years.
e Group’s share of the carrying value of hotel properties (including properties, plant and equipment, and leasehold
land) owned by the Group’s associates and joint ventures amounted to US$198.1 million (2020: US$222.7 million) and
US$117.0 million (2020: US$123.7 million) respectively.
Associates Joint ventures
2021
US$m
2020
US$m
2021
US$m
2020
US$m
Movements of associates and
joint ventures during the year:
At 1st January 105.0 114.0 126.6 89.1
Exchange differences – – (10.4) 11.4
Share of results after tax and
non-controlling interests (13.9) (21.9) (7.9) (4.9)
Share of other comprehensive income
after tax and non-controlling interests (2.5) 1.8 0.5 –
Acquisition of an associate (refer note 28d) – 2.0 – –
Advance to associates and joint ventures
(refer note 28e) 2.3 9.1 4.8 31.4
Repayment of loans to associates and
joint ventures (refer note 28f) (2.6) – (0.4) (0.4)
At 31st December 88.3 105.0 113.2 126.6
Fair value of listed associate 190.3 211.9 n/a n/a
52 Mandarin Oriental International Limited
13 Associates and joint ventures continued
a) Investment in associates
e material associates of the Group are listed below. ese associates have share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investments in material associates in 2021 and 2020:
Name of entity Nature of business
Country of incorporation and
principal place of business/
place of listing
% of ownership interest
2021 2020
OHTL PCL (‘OHTL’) Owner of Mandarin Oriental,
Bangkok
Thailand/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 2021, the fair value of the Group’s interest in OHTL, which is listed on the ailand Stock Exchange,
was US$190.3 million (2020: US$211.9 million) and the carrying amount of the Group’s interest was US$5.5 million
(2020: US$13.4 million).
Summarised nancial information for material associates
Summarised balance sheet at 31st December
OHTL Marina Bay Hotel Total
2021
US$m
2020
US$m
2021
US$m
2020
US$m
2021
US$m
2020
US$m
Non-current assets 126.6 149.7 109.4 117.9 236.0 267.6
Current assets
Cash and cash equivalents 3.1 3.6 23.7 24.9 26.8 28.5
Other current assets 4.1 4.6 5.8 2.0 9.9 6.6
Total current assets 7.2 8.2 29.5 26.9 36.7 35.1
Non-current liabilities
Financial liabilities* (69.4) (72.6) – – (69.4) (72.6)
Other non-current liabilities* (23.5) (29.4) (2.6) (3.0) (26.1) (32.4)
Total non-current liabilities (92.9) (102.0) (2.6) (3.0) (95.5) (105.0)
Current liabilities
Financial liabilities* (38.1) (34.9) (7.5) (7.2) (45.6) (42.1)
Other current liabilities* (2.7) (4.3) (2.8) (3.4) (5.5) (7.7)
Total current liabilities (40.8) (39.2) (10.3) (10.6) (51.1) (49.8)
Net assets 0.1 16.7 126.0 131.2 126.1 147.9
* Financial liabilities excluding trade and other payables and provisions, which are presented under other current and non-current liabilities.
53Annual Report 2021
Notes to the Financial Statements Continued
13 Associates and joint ventures continued
a) Investment in associates continued
Summarised nancial information for material associates continued
Summarised statement of comprehensive income for the year ended 31st December
OHTL Marina Bay Hotel Total
2021
US$m
2020
US$m
2021
US$m
2020
US$m
2021
US$m
2020
US$m
Revenue 17.5 29.2 29.3 27.5 46.8 56.7
Depreciation and amortisation (9.9) (10.7) (5.8) (5.6) (15.7) (16.3)
Interest expense (2.9) (1.6) – – (2.9) (1.6)
(Loss)/profit from underlying
business performance (18.7) (16.6) (1.9) 1.8 (20.6) (14.8)
Income tax credit 2.3 3.4 0.2 0.5 2.5 3.9
(Loss)/profit after tax (16.4) (13.2) (1.7) 2.3 (18.1) (10.9)
Other comprehensive (expense)/income (0.2) (0.3) (3.5) 3.2 (3.7) 2.9
Total comprehensive (expense)/income (16.6) (13.5) (5.2) 5.5 (21.8) (8.0)
e information contained in the summarised balance sheet and statement of comprehensive income reects the
amounts presented in the nancial statements of the associates adjusted for dierences in accounting policies between
the Group and the associates, and fair value of the associates at the time of acquisition.
54 Mandarin Oriental International Limited
13 Associates and joint ventures continued
a) Investment in associates continued
Reconciliation of the summarised nancial information
Reconciliation of the summarised nancial information presented to the carrying amount of the Group’s interests
in its material associates for the year ended 31st December:
OHTL Marina Bay Hotel Total
2021
US$m
2020
US$m
2021
US$m
2020
US$m
2021
US$m
2020
US$m
Net assets at 1st January 16.7 30.2 131.2 125.7 147.9 155.9
(Loss)/profit for the year (16.4) (13.2) (1.7) 2.3 (18.1) (10.9)
Other comprehensive (expense)/income (0.2) (0.3) (3.5) 3.2 (3.7) 2.9
Net assets at 31st December 0.1 16.7 126.0 131.2 126.1 147.9
Effective interest in associates (%) 47.6 47.6 50.0 50.0
Group’s share of net assets in associates – 7.9 63.0 65.6 63.0 73.5
Notional goodwill* 5.5 5.5 – – 5.5 5.5
Carrying value 5.5 13.4 63.0 65.6 68.5 79.0
Fair value 190.3 211.9 n/a n/a 190.3 211.9
e Group has interests in a number of individually immaterial associates. e following table analyses, in aggregate,
the share of prot and other comprehensive expense and carrying amount of these associates.
2021
US$m
2020
US$m
Share of loss (5.3) (16.7)
Share of other comprehensive (expense)/income (0.6) 0.4
Share of total comprehensive expense (5.9) (16.3)
Carrying amount of interests in these associates 19.8 26.0
* OHTL repurchased some of its own shares in 2013 which were subsequently cancelled in 2016. The number of OHTL shares held by
the Group remained unchanged. As a result of the share repurchase, notional goodwill of US$5.5 million was recognised and the Group’s
effective interest increased to 47.6%.
Contingent liabilities relating to the Group’s interest in associates
2021
US$m
2020
US$m
Financial guarantee in respect of facilities made available to an associate 20.3 20.3
e guarantee in respect of facilities made available to an associate is stated at its contracted amount. e Directors are
of the opinion that it is not probable that this guarantee will be called upon.
55Annual Report 2021
Notes to the Financial Statements Continued
13 Associates and joint ventures continued
b) Investment in joint ventures
e material joint venture of the Group is listed below. is joint venture has share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investment in material joint venture in 2021 and 2020:
Name of entity Nature of business
Country of incorporation and
principal place of business
% of ownership interest
2021 2020
Ritz Madrid, S.A.
(‘Ritz Madrid’)
Owner of Mandarin Oriental
Ritz, Madrid
Spain 50.0% 50.0%
Summarised nancial information for material joint venture
Summarised balance sheet at 31st December
Ritz Madrid
2021
US$m
2020
US$m
Non-current assets 265.9 286.9
Current assets
Cash and cash equivalents 10.7 20.7
Other current assets 3.2 1.9
Total current assets 13.9 22.6
Non-current liabilities
Financial liabilities*
†
(265.0) (276.2)
Other non-current liabilities* (40.0) (44.8)
Total non-current liabilities (305.0) (321.0)
Current liabilities
Other current liabilities* (26.0) (25.0)
Net liabilities (51.2) (36.5)
* 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$265.0 million (2020: US$276.2 million).
Summarised statement of comprehensive income for the year ended 31st December
Ritz Madrid
2021
US$m
2020
US$m
Revenue 26.0 0.1
Depreciation and amortisation (5.6) (0.9)
Interest expense (1.4) (0.2)
Loss after tax (15.7) (10.2)
Other comprehensive income/(expense) 1.0 (1.7)
Total comprehensive expense (14.7) (11.9)
e information contained in the summarised balance sheet and statement of comprehensive income reects the
amounts presented in the nancial statements of the joint ventures adjusted for dierences in accounting policies
between the Group and the joint ventures, fair value of the joint ventures at the time of acquisition, and elimination
of interest on shareholders’ loan.
56 Mandarin Oriental International Limited
13 Associates and joint ventures continued
b) Investment in joint ventures continued
Reconciliation of the summarised nancial information
Reconciliation of the summarised nancial information presented to the carrying amount of the Group’s interests
in its material joint venture for the year ended 31st December:
Ritz Madrid
2021
US$m
2020
US$m
Net liabilities at 1st January (36.5) (24.6)
Loss for the year (15.7) (10.2)
Other comprehensive income/(expense) 1.0 (1.7)
Net liabilities at 31st December (51.2) (36.5)
Effective interest in joint venture (%) 50.0 50.0
Group’s share of net liabilities in joint venture (25.6) (18.3)
Goodwill on acquisition 6.3 6.8
Shareholders’ loans 132.5 138.1
Carrying value 113.2 126.6
e Group has no other joint ventures other than Ritz Madrid.
Commitments and contingent liabilities in respect of joint venture
e Group has the following commitments relating to its joint venture as at 31st December:
2021
US$m
2020
US$m
Commitment to provide funding if called – 7.8
ere were no contingent liabilities relating to the Group’s interest in its joint venture at 31st December 2021 and 2020.
14 Other investments
2021
US$m
2020
US$m
Investment measured at fair value through profit and loss
– unlisted investments 16.5 16.1
Movements of these investments which were valued based on unobservable inputs during the year are disclosed in
note 36.
57Annual Report 2021
Notes to the Financial Statements Continued
15 Deferred tax assets/(liabilities)
Accelerated tax
depreciation
US$m
Fair value
gains/(losses)
US$m
Losses
US$m
Employee
benefits
US$m
Unremitted
earnings in
associates/
joint ventures
US$m
Provisions
and other
temporary
differences
US$m
Total
US$m
2021
At 1st January (43.5) 1.8 15.5 (1.3) (0.9) (0.9) (29.3)
Exchange differences 0.3 0.1 (0.6) – 0.1 – (0.1)
(Charged)/credited to
profit and loss (2.9) – (2.9) – 0.8 (0.1) (5.1)
Charged to other
comprehensive income – (1.3) – (0.6) – – (1.9)
At 31st December (46.1) 0.6 12.0 (1.9) – (1.0) (36.4)
Deferred tax assets 1.0 0.6 12.0 – – 0.1 13.7
Deferred tax liabilities (47.1) – – (1.9) – (1.1) (50.1)
(46.1) 0.6 12.0 (1.9) – (1.0) (36.4)
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
Credited/(charged) to other
comprehensive income – 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)
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 osetting is allowed.
Deferred tax assets of US$85.0 million (2020: US$71.5 million) arising from unused tax losses of US$385.5 million
(2020: US$329.6 million) have not been recognised in the nancial statements. Included in the unused tax losses,
US$334.2 million have no expiry date and the balance will expire at various dates up to and including 2037. Following
a recoverability review performed in 2021, deferred tax assets of US$2.9 million were derecognised due to hotel losses
following the COVID-19 pandemic.
Deferred tax assets of US$3.3 million (2020: US$2.4 million) have not been recognised in relation to temporary
dierences in subsidiaries.
e Group has no unrecognised deferred tax liabilities arising on temporary dierences associated with investments
in subsidiaries at 31st December 2021 and 2020.
58 Mandarin Oriental International Limited
16 Pension plans
e Group operates dened benet pension plans in the main territories in which it operates, with the majority of
the plans in Hong Kong. Most of the pension plans are nal salary dened benet plans calculated based on members’
length of service and their salaries in the nal years leading up to retirement. In Hong Kong, the pension benets are
paid in one lump sum. With the exception of certain plans in Hong Kong, all the dened benet plans are closed to
new members. In addition, although all plans are impacted by the discount rate, liabilities are driven by salary growth.
e Group’s dened benet plans are either funded or unfunded, with the assets of the funded plans held independently
of the Group’s assets in separate trustee administered funds. Plan assets held in trusts are governed by local regulations
and practice in each country. Responsibility for governance of the plans, including investment decisions and contribution
schedules, lies jointly with the Company and the boards of trustees. e Group’s major plans are valued by independent
actuaries annually using the projected unit credit method.
e amounts recognised in the consolidated balance sheet are as follows:
2021
US$m
2020
US$m
Fair value of plan assets 53.5 52.4
Present value of funded obligations (46.4) (46.9)
7.1 5.5
Present value of unfunded obligations (0.3) (0.3)
Net pension assets 6.8 5.2
Analysis of net pension assets
Pension assets 7.1 5.5
Pension liabilities (0.3) (0.3)
6.8 5.2
59Annual Report 2021
Notes to the Financial Statements Continued
16 Pension plans continued
e movement in the net pension assets is as follows:
Fair value
of plan
assets
US$m
Present
value of
obligation
US$m
Total
US$m
2021
At 1st January 52.4 (47.2) 5.2
Current service cost – (3.2) (3.2)
Interest income/(expense) 1.0 (0.9) 0.1
Administration expenses (0.3) – (0.3)
0.7 (4.1) (3.4)
53.1 (51.3) 1.8
Exchange differences (0.3) 0.3 –
Remeasurements
– return on plan assets, excluding amounts
included in interest income 2.5 – 2.5
– change in financial assumptions – 1.3 1.3
– experience losses – (0.3) (0.3)
2.5 1.0 3.5
Contributions from employers 1.5 – 1.5
Contributions from plan participants 0.5 (0.5) –
Benefit payments (3.4) 3.4 –
Transfer to other plans (0.4) 0.4 –
At 31st December 53.5 (46.7) 6.8
2020
At 1st January 49.8 (48.7) 1.1
Current service cost – (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)
Exchange differences 0.2 (0.2) –
Remeasurements
– return on plan assets, excluding amounts
included in interest income 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
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 from other plans (0.9) 0.9 –
At 31st December 52.4 (47.2) 5.2
60 Mandarin Oriental International Limited
16 Pension plans continued
e weighted average duration of the dened benet obligation at 31st December 2021 is 5.2 years (2020: 5.5 years).
Expected maturity analysis of undiscounted pension benets at 31st December is as follows:
2021
US$m
2020
US$m
Within one year 11.6 4.8
Between one and two years 5.1 10.0
Between two and five years 15.5 14.9
Between five and ten years 20.9 23.6
Between ten and fifteen years 16.1 15.7
Between fifteen and twenty years 8.9 10.7
Beyond twenty years 5.6 9.3
83.7 89.0
e principal actuarial assumptions used for accounting purposes at 31st December are as follows:
Hong Kong
2021
%
2020
%
Discount rate 2.40 1.90
Salary growth rate 3.80 3.80
As participants of the plans relating to Hong Kong usually take lump sum amounts upon retirement, mortality is not
a principal assumption for these plans.
e sensitivity of the dened benet obligation to changes in the weighted principal assumptions is:
Increase/(decrease) on
defined benefit obligation
Change in
assumption
%
Increase in
assumption
US$m
Decrease in
assumption
US$m
Discount rate 1 (2.6) 2.9
Salary growth rate 1 2.6 (2.4)
e 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 the
sensitivity of the dened benet obligation to signicant actuarial assumptions the same method (present value of the
dened benet 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.
61Annual Report 2021
Notes to the Financial Statements Continued
16 Pension plans continued
e analysis of the fair value of plan assets at 31st December is as follows:
2021
US$m
2020
US$m
Equity investments
– Asia-Pacific 4.4 5.2
– Europe 4.3 4.0
– North America 10.7 10.2
– Global 0.6 0.3
20.0 19.7
Investment funds
– Asia-Pacific 7.4 8.3
– Europe 6.9 6.5
– North America 15.7 11.4
– Global 3.0 4.8
33.0 31.0
Total investments 53.0 50.7
Cash and cash equivalents 2.7 3.8
Benefits payable and other (2.2) (2.1)
53.5 52.4
As at 31st December 2021, 91.2% of equity investments and 97.5% of investment funds were quoted on active markets
(2020: 100% and 95% respectively).
e 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. e last ALM review was completed in 2021. e next
ALM review is scheduled for 2024.
As at 31st December 2021, the Hong Kong plans had assets of US$53.5 million (2020: US$52.4 million).
e Group maintains an active and regular contribution schedule across all the plans. e contribution to all its plans
in 2021 were US$1.5 million and the estimated amount of contributions expected to be paid to all its plans in 2022
is US$1.5 million.
62 Mandarin Oriental International Limited
17 Debtors
2021
US$m
2020
US$m
Trade debtors
– third parties 28.6 20.4
– associates and joint ventures 2.1 0.3
30.7 20.7
– provision for impairment (3.5) (3.1)
27.2 17.6
Other debtors
– third parties 49.6 59.7
– associates and joint ventures 2.7 1.5
52.3 61.2
– provision for impairment (1.8) (2.0)
50.5 59.2
77.7 76.8
Non-current 8.9 5.1
Current 68.8 71.7
77.7 76.8
Analysis by geographical area
– Asia 34.4 29.5
– EMEA 30.6 41.6
– America 12.7 5.7
77.7 76.8
Derivative nancial instruments are stated at fair value. Other debtors are stated at amortised cost. e fair values of
short-term debtors approximate their carrying amounts.
2021
US$m
2020
US$m
Fair value
– trade debtors 27.2 17.6
– other debtors* 35.2 42.9
62.4 60.5
* Excluding prepayments.
63Annual Report 2021
Notes to the Financial Statements Continued
17 Debtors continued
Trade and other debtors
e average credit period on provision of services varies among Group businesses and is generally not more than 30 days.
Other debtors are further analysed as follows:
2021
US$m
2020
US$m
Derivatives financial instruments (refer note 29) 4.4 –
Other amounts due from associates and joint ventures 2.7 1.5
Rental and other deposits 7.7 22.5
Other receivables 20.4 18.9
Financial assets 35.2 42.9
Prepayments 15.3 16.3
50.5 59.2
No debtors and prepayments have been pledged as security.
Impairment of trade debtors
Before accepting any new customer, the individual Group business assesses the potential customer’s credit quality and
sets credit limits by customer using internal credit scoring systems. ese limits and scoring are reviewed periodically.
Signicant nancial diculties of the debtor, probability that the debtor will enter bankruptcy or nancial reorganisation,
and default or delinquency in payment are considered indicators that the debtor is impaired. An allowance for impairment
of trade debtors is made based on the estimated irrecoverable amount determined by reference to past default experience.
e Group applied the simplied approach to measure expected credit loss, that is a lifetime expected loss allowance
for trade debtors. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. Changes in certain macroeconomic information such as GDP and ination rate,
are relevant for determining expected credit loss rates.
e expected loss rates are based on the historical payment proles of sales and the corresponding historical credit losses.
e historical loss rates are adjusted to reect current and forward-looking information on macroeconomic factors and
industry trends aecting the ability of the customers to settle the receivables.
e loss allowances for trade debtors at 31st December 2021 and 2020 were determined as follows:
Below
30 days
Between
31 and
60 days
Between
61 and
120 days
More than
120 days Total
2021
Weighted average expected loss rate – – 45% 57% 11%
Gross carrying amount – trade debtors (US$m) 21.1 3.4 1.1 5.1 30.7
Loss allowance (US$m) 0.1 – 0.5 2.9 3.5
2020
Weighted average expected loss rate – – – 89% 15%
Gross carrying amount – trade debtors (US$m) 15.0 1.2 1.0 3.5 20.7
Loss allowance (US$m) – – – 3.1 3.1
64 Mandarin Oriental International Limited
17 Debtors continued
Impairment of trade debtors continued
Movements in the provisions for impairment are as follows:
Trade debtors Other debtors
2021
US$m
2020
US$m
2021
US$m
2020
US$m
At 1st January (3.1) (3.6) (2.0) (1.5)
Additional provisions (1.0) (0.6) (0.6) (1.3)
Unused amounts reversed 0.3 1.0 0.6 0.8
Amounts written off 0.3 0.1 0.2 –
At 31st December (3.5) (3.1) (1.8) (2.0)
Trade debtors and other debtors are written o when there is no reasonable expectation of recovery. Indicators that there
is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group.
18 Bank and cash balances
2021
US$m
2020
US$m
Deposits with banks and financial institutions 64.9 75.3
Bank balances 147.1 88.6
Cash balances 0.8 0.7
212.8 164.6
Analysis by currency
– Euro 72.1 24.4
– Hong Kong dollar 14.2 15.7
– Indonesian rupiah 5.6 7.7
– Japanese yen 5.7 9.3
– Swiss franc 9.3 2.2
– United Kingdom sterling 23.7 22.6
– United States dollar 74.2 75.8
– Other 8.0 6.9
212.8 164.6
e weighted average interest rate on deposits with banks and nancial institutions at 31st December 2021 was 0.2%
(2020: 1.0%) per annum.
65Annual Report 2021
Notes to the Financial Statements Continued
19 Creditors
2021
US$m
2020
US$m
Trade creditors 16.8 15.0
Accruals 80.6 62.5
Rental and other refundable deposits 4.4 6.7
Derivative financial instruments (refer note 29) 3.6 10.9
Other creditors 28.1 23.5
Financial liabilities 133.5 118.6
Contract liabilities (refer note 2) 23.3 31.1
Rental income received in advance 3.6 5.8
160.4 155.5
Non-current 3.2 10.9
Current 157.2 144.6
160.4 155.5
Analysis by geographical area
– Asia 66.1 74.2
– EMEA 45.5 38.2
– America 48.8 43.1
160.4 155.5
Derivative nancial instruments are stated at fair value. Other creditors are stated at amortised cost. e fair values of
these 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 the
underlying assets to the condition required by the terms and conditions of the leases. e costs of US$0.8 million
(2020: US$0.8 million) were included in accruals at 31st December 2021.
66 Mandarin Oriental International Limited
20 Borrowings
2021 2020
Carrying
amount
US$m
Fair
value
US$m
Carrying
amount
US$m
Fair
value
US$m
Current portion of long-term borrowings
– bank loans – – 61.5 61.5
– other borrowings 2.5 2.5 2.7 2.7
Current borrowings 2.5 2.5 64.2 64.2
Long-term borrowings
– bank loans 726.5 726.5 605.2 605.2
– other borrowings 1.3 1.3 1.4 1.4
Long-term borrowings 727.8 727.8 606.6 606.6
730.3 730.3 670.8 670.8
e fair values are estimated using the expected future payments discounted at market interest rate from 0.3% to 3.5%
(2020: 0.3% to 3.5%) per annum. is is in line with the denition of ‘observable current market transactions’ under
the fair value measurement hierarchy. e fair value of current borrowings approximates their carrying amount, as the
impact of discounting is not signicant.
2021
US$m
2020
US$m
Secured 640.9 606.8
Unsecured 89.4 64.0
730.3 670.8
Borrowings of US$640.9 million (2020: US$606.8 million) were secured against the tangible xed assets and right-of-use
assets of certain subsidiaries at 31st December 2021. e book value of these tangible xed assets and right-of-use assets
at 31st December 2021 was US$571.3 million (2020: US$586.0 million).
67Annual Report 2021
Notes to the Financial Statements Continued
20 Borrowings continued
e borrowings at 31st December are further summarised as follows:
Fixed rate borrowings
Weighted
average
interest rates
%
Weighted
average period
outstanding
Years US$m
Floating rate
borrowings
US$m
Total
US$m
2021
Hong Kong dollar 1.6 1.7 214.8 316.1 530.9
Swiss franc 2.2 10.0 1.4 2.3 3.7
United Kingdom sterling 1.6 2.4 54.0 54.7 108.7
United States dollar 1.0 – – 87.0 87.0
270.2 460.1 730.3
2020
Euro 0.5 – – 61.5 61.5
Hong Kong dollar 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
e weighted average interest rates and period of xed rate borrowings are stated after taking into account hedging
transactions (refer note 29).
e 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:
2021
US$m
2020
US$m
Floating rate borrowings 460.1 398.6
Fixed rate borrowings
– Within one year 54.5 –
– Between one and two years – 54.8
– Between two and three years 214.3 –
– Between three and four years – 215.8
– Between four and five years – –
– Beyond five years 1.4 1.6
270.2 272.2
730.3 670.8
68 Mandarin Oriental International Limited
20 Borrowings continued
e movements in borrowings are as follows:
Long-term
borrowings
US$m
Short-term
borrowings
US$m
Total
US$m
2021
At 1st January 606.6 64.2 670.8
Exchange differences (4.3) (0.4) (4.7)
Transfer (0.1) 0.1 –
Drawdown of borrowings 130.6 – 130.6
Repayment of borrowings (5.0) (61.4) (66.4)
At 31st December 727.8 2.5 730.3
2020
At 1st January 568.6 2.5 571.1
Exchange differences 11.1 0.3 11.4
Transfer (61.5) 61.5 –
Drawdown of borrowings 88.4 – 88.4
Repayment of borrowings – (0.1) (0.1)
At 31st December 606.6 64.2 670.8
21 Lease liabilities
2021
US$m
2020
US$m
At 1st January 177.1 175.4
Exchange differences (16.7) 8.8
Additions 0.2 1.2
Termination (0.2) –
Lease payments (5.5) (7.9)
Interest expense 2.2 1.9
Modification of lease terms and other (3.4) (2.3)
At 31st December 153.7 177.1
Non-current 147.4 170.1
Current 6.3 7.0
153.7 177.1
Lease terms are negotiated on an individual basis and contain a wide range of dierent terms and conditions. e lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
e Group is not exposed to any residual guarantees in respect of the leases entered into at 31st December 2021 and 2020.
ere is no lease contract entered but not commenced at 31st December 2021 and 2020.
69Annual Report 2021
Notes to the Financial Statements Continued
2021
US$m
2020
US$m
Netted off against the net book value of the property (refer note 10) 18.0 18.8
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$33.0 million out of the net proceeds
obtained through the issuance and sale of certain tax increment nancing bonds (‘TIF Bonds’) for the development
and construction of Mandarin Oriental, Washington D.C.
e receipt of the TIF Bonds has been treated as a government grant and netted o against the net book value in respect
of the property. e TIF Bonds are being amortised over 39 years up to February 2043.
23 Segmental information for non-current assets
Set out below is an analysis of the Group’s non-current assets, excluding amounts due from associates and joint ventures,
other investments, deferred tax assets, pension assets and derivative nancial instruments, by reportable segment.
2021
US$m
2020
US$m
Analysis by geographical area
– Asia 2,946.4 3,060.3
– EMEA 770.5 839.2
– America 208.7 211.4
3,925.6 4,110.9
24 Share capital
Ordinary shares in millions
2021 2020 2021
US$m
2020
US$m
Authorised
Shares of US¢5.00 each 1,500.0 1,500.0 75.0 75.0
Issued and fully paid
At 1st January 1,263.2 1,263.2 63.2 63.2
Issued under share-based long-term
incentive plans 0.4 – – –
At 31st December 1,263.6 1,263.2 63.2 63.2
70 Mandarin Oriental International Limited
25 Share premium
2021
US$m
2020
US$m
At 1st January 499.7 499.7
Transfer from capital reserves 0.8 –
At 31st December 500.5 499.7
26 Share-based long-term incentive plans
Share-based long-term incentive plans have been set up to provide incentives for selected executives. Awards can take
the form of share options with an exercise price based on the then prevailing market prices or such other price set by
the Directors or share awards which will vest free of payment. Awards normally vest on or after the third anniversary
of the date of grant and may be subject to the achievement of performance conditions.
i) e Mandarin Oriental Share-based Long-term Incentive Plan (the ‘2014 Plan’) was adopted by the Company on
6th March 2014. Under these awards, the free shares are received by the participants to the extent the award vests.
Conditions, if any, are at the discretion of the Directors. No conditional share awards were granted in 2021 and 2020
under the 2014 Plan.
ii) Prior to the adoption of the 2014 Plan, e Mandarin Oriental International Share Option Plan 2005 provided
selected executives with options to purchase ordinary shares in the Company. e exercise price of the granted
options was based on the average market price for the ve trading days immediately preceding the date of grant
of the options. Options are vested over a period of up to three years and are exercisable for up to ten years following
the date of grant.
Movements of the outstanding options during the year:
2021 2020
Weighted average
exercise price
US$
Options
in millions
Weighted average
exercise price
US$
Options
in millions
At 1st January 1.72 4.2 1.72 4.2
Exercised 1.68 (2.1) – –
Cancelled 1.91 (1.1) – –
At 31st December 1.59 1.0 1.72 4.2
e average share price during the year was US$2.00 (2020: US$1.61) per share.
Outstanding options at 31st December:
Ordinary shares in millions
Expiry date
Exercise price
US$ 2021 2020
2021 1.99 – 1.3
2022 1.61 0.5 1.9
2023 1.57 0.5 1.0
Total outstanding 1.0 4.2
of which exercisable 1.0 4.2
71Annual Report 2021
Notes to the Financial Statements Continued
27 Dividends
In light of the substantially reduced levels of business due to the impact of COVID-19 pandemic, no interim and nal
dividends in respect of the 2021 and 2020 nancial years have been declared or proposed by the Board.
a) Other non-cash items
2021
US$m
2020
US$m
Fair value loss on investment property under development 73.9 474.9
Fair value gain on other investments (0.6) (0.7)
Gain on modification of lease terms (3.4) (2.3)
Other 1.3 0.9
71.2 472.8
b) Movements in working capital
2021
US$m
2020
US$m
Decrease in stocks 0.4 0.5
(Increase)/decrease in debtors (13.9) 29.1
Increase/(decrease) in creditors 12.6 (29.3)
Increase in pension obligations 1.8 1.1
0.9 1.4
72 Mandarin Oriental International Limited
continued
c) e Group withdrew from the expansion project of Mandarin Oriental, Munich and received cash refund on the
deposits of land and related costs in October 2021.
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. e principal activity of S1D is developing and operating an online booking service platform for
luxury homes. e Group has appointed two of ve directors to the board of S1D and has exercised signicant
inuence on the decisions about the operation of S1D.
e) During 2021, the Group provided shareholder loans to Mandarin Oriental, New York of US$2.2 million
(2020: US$8.6 million), Mandarin Oriental Ritz, Madrid of US$4.8 million (2020: US$31.4 million) and
River City Shopping Complex of US$0.1 million (2020: nil). No shareholder loan was provided to Mandarin
Oriental, Miami in 2021 (2020: US$0.5 million).
f) During 2021, the Group received repayments on its shareholder loans previously provided to Mandarin Oriental Ritz,
Madrid of US$0.4 million (2020: US$0.4 million) and Mandarin Oriental, Miami of US$2.6 million (2020: nil).
g) Cash outows for leases
2021
US$m
2020
US$m
Lease rentals paid (9.3) (10.5)
The above cash outflows are included in
– operating activities (6.0) (4.5)
– financing activities (3.3) (6.0)
(9.3) (10.5)
h) Analysis of balances of cash and cash equivalents
2021
US$m
2020
US$m
Bank and cash balances (refer note 18) 212.8 164.6
73Annual Report 2021
Notes to the Financial Statements Continued
e fair values of derivative nancial instruments at 31st December are as follows:
2021 2020
Positive
fair value
US$m
Negative
fair value
US$m
Positive
fair value
US$m
Negative
fair value
US$m
Designated as cash flow hedges
– forward foreign exchange contracts 4.4 – – –
– interest rate swaps – (3.6) – (10.9)
4.4 (3.6) – (10.9)
Forward foreign exchange contracts
e contract amounts of the outstanding forward foreign exchange contracts at 31st December 2021 were
US$56.6 million (2020: nil).
Interest rate swaps
e notional principal amounts of the outstanding interest rate swap contracts at 31st December 2021 were
US$268.8 million (2020: US$270.6 million).
At 31st December 2021, the xed interest rates relating to interest rate swaps varied from 1.2% to 1.8%
(2020: 1.2% to 1.8%) per annum.
e fair values of interest rate swaps at 31st December 2021 were based on the estimated cash ows discounted at
market rates ranging from 0.9% to 1.0% (2020: 0.9% to 1.0%) per annum.
30 Commitments
2021
US$m
2020
US$m
Capital commitments
Authorised not contracted
– other 506.7 618.4
Contracted not provided
– joint ventures – 7.8
– other 43.6 102.5
43.6 110.3
550.3 728.7
is primarily related to capital commitments for the Causeway Bay site under development, which is expected to
complete in 2025.
74 Mandarin Oriental International Limited
31 Related party transactions
Jardine Strategic Limited (‘JSL’) became the parent company of the Group following the completion of the simplication
of the Group’s parent company structure in April 2021. Jardine Strategic Holdings Limited and JMH Bermuda Limited,
a wholly-owned subsidiary of the Group’s ultimate parent company, Jardine Matheson Holdings Limited (‘JMH’),
amalgamated under the Bermuda Companies Act to form JSL, a wholly-owned subsidiary of JMH. Both JMH and JSL
are incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety of transactions with its associates and joint ventures
and with JMH’s subsidiaries, associates and joint ventures. e more signicant of these transactions are described below:
During 2021, the Group managed six (2020: six) associate and joint venture hotels and received management fees of
US$6.6 million (2020: US$4.2 million) based on long-term management agreements on normal commercial terms.
e Group provided hotel management services to Hongkong Land (‘HKL’), a subsidiary of JMH. Total management
fees received from HKL in 2021 amounted to US$2.3 million (2020: US$1.2 million), based on long-term management
agreements on normal commercial terms.
e Group pays a management fee to Jardine Matheson Limited, a subsidiary of JMH, in consideration for certain
management consultancy services. e fee is calculated as 0.5% of the Group’s net prot. No fee was paid in 2021
and 2020 (due to underlying losses).
During 2021, in respect of the Causeway Bay site under development, the Group paid consultancy fees of US$1.2 million
(2020: US$2.1 million) to HKL in consideration for project management consultancy services. In addition,
Gammon Construction Limited (‘GCL’), a joint venture of JMH, completed value of works of US$17.9 million
(2020: US$16.3 million). e HKL agreement and GCL contract were arranged on normal commercial terms.
e outstanding balances with associates and joint ventures are set out in debtors in note 17.
Details of Directors’ emoluments (being the key management personnel compensation) are shown on page 120 under
the heading of ‘Remuneration outcomes in 2021’.
32 Summarised balance sheet of the Company
Included below is certain summarised balance sheet information of the Company disclosed in accordance with
Bermuda Law.
2021
US$m
2020
US$m
Subsidiaries 1,347.2 1,308.3
Net current liabilities (1.8) (1.6)
Net assets 1,345.4 1,306.7
Share capital (refer note 24) 63.2 63.2
Share premium (refer note 25) 500.5 499.7
Revenue and other reserves 781.7 743.8
Shareholders’ funds 1,345.4 1,306.7
Subsidiaries are shown at cost less amount provided, and include amounts due from and due to subsidiaries.
75Annual Report 2021
Notes to the Financial Statements Continued
33 Principal subsidiaries, associates, joint ventures and managed hotels
e principal subsidiaries, associates, joint ventures and managed hotels of the Group at 31st December 2021 are set out below.
Proportion of ordinary shares
and voting powers
at 31st December 2021 held by
Principal place
of business Name of entity Nature of business
Attributable interest %
the Group
%
non-controlling
interests
% 2021 2020
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 – 181 rooms. Freehold
Switzerland Société Immobilière de Mandarin Oriental (Genèva) SA Owner: Mandarin Oriental, Geneva 85.3 85.3 85.3 14.7 Lease expiry 2040
Switzerland Société pour l’ Exploitation de Mandarin Oriental (Genèva) SA 100 100 100 – 178 rooms
Germany Dinavest International Holdings B.V. Owner: Mandarin Oriental, Munich 100 100 100 – 73 rooms. Freehold
France MOHG 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. 100 100 100 – 373 rooms. Freehold
Associates and joint ventures
Singapore Marina Bay Hotel Private Limited Owner: Mandarin Oriental, Singapore 50 50 50 50 527 rooms. Lease expiry 2079
Thailand OHTL PCL Owner: Mandarin Oriental, Bangkok 47.6 47.6 47.6 52.4 331 rooms. Various freehold/leasehold
Malaysia Asas Klasik Sdn Bhd Owner: Mandarin Oriental, Kuala Lumpur 25 25 25 75 629 rooms. Freehold
Thailand Chaophaya Development Corporation Limited Owner: River City Shopping Complex 49 49 49 51 –
Spain Ritz Madrid, S.A. Owner: Mandarin Oriental Ritz, Madrid 50 50 50 50 153 rooms. Freehold
United States ICD Columbus Centre Hotel LLC Owner: Mandarin Oriental, New York 25.1 25 25.1 74.9 244 rooms. Freehold
United States Swire Brickell Key Hotel Limited Owner: Mandarin Oriental, Miami 25 25 25 75 326 rooms. Freehold
Hong Kong Stay One Degree Limited Online booking service platform for luxury homes 16.7 16.7 16.7 83.3 –
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
Taiwan Mandarin Oriental, Taipei – – – – 294 rooms
Czech Republic Mandarin Oriental, Prague – – – – 99 rooms
Spain Mandarin Oriental, Barcelona – – – – 120 rooms
Turkey Mandarin Oriental, Bodrum – – – – 130 rooms
Turkey Mandarin Oriental Bosphorus, Istanbul – – – – 100 rooms
Italy Mandarin Oriental, Milan – – – – 104 rooms
Italy Mandarin Oriental, Lago di Como – – – – 75 rooms
Morocco Mandarin 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
Saudi Arabia Al Faisaliah Hotel, Riyadh – – – – 321 rooms
Chile Mandarin Oriental, Santiago – – – – 310 rooms
Saint Vincent and
the Grenadines Mandarin Oriental, Canouan – – – – 35 rooms
Mandarin Oriental, Shenzhen in China with 178 rooms, a managed hotel of the Group, opened on 20th January 2022.
76 Mandarin Oriental International Limited
33 Principal subsidiaries, associates, joint ventures and managed hotels
e principal subsidiaries, associates, joint ventures and managed hotels of the Group at 31st December 2021 are set out below.
Proportion of ordinary shares
and voting powers
at 31st December 2021 held by
Principal place
of business Name of entity Nature of business
Attributable interest %
the Group
%
non-controlling
interests
% 2021 2020
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 – 181 rooms. Freehold
Switzerland Société Immobilière de Mandarin Oriental (Genèva) SA Owner: Mandarin Oriental, Geneva 85.3 85.3 85.3 14.7 Lease expiry 2040
Switzerland Société pour l’ Exploitation de Mandarin Oriental (Genèva) SA 100 100 100 – 178 rooms
Germany Dinavest International Holdings B.V. Owner: Mandarin Oriental, Munich 100 100 100 – 73 rooms. Freehold
France MOHG 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. 100 100 100 – 373 rooms. Freehold
Associates and joint ventures
Singapore Marina Bay Hotel Private Limited Owner: Mandarin Oriental, Singapore 50 50 50 50 527 rooms. Lease expiry 2079
Thailand OHTL PCL Owner: Mandarin Oriental, Bangkok 47.6 47.6 47.6 52.4 331 rooms. Various freehold/leasehold
Malaysia Asas Klasik Sdn Bhd Owner: Mandarin Oriental, Kuala Lumpur 25 25 25 75 629 rooms. Freehold
Thailand Chaophaya Development Corporation Limited Owner: River City Shopping Complex 49 49 49 51 –
Spain Ritz Madrid, S.A. Owner: Mandarin Oriental Ritz, Madrid 50 50 50 50 153 rooms. Freehold
United States ICD Columbus Centre Hotel LLC Owner: Mandarin Oriental, New York 25.1 25 25.1 74.9 244 rooms. Freehold
United States Swire Brickell Key Hotel Limited Owner: Mandarin Oriental, Miami 25 25 25 75 326 rooms. Freehold
Hong Kong Stay One Degree Limited Online booking service platform for luxury homes 16.7 16.7 16.7 83.3 –
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
Taiwan Mandarin Oriental, Taipei – – – – 294 rooms
Czech Republic Mandarin Oriental, Prague – – – – 99 rooms
Spain Mandarin Oriental, Barcelona – – – – 120 rooms
Turkey Mandarin Oriental, Bodrum – – – – 130 rooms
Turkey Mandarin Oriental Bosphorus, Istanbul – – – – 100 rooms
Italy Mandarin Oriental, Milan – – – – 104 rooms
Italy Mandarin Oriental, Lago di Como – – – – 75 rooms
Morocco Mandarin 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
Saudi Arabia Al Faisaliah Hotel, Riyadh – – – – 321 rooms
Chile Mandarin Oriental, Santiago – – – – 310 rooms
Saint Vincent and
the Grenadines Mandarin Oriental, Canouan – – – – 35 rooms
Mandarin Oriental, Shenzhen in China with 178 rooms, a managed hotel of the Group, opened on 20th January 2022.
77Annual Report 2021
Notes to the Financial Statements Continued
34 Principal accounting policies
Basis of consolidation
i) e consolidated nancial statements include the nancial statements of the Company, its subsidiaries, and the
Group’s interests in associates and joint ventures.
ii) A subsidiary is an entity over which the Group has control. e 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 aect those returns
through its power over the entity.
e purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. e cost of
an acquisition includes the fair value at the acquisition date of any contingent consideration. e Group recognises
the non-controlling interest’s proportionate share of the recognised identiable 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 prot and loss. Changes in a parent’s ownership
interest in a subsidiary that do not result in the loss of control are accounted for as equity transactions. When control
over a previous subsidiary is lost, any remaining interest in the entity is remeasured at fair value and the resulting gain
or loss is recognised in prot and loss.
All material intercompany transactions, balances and unrealised surpluses and decits on transactions between
Group companies have been eliminated. e cost of and related income arising from shares held in the Company
by subsidiaries are eliminated from shareholders’ funds and non-controlling interests, and prot, respectively.
iii) An associate is an entity, not being a subsidiary or joint venture, over which the Group exercises signicant inuence.
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.
Prots and losses resulting from upstream and downstream transactions between the Group and its associates and
joint ventures are recognised in the consolidated nancial statements only to the extent of unrelated investor’s
interests 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) e results of subsidiaries, associates and joint ventures are included or excluded from their eective dates of
acquisition or disposal, respectively. e 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 con tinued
Exchange dierences arising from the retranslation of the net investment in foreign subsidiaries, associates and joint
ventures, and of nancial instruments which are designated as hedges of such investments, are recognised in other
comprehensive income and accumulated in equity under exchange reserves. On the disposal of these investments,
such exchange dierences are recognised in prot and loss. Exchange dierences 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 dierences are recognised in prot 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-nancial assets
Assets that have indenite useful lives are not subject to amortisation and are tested for impairment annually and
whenever 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 identiable
cash ows. 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 the
higher of an asset’s fair value less costs to sell and value in use. Non-nancial assets other than goodwill that suered
an impairment are reviewed for possible reversal of the impairment annually.
Intangible assets
i) Goodwill represents the excess of the sum of the consideration transferred, the amount of any non-controlling
interests 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 identiable assets acquired. Non-controlling interests
are measured at their proportionate share of the net identiable assets at the acquisition date. If the cost of acquisition
is less than the fair value of the net assets acquired, the dierence is recognised directly in prot 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 of
cash-generating units for the purpose of impairment testing and is carried at cost less accumulated impairment loss.
e prot 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 specic 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 and
directly attributable to hotel projects under development, which are capitalised to the extent that such expenditure is
expected to generate future economic benets and upon completion of the project. Capitalised development project
contract costs are amortised over the term of the management contracts when the related revenue is recognised.
79Annual Report 2021
Notes to the Financial Statements Continued
34 Principal accounting policies continued
Tangible xed 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 indenite life. Properties on freehold and leasehold land are stated
at 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 xed assets are stated at cost less amounts provided for depreciation.
Depreciation of tangible xed 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. e residual values and useful lives are reviewed at each balance sheet date.
e 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, nishes 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 xed asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
e prot or loss on disposal of tangible xed assets is recognised by reference to their carrying amount.
Leases
At 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 identied asset for a period of time in exchange for consideration.
Lease contracts may contain lease and non-lease components. e 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
e Group enters into property leases for use as hotels or oces.
e Group recognises right-of-use assets and lease liabilities at the lease commencement dates, that is the dates the
underlying assets are available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment, and adjusted for any remeasurement of lease liabilities. e cost of the right-of-use assets includes amounts
of 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 depreciated
using the straight-line method over the shorter of their estimated useful lives and the lease terms.
When right-of-use assets meet the denition 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 continued
i) As a lessee continued
e Group also has interests in leasehold land for use in its operations. Lump sum payments were made upfront to
acquire these land interests from their previous registered owners or governments in the jurisdictions where the land
is located. ere are no ongoing payments to be made under the term of the land leases, other than insignicant lease
renewal costs or payments based on rateable value set by the relevant government authorities. ese payments are
stated 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 signicant cost.
Lease liabilities are measured at the present value of lease payments to be made over the lease terms. Lease payments
include xed payments (including in-substance xed 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.
e lease payments also include the exercise price of a purchase option reasonably certain to be exercised and
payments of penalties for terminating a lease, if the lease term reects the Group exercising that option. e variable
lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event
or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. Lease liabilities are measured
at amortised cost using the eective 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.
e 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 reassessment
of whether the Group will be reasonably certain to exercise an extension or a termination option. When the lease
liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in prot or loss if the carrying amount of right-of-use asset has been reduced to zero.
e 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 oce equipment. Short-term leases
are leases with a lease term of 12 months or less. Lease payments associated with these leases are recognised on
a straight-line basis as an expense in prot and loss over the lease term.
Lease liabilities are classied as non-current liabilities unless payments are within 12 months from the balance
sheet date.
ii) As a lessor
e Group enters into contracts with lease components as a lessor primarily on its properties. ese leases are
operating leases as they do not transfer the risk and rewards incidental to the underlying properties. e Group
recognises the lease payments received under these operating leases on a straight-line basis over the lease term as
part of revenue in the prot and loss.
81Annual Report 2021
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 classied
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 estimated
open market value determined annually by independent qualied valuers who have recent experience in the location and
segment of the investment property being valued.
e market value of investment property under development is derived using the direct comparison method and the
residual method. e direct comparison method is based on market evidence of transaction prices for similar properties
which recently transacted. e 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 prot and
risk. e direct comparison method and the estimated capital value of the residual method are adjusted to reect the
conditions of the subject property including property site and location. Changes in fair value are recognised in prot
and loss.
Investments
e Group classies its investments into the following measurement categories:
i) ose to be measured subsequently at fair value, either through other comprehensive income or through prot
and loss; and
ii) ose to be measured at amortised cost.
e classication is based on the management’s business model and their contractual cash ows characteristics.
Investments are measured at fair value with fair value gains and losses recognised in prot 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 reclassied to prot
and loss.
At initial recognition, the Group measures an investment at its fair value plus, in the case of the investment not at
fair value through prot or loss, transaction costs that are directly attributable to the acquisition of the investment.
Transaction costs of investments carried at fair value through prot and loss are expensed in prot and loss.
All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to
purchase or sell the investments.
Investments are classied as non-current assets.
82 Mandarin Oriental International Limited
34 Principal accounting policies continued
Stocks
Stocks, which principally comprise beverages and consumables, are stated at the lower of cost and net realisable value.
Cost is determined by the rst-in, rst-out method.
Debtors
Trade debtors are recognised initially at the amount of consideration that is unconditional and measured subsequently
at amortised cost using eective interest method. All other debtors, excluding derivative nancial instruments, are
measured at amortised cost except where the eect of discounting would be immaterial. e impairment measurement is
subject to whether there has been a signicant increase in credit risk. For trade debtors, the Group applied the simplied
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 nancial diculties of the debtor, probability
that the debtor will enter bankruptcy or nancial reorganisation, and default or delinquency in payments. e carrying
amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in
arriving at operating prot. When a debtor is uncollectible, it is written o against the allowance account. Subsequent
recoveries of amount previously written o are credited to prot and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classied under non-current assets.
Cash and cash equivalents
For the purposes of the cash ow statement, cash and cash equivalents comprise deposits with banks and nancial
institutions and bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts are included
in 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 outow of resources embodying economic benets 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 eective 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 classied as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
83Annual Report 2021
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 grants will be
received, and the Group will comply with the conditions associated with the grants.
Grants that compensate the Group for expenses incurred are recognised in the prot 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 prot
and loss as other income on a systematic basis in the period in which the expenses are recognised. Unconditional grants
are recognised in the prot 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
e tax expense for the year comprises current and deferred tax. Tax is recognised in prot and loss, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
e 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 dierences 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 realised
or the deferred tax liability is settled.
Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions, on
the dierence between the fair value of the net assets acquired and their tax base. Deferred tax is provided on temporary
dierences associated with investments in subsidiaries, associates and joint ventures, except where the Group is able to
control the reversal of the temporary dierence and it is probable that the temporary dierence will not reverse in the
foreseeable 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 prot will be available against which the unused tax losses can be utilised.
Employee benets
e Group operates a number of dened benet and dened contribution plans, the assets of which are held in trustee
administered funds.
Pension accounting costs for dened benet plans are assessed using the projected unit credit method. Under this
method, the costs of providing pensions are charged to prot and loss spreading the regular cost over the service lives
of employees in accordance with the advice of qualied actuaries, who carry out a full valuation of major plans every
year. e pension obligations are measured as the present value of the estimated future cash outows by reference to
market 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 recognised
in other comprehensive income in the year in which they occur.
Past service costs are recognised immediately in prot and loss.
e Group’ total contributions relating to the dened contribution plans are charged to prot and loss in the year to
which they relate.
84 Mandarin Oriental International Limited
34 Principal accounting policies continued
Derivative nancial instruments
e Group only enters into derivative nancial instruments in order to hedge underlying exposures and not as
speculative investments. Derivative nancial instruments are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair value. e method of recognising the resulting
gain or loss is dependent on the nature of the item being hedged. e Group designates certain derivatives as a hedge
of a forecasted transaction or of the foreign currency risk on a rm commitment (‘cash ow 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 ows of the hedging instruments are expected to oset changes
in the cash ows of hedged items. e 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 ow hedges and that are highly eective,
are recognised in other comprehensive income and accumulated in equity under hedging reserves. Changes in the fair
value relating to the ineective portion is recognised immediately in prot and loss. Where the hedged item results in the
recognition of a non-nancial asset or of a non-nancial liability, the deferred gains and losses and included in the initial
measurement of the cost of the asset or liability. e deferred amounts are ultimately recognised in prot and loss as the
hedged item aects prot and loss. Otherwise, amounts deferred in hedging reserves are transferred to prot and loss in
the same periods during which the hedged rm commitment or forecasted transaction aects prot and loss. e gain or
loss relating to the eective portion of the interest rate swaps hedging variable rate borrowings is recognised in prot and
loss within nance 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 existing
in hedging reserves at that time remains in the hedging reserves and is recognised when the committed or forecasted
transaction ultimately is recognised in prot 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 prot and loss.
Certain derivative transactions, while providing eective economic hedges under the Group’s risk management policies,
do not qualify for hedge accounting under the specic 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 prot and loss.
Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash ow hedges.
Any gain or loss on the hedging instrument relating to the eective portion of the hedge is recognised in other
comprehensive income and accumulated in exchange reserves; the gain or loss relating to the ineective portion
is recognised immediately in prot and loss.
e fair value of derivatives which are designated and qualify as eective hedges are classied 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 signicant risk from a third party by agreeing to
compensate that party on the occurrence of a specied uncertain future event are accounted for in a manner similar to
insurance contracts. Provisions are recognised when it is probable that the Group has obligations under such guarantees
and an outow of resources embodying economic benets will be required to settle the obligations.
85Annual Report 2021
Notes to the Financial Statements Continued
34 Principal accounting policies continued
Osetting nancial instruments
Financial assets and liabilities are oset and the net amount reported in the balance sheet when there is a legally
enforceable right to oset the recognised amounts and there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously. e 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 identied to provide greater understanding of the Group’s underlying business
performance. Items classied 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 prot and loss; gains and losses arising
from 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 business
combinations; 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 prot attributable to shareholders and on the weighted average number of
shares in issue during the year. For the purpose of calculating diluted earnings per share, the weighted average number
of 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 recognition
i) 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 and
management 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 account
the 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 eective for accounting periods beginning after 2021 have been published
and will be adopted by the Group from their eective dates. e Group is currently assessing the potential impact of
these standards and amendments but expects their adoption will not have a signicant impact on the Group’s consolidated
nancial statements. e relevant standard and amendments are set out below.
i) Amendment to IFRS 9: ‘Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities’ (eective from
1st January 2022) claries the requirement to derecognise the original nancial liability and recognise a new nancial
liability where there is an exchange between an existing borrower and lender of debt instrument with substantially
dierent terms. e amendments claries that the terms are substantially dierent if the discounted present value
of the cash ows under the new terms using the original eective interest rate, including any fees paid net of any fees
received, is at least 10 per cent dierent from the discounted present value of the remaining cash ows of the original
nancial liability. e Group will apply the amendment from 1st January 2022, but it is not expected the adoption
will have a signicant impact on the Group’s consolidated nancial statements.
ii) Amendments to IAS 37 – Onerous Contracts – Cost of Fullling a Contract (eective from 1st January 2022)
claries that for the purpose of assessing whether a contract is onerous, the cost of fullling the contract includes
both the incremental costs of fullling that contract and an allocation of other costs that relate directly to fullling
contracts. e Group will apply the amendment from 1st January 2022, but it is not expected the adoption will have
a signicant impact on the Group’s consolidated nancial statements.
iii) IFRS 17 ‘Insurance Contracts’ (eective from 1st January 2023) – e Group is assessing the potential impact on
the Group’s consolidated nancial statements.
iv) Amendment to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction (eective
1st January 2023) requires companies to recognise deferred tax on transactions that, on initial recognition, give rise
to equal amounts taxable and deductible temporary dierences. ey typically apply to transactions such as leases
of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and
liabilities. e Group is assessing the potential impact on the Group’s consolidated nancial statements.
87Annual Report 2021
Notes to the Financial Statements Continued
36 Financial risk management
Financial risk factors
e Group’s activities expose it to a variety of nancial risks: market risk (including foreign exchange risk, interest rate
risk and price risk), credit risk and liquidity risk.
e Group’s treasury function co-ordinates, under the directions of the board of Mandarin Oriental Hotel Group
International Limited, nancial risk management policies and their implementation on a group-wide basis. e Group’s
treasury policies are designed to manage the nancial impact of uctuations in interest rates and foreign exchange rates
and to minimise the Group’s nancial risks. e Group uses derivative nancial instruments, principally interest rate
swaps and caps, and forward foreign exchange contracts as appropriate for hedging transactions and managing the
Group’s assets and liabilities in accordance with the Group’s nancial 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.
e eective portion of the change in the fair value of the hedging instrument is deferred into the cash ow hedge reserve
through other comprehensive income and will be recognised in prot and loss when the hedged item aects prot and
loss. In general, the volatility in prot or loss can be reduced by applying hedge accounting.
Hedge eectiveness is determined at the inception of the hedge relationship, and through periodic prospective eectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
e 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. e Group does not hedge 100% of its loans, therefore
the hedged item is identied as a proportion of the outstanding loans up to the notional amount of the swaps. As all
critical terms matched during the year, eective economic relationship existed between the swaps and the loans.
e Group performs a qualitative assessment of eectiveness. If changes in circumstances aect 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 eectiveness.
Hedge ineectiveness for interest rate swaps may occur due to:
i) e credit value/debit value adjustment on the interest rate swaps which is not matched by the loan;
ii) Dierences in critical terms between the interest rate swaps and loans; and
iii) e eects of the forthcoming reforms to IBORs, because these might take eect at a dierent time and have a
dierent impact on the hedged item (the oating-rate debt) and the hedging instrument (the interest rate swap used
to hedge the debt).
e ineectiveness during 2021 or 2020 in relation to the interest rate swaps was not material.
88 Mandarin Oriental International Limited
36 Financial risk management continued
Financial risk factors continued
i) Market risk
Foreign exchange risk
Entities within the Group are exposed to foreign exchange risk from future commercial transactions, net investments
in foreign operations and net monetary assets and liabilities that are denominated in a currency that is not the entity’s
functional currency.
Group entities are required to manage their foreign exchange risk against their functional currency. To manage
their foreign exchange risk arising from future commercial transactions, entities in the Group use forward foreign
exchange contracts in a consistent manner to hedge rm and anticipated foreign exchange commitments. e 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 eective.
Currency risks as dened by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency
that is not the functional currency. In 2021 and 2020, the Group’s principal foreign exchange exposure was with
the Euro. At 31st December 2021, if the United States dollar had strengthened/weakened by 10% against Euro
with all other variables unchanged, the Group’s loss after tax would have been US$4.2 million (2020: US$0.2 million)
higher/lower, arising from foreign exchange losses/gains taken on translation. e impact on amounts attributable
to the shareholders of the Company would be US$4.2 million (2020: US$0.2 million) lower/higher. is sensitivity
analysis ignores any osetting foreign exchange factors and has been determined assuming that the change in foreign
exchange rates had occurred at the balance sheet date. e stated change represents management’s assessment of
reasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date. ere
are no other signicant monetary balances held by Group companies at 31st December 2021 that are denominated
in a non-functional currency. Dierences resulting from the translation of nancial statements into the Group’s
presentation currency are not taken into consideration.
89Annual Report 2021
Notes to the Financial Statements Continued
36 Financial risk management continued
Financial risk factors continued
i) Market risk continued
Interest rate risk
e Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and assets.
ese exposures are managed partly by using natural hedges that arise from osetting interest rate sensitive assets
and liabilities, and partly through xed rate borrowings and the use of derivative nancial instruments such as
interest rate swaps and caps. e Group monitors interest rate exposure on a monthly basis by currency and business
unit, taking into consideration proposed nancing and hedging arrangements. e Group’s guideline is to maintain
40% to 60% of its gross borrowings, in xed rate instruments. At 31st December 2021, the Group’s interest rate
hedge was 37% (2020: 41%), with an average tenor of 1.9 years (2020: 2.9 years). e interest rate prole of the
Group’s borrowings after taking into account hedging transactions are set out in note 20.
Cash ow interest rate risk is the risk that changes in market interest rates will impact cash ows arising from variable
rate nancial instruments. Borrowings at oating rates therefore expose the Group to cash ow interest rate risk. e
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
eect of converting borrowings from oating rate to xed rate, caps provide protection against a rise in oating rates
above a pre-determined rate. Details of interest rate swaps are set out in note 29.
At 31st December 2021, 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$3.3 million (2020: US$2.6 million) higher/lower, and hedging reserves
would have been US$4.2 million (2020: US$6.6 million) higher/lower, as a result of fair value changes to cash ow
hedges. e sensitivity analysis has been determined assuming that the change in interest rates had occurred at the
balance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative
nancial instruments in existence at that date. ere is no signicant sensitivity resulting from interest rate caps.
e 100 basis point increase or decrease represents management’s assessment of a reasonably possible change in those
interest rates which have the most impact on the Group, specically 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 aect
the interest income or expense of non-derivative variable-interest nancial instruments, the interest payments of
which are not designated as hedged items of cash ow hedges against interest rate risks. As a consequence, they are
included in the calculation of loss after tax sensitivities. Changes in the market interest rate of nancial instruments
that were designated as hedging instruments in a cash ow hedge to hedge payment uctuations resulting from
interest rate movements aect 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 continued
i) Market risk continued
Price risk
e Group is exposed to price risk from its investments which are measured at fair value through prot and loss.
Gains and losses arising from changes in the fair value of these investments are recognised in prot and loss or
other comprehensive income according to their classication. e performance of these investments are monitored
regularly, together with an assessment of their relevance to the Group’s long-term strategic plans. Details of these
investments are contained in note 14.
e Group’s interest in these investments are unhedged. At 31st December 2021, if the price of these investments had
been 25% higher/lower with all other variables held constant, non-trading operating prot and total equity would
have been US$4.1 million (2020: US$4.0 million) higher/lower. e sensitivity analysis has been determined based
on a reasonable expectation of possible valuation volatility over the next 12 months.
ii) Credit risk
e Group’s credit risk is primarily attributable to deposits with banks, credit exposures to customers and derivative
nancial instruments with a positive fair value. e Group has credit policies in place and the exposures to these
credit risks are monitored on an ongoing basis.
e Group manages its deposits with banks and nancial institutions and transactions involving derivative nancial
instruments by monitoring credit ratings and capital adequacy ratios of counterparties, and limiting the aggregate
risk to any individual counterparty. e utilisation of credit limits is regularly monitored. At 31st December 2021,
90% (2020: 90%) of deposits and balances with banks and nancial institutions were made to institutions with
credit ratings of no less than A- (Fitch). Similarly transactions involving derivative nancial instruments are with
banks with sound credit ratings and capital adequacy ratios. In developing countries it may be necessary to deposit
money with banks that have a lower credit rating, however the Group only enters into derivative transactions with
counterparties which have credit rating of at least investment grade. Management does not expect any counterparty
to fail to meet its obligations.
In respect of credit exposures to customers, the Group has policies in place to ensure that sales on credit without
collateral are made principally to travel agents and corporate companies with an appropriate credit history. Sales to
other customers are made in cash or by major credit cards.
e maximum exposure to credit risk is represented by the carrying amount of each nancial asset in the balance
sheet after deducting any impairment allowance.
91Annual Report 2021
Notes to the Financial Statements Continued
36 Financial risk management continued
Financial risk factors continued
iii) Liquidity risk
Prudent liquidity risk management includes managing the prole of debt maturities and funding sources,
maintaining sucient 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. e Group’s ability to fund its
existing and prospective debt requirements is managed by maintaining diversied 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 ows. In addition, long-term cash ows are projected to assist with
the Group’s long-term debt nancing plans.
At 31st December 2021, total available borrowing facilities amounted to US$1,024 million (2020: US$834 million)
of which US$730 million (2020: US$671 million) was drawn down. Undrawn committed facilities, in the form
of revolving credit and term loan facilities totalled US$294 million (2020: US$163 million), in addition to cash
balances of US$213 million (2020: US$165 million).
e table below analyses the Group’s non-derivative nancial liabilities and net settled derivative nancial liabilities
into relevant maturity groupings based on the remaining period at 31st December 2021 and 2020 to the contractual
maturity date. Derivative nancial liabilities are included in the analysis if their contractual maturities are essential
for an understanding of the timing of the cash ows. e amounts disclosed in the table are the contractual
undiscounted cash ows.
Within
one
year
US$m
Between
one and
two years
US$m
Between
two and
three years
US$m
Between
three and
four years
US$m
Between
four and
five years
US$m
Beyond
five
years
US$m
Total
undiscounted
cash flows
US$m
2021
Borrowings 13.3 96.8 642.9 0.2 0.2 1.0 754.4
Lease liabilities 8.9 9.1 8.8 8.8 7.2 136.6 179.4
Creditors 129.9 – – – – – 129.9
Net settled derivative
financial instruments 2.8 0.8 0.1 – – – 3.7
2020
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
Creditors 107.7 – – – – – 107.7
Net settled derivative
financial instruments 3.7 3.6 2.8 0.8 – – 10.9
92 Mandarin Oriental International Limited
36 Financial risk management continued
Capital management
e Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst
seeking to maximise benets to shareholders and other stakeholders. Capital is equity as shown in the consolidated
balance sheet plus net debt.
e Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and
shareholder returns, taking into consideration the future capital requirements of the Group and capital eciency,
prevailing and projected protability, projected operating cash ows, projected capital expenditures and projected
strategic investment opportunities. In order to maintain or adjust the capital structure, the Group may adjust the amount
of dividends paid to shareholders, purchase Group shares, return capital to shareholders, issue new shares or sell assets
to reduce debt.
e 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’. e 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 value
of 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 prot 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 nancing charges before the deduction of capitalised interest and excluding interest on lease liabilities. e Group
does not have a dened gearing or interest cover benchmark or range.
e ratios at 31st December 2021 and 2020 are as follows:
2021 2020
Gearing ratio
– based on shareholders’ funds 16% 14%
– based on adjusted shareholders’ funds 10% 10%
Interest cover n/a n/a
Fair value estimation
i) Financial instruments that are measured at fair value
For nancial 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’)
e fair values of derivative nancial instruments are determined using rates quoted by the Group’s bankers
at the balance sheet date. e rates for interest rate swaps and caps and forward foreign exchange contracts are
calculated by reference to market interest rates and foreign exchange rates.
e 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’)
e fair values of other unlisted investments, are determined using valuation techniques by reference to
observable current market transactions (including price-to earnings and price-to book ratios of listed securities
of entities engaged in similar industries) or the market prices of the underlying investments with certain degree
of entity specic estimates or discounted cash ow by projecting the cash inows from these investments.
ere were no changes in valuation techniques during the year.
93Annual Report 2021
Notes to the Financial Statements Continued
36 Financial risk management continued
Fair value estimation continued
i) Financial instruments that are measured at fair value continued
e table below analyses nancial instruments carried at fair value at 31st December 2021 and 2020, by the levels in
the fair value measurement hierarchy.
Observable
current market
transactions
US$m
Unobservable
inputs
US$m
Total
US$m
2021
Assets
Other investments 6.0 10.5 16.5
Derivative financial instruments at fair value
– through other comprehensive income 4.4 – 4.4
10.4 10.5 20.9
Liabilities
Derivative financial instruments at fair value
– through other comprehensive income (3.6) – (3.6)
2020
Assets
Other investments 5.4 10.7 16.1
Liabilities
Derivative financial instruments at fair value
– through other comprehensive income (10.9) – (10.9)
ere were no transfers among the two categories during the year ended 31st December 2021 and 2020.
Movements of nancial instruments which are valued based on unobservable inputs during the year ended
31st December are as follows:
Unlisted investments
2021
US$m
2020
US$m
At 1st January 10.7 11.3
Additions – 0.6
Disposals (0.2) (1.2)
At 31st December 10.5 10.7
ii) Financial instruments that are not measured at fair value
e fair values of current debtors, bank and cash balances, current creditors, current borrowings and current lease
liabilities are assumed to approximate their carrying amounts due to the short-term maturities of these assets
and liabilities.
e fair values of long-term borrowings are based on market prices or are estimated using the expected future
payments discounted at market interest rates. e fair values of non-current lease liabilities are estimated using
the expected future payments discounted at market interest rates.
94 Mandarin Oriental International Limited
36 Financial risk management continued
Financial instruments by category
e fair values of nancial assets and nancial liabilities, together with carrying amounts at 31st December 2021 and
2020 are as follows:
Fair value of
hedging
instruments
US$m
Fair value
through
profit and loss
US$m
Financial
assets at
amortised cost
US$m
Other
financial
liabilities
US$m
Total
carrying
amount
US$m
Fair
value
US$m
2021
Financial assets measured at fair value
Other investments – 16.5 – – 16.5 16.5
Derivative financial instruments 4.4 – – – 4.4 4.4
4.4 16.5 – – 20.9 20.9
Financial assets not measured at fair value
Debtors – – 58.0 – 58.0 58.0
Bank and cash balances – – 212.8 – 212.8 212.8
– – 270.8 – 270.8 270.8
Financial liabilities measured at fair value
Derivative financial instruments (3.6) – – – (3.6) (3.6)
Financial liabilities not measured
at fair value
Borrowings – – – (730.3) (730.3) (730.3)
Lease liabilities – – – (153.7) (153.7) (153.7)
Trade and other payables excluding
non-financial liabilities – – – (129.9) (129.9) (129.9)
– – – (1,013.9) (1,013.9) (1,013.9)
2020
Financial assets measured at fair value
Other investments – 16.1 – – 16.1 16.1
Financial assets not measured wat fair
value
Debtors – – 60.5 – 60.5 60.5
Bank and cash balances – – 164.6 – 164.6 164.6
– – 225.1 – 225.1 225.1
Financial liabilities measured at fair value
Derivative financial instruments (10.9) – – – (10.9) (10.9)
Financial liabilities not measured
at fair value
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)
95Annual Report 2021
Notes to the Financial Statements Continued
37 Critical accounting estimates and judgements
Estimates and judgements used in preparing the nancial statements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to be reasonable
according to circumstances and conditions available. e existing and potential impacts arising from the COVID-19
pandemic have been considered when applying estimates and assumptions in the preparation of the nancial 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 dier from these accounting estimates.
e estimates and assumptions that have a signicant eect on the reported amounts of assets and liabilities, and income
and expenses are discussed below.
Investment property under development
e 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 with equal weighting. e direct comparison method and
the estimated capital value of the residual method are made by reference to comparable market transactions and adjusted
for property-specic qualitative factors. e residual method is also based on assumptions about the estimated costs to
complete the development, the developer’s estimated prot 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.
e independent valuers have considered climate change, sustainability, resilience and environmental, social and
governance (‘ESG’) within their valuations. Investment property under development held by the Group is considered to
currently display ESG characteristics that would be expected in the market, and therefore there were no direct and tangible
pricing adjustments required to the valuation of the investment property under development. e Group will monitor
these considerations for each reporting period.
Impairment of assets
e Group tests annually whether goodwill that has indenite useful life suered any impairment. Other assets such as
tangible xed 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. e recoverable amount of
an asset or a cash generating unit is determined based on the higher of its fair value less costs to sell and its value in use,
calculated on the basis of management’s assumptions and estimates. Changing the key assumptions, including the
discount rates or the growth rate assumptions in the cash ow projections, could materially aect the value-in-use
calculations.
e loss allowances for nancial assets are based on assumptions about risk of default and expected loss rates. e 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).
96 Mandarin Oriental International Limited
37 Critical accounting estimates and judgements continued
Tangible xed asses and depreciation
Management determines the estimated useful lives and related depreciation charges for the Group’s tangible xed assets.
Management will revise the depreciation charge where useful lives are dierent to those previously estimated, or it will
write o or write down technically obsolete or non-strategic assets that have been abandoned.
Income taxes
e Group is subject to income taxes in numerous jurisdictions. Signicant judgement is required in determining
the worldwide provision for income taxes. ere are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. Where the nal tax outcome of these matters is
dierent from the amounts that were initially recorded, such dierences 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. ere is a rebuttable
presumption in International Financial Reporting Standards that investment properties measured at fair value are
recovered through sale. us 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 expectation
of future taxable prot that will be available against which the tax losses can be utilised. e outcome of their actual
utilisation may be dierent.
Pension obligations
e present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. e assumptions used in determining the net cost/income for pensions include the
discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
e Group determines the appropriate discount rate at the end of each year. is is the interest rate that should be used
to determine the present value of estimated future cash outows expected to be required to settle the pension obligations.
In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that
are denominated in the currency in which the benets will be paid and that have terms to maturity approximating the
terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions.
97Annual Report 2021
Notes to the Financial Statements Continued
37 Critical accounting estimates and judgements continued
Leases
Liabilities and the corresponding right-of-use assets arising from leases are initially measured at the present value of the
lease 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. e Group generally uses the incremental
borrowing rate as the discount rate.
e Group applies the incremental borrowing rate with reference to the rate of interest that the Group would have
to pay to borrow, over a similar term as that of the lease, the funds necessary to obtain an asset of a similar value to
the 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. e Group
determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend 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.
e Group has the option, under some of its leases to lease the assets for additional terms. e Group applies judgement
in evaluating whether it is reasonably certain to exercise the option to renew. at is, the Group considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group
reassesses the lease term if there is a signicant event or change in circumstances that is within its control and aects
its ability to exercise or not to exercise the option to renew. e assessment of whether the Group is reasonably certain
to exercise the options impacts the lease terms, which signicantly aects the amount of lease liabilities and right-of-use
assets recognised.
Non-trading items
e Group uses underlying business performance in its internal nancial reporting to distinguish between the
underlying prots and non-trading items. e identication of non-trading items requires judgement by management,
but follows the consistent methodology as set out in the Group’s accounting policies.
Interest rate benchmark reform
Following the nancial crisis, the reform and replacement of benchmark interest rates such as US$ LIBOR and other
interbank oered rates (‘IBORs’) has become a priority for global regulators. ere is currently uncertainty around the
timing and precise nature of these changes on some IBORs.
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 dierences and credit dierences might
need to be applied to RFRs, to enable the two benchmark rates to be economically equivalent on transition. e greatest
change will be amendments to the contractual terms of the IBORs-referenced oating-rate debt and the associated swap
and the corresponding update of the hedge designation. However, the changed reference rate might also aect other
systems, processes, risk and valuation models, as well as having tax and accounting implications.
98 Mandarin Oriental International Limited
37 Critical accounting estimates and judgements continued
Interest rate benchmark reform continued
Group Treasury is managing the IBORs transition plan, which has progressed throughout 2021. GBP LIBOR ceased on
31st December 2021 and all existing contracts and agreements with a reference to GBP LIBOR were transitioned by this
date. We have also transitioned all material contracts referencing the Singapore Swap Oer Rate in 2021. US$ LIBOR
is expected to cease on 30th June 2023, and the Group’s transition plan is on track to ensure conversion of existing
US$ LIBOR contracts by the date of cessation.
Relief applied
e Group has applied the following reliefs that were introduced by the amendments made to IFRS 9 ‘Financial
Instruments’ in September 2019 and August 2020:
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 eective on a forward-looking basis, the Group has assumed
that the IBORs interest rate on which the cash ows of the hedged debt and the interest rate swap that hedges
it is not altered by IBORs reform.
iii) e Group has not recycled the cash ow hedge reserve relating to the period after the reforms are expected to
take eect.
iv) For nancial instruments measured using amortised cost measurement, changes to the basis for determining the
contractual cash ows required by interest rate benchmark reform are reected by adjusting their eective interest
rate. No immediate gain or loss is recognised.
v) For lease liabilities where there is a change to the basis for determining the contractual cash ows, the lease liability is
remeasured by discounting the revised lease payments using a discount rate that reects the change in the interest rate
where the change is required by IBORs reform.
Assumptions made
In calculating the change in fair value attributable to the hedged risk of oating-rate debt, the Group has made the
following assumptions that reect its current expectations:
i) e IBORs-referenced oating-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 oating-rate debt are anticipated.
99Annual Report 2021
To the members of Mandarin Oriental International Limited
Report on the audit of the Group nancial statements
Opinion
In our opinion, Mandarin Oriental International Limited’s Group (the ‘Group’) nancial statements
(the ‘nancial statements’):
give a true and fair view of the state of the Group’s aairs as at 31st December 2021 and of its loss and cash ows
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); and
have been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).
We have audited the nancial statements, included within the Annual Report, which comprise: the Consolidated
Balance Sheet as at 31st December 2021; the Consolidated Prot and Loss Account, the Consolidated Statement
of Comprehensive Income, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in
Equity for the year then ended; and the Notes to the nancial statements, which include a description of the signicant
accounting policies (the ‘Principal Accounting Policies’).
Certain required disclosures have been presented in the Corporate Governance section, rather than in the Notes to the
nancial statements. ese disclosures are cross-referenced from the nancial statements and are identied 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 nancial
statements section of our report. We believe that the audit evidence we have obtained is sucient and appropriate to
provide 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 nancial statements in the UK, which includes the Financial Reporting Council’s (‘FRC’s’) Ethical Standard, as
applicable to listed entities, and we have fullled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Materiality
Overall Group materiality: US$3.0 million (2020: US$11.4 million)
Based on 5% of underlying loss before tax (2020: Based on 5% of underlying loss before tax)
Audit scope
A full scope audit of six of the Mandarin Oriental hotels and two entities engaged in hotel management services
and holding the investment property under development was performed. ese hotels and entities, together with
procedures performed over specic balances and transactions for a further two of the Mandarin Oriental hotels, one
further entity engaged in hotel management services and on central functions and at the Group level, accounted for
96% of the Group’s revenue, 80% of the Group’s loss before tax, 70% of the Group’s underlying loss before tax and
98% 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
Independent Auditors’ Report
100 Mandarin Oriental International Limited
e scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
nancial 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 line
with our responsibilities, outlined in the Auditors’ responsibilities for the audit of the nancial statements section, to
detect material misstatements in respect of irregularities, including fraud. e extent to which our procedures are capable
of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identied that the principal risks of non-compliance with
laws and regulations related to, but were not limited to, the Companies Act 1981 (Bermuda), the Listing Rules, tax
regulations, employment regulations, health and safety regulation and equivalent local laws and regulations applicable
to signicant reporting component teams, and we considered the extent to which non-compliance might have a material
eect on the nancial statements. We also considered those laws and regulations that have a direct impact on the
nancial statements such as the Companies Act 1981 (Bermuda).
We evaluated management’s incentives and opportunities for fraudulent manipulation of the nancial 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. e Group engagement
team shared this risk assessment with the component auditors so that they could include appropriate audit procedures
in 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 of
any 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 or
suspected 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 signicant accounting estimates that
involved 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);
Incorporating elements of unpredictability in the audit procedures we performed; and
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also
addressed the risk of management override of internal controls, including testing journals, and evaluated whether
there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
ere are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reected in the
nancial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
101Annual Report 2021
Independent Auditors’ Report Continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most signicance in the audit
of the nancial statements of the current period and include the most signicant assessed risks of material misstatement
(whether or not due to fraud) identied by the auditors, including those which had the greatest eect on: the overall audit
strategy; the allocation of resources in the audit; and directing the eorts of the engagement team. ese matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the nancial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
is is not a complete list of all risks identied by our audit. e key audit matters below are consistent with last year.
Key audit matter
Impact of COVID-19
e COVID-19 pandemic has had a signicant impact
on the performance of the Group. e extent of the
negative impact of the pandemic on future trading
performance is dicult to predict. erefore, there is
inherent uncertainty in determining the impact of the
pandemic on certain aspects of the nancial statements.
e key impacts of COVID-19 on the nancial
statements are:
e assumptions supporting the valuation of the
investment property under development has been
updated to reect management’s best estimate of the
impact of COVID-19.
Management’s assessment of the carrying value of the
Group’s hotels, include the impact of COVID-19 on
the underlying businesses, as described in the related
key audit matter below.
e Group has for the second year in a row made a loss as
a result of the travel and other restrictions caused by the
pandemic. is increases the risk of material uncertainty
in relation to going concern. Nonetheless, the Directors
have concluded that it is appropriate to prepare the
nancial statements on a going concern basis and that
no material uncertainty exists that may cast signicant
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 operation
of controls, has been impacted by COVID-19 as a result
of some sta working remotely. For example, this has
meant virtual review meetings replaced in-person meetings.
How our audit addressed the key audit matter
Our procedures in respect of the valuation of investment
property under development and the recoverability of the
carrying amounts of hotel properties are covered in the
related 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 the
operation of IT and business process controls, and
whether there has been any impact on the Group.
We enquired with our component teams to understand
if there were any changes to management’s planned
operation of 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 oversight
over component audit teams, using video conferencing
and remote working paper reviews, to satisfy ourselves
as to the appropriateness of audit work performed at
signicant and material components.
We considered the appropriateness of disclosures in
the nancial 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 light
of the impact of COVID-19. Our conclusions in respect
of going concern are set out separately within this report
in the section relating to going concern.
102 Mandarin Oriental International Limited
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 nancial statements.
e fair value of the Group’s investment property
under development amounted to US$2,462.0 million
at 31st December 2021, with a revaluation loss of
US$73.9 million recognised as a non-trading item in
the Consolidated Prot and Loss Account for the year.
e valuation was carried out by a third-party valuer
(the ‘valuer’). ere is inherent estimation uncertainty
in determining a property’s valuation as the valuer make
assumptions, judgements and estimates in key areas.
e valuation was derived using the direct comparison
method and residual method. Judgement is required in
selecting appropriate land sale comparable transactions
for the direct comparison method valuation; and the
determination of the gross development value, estimated
costs to complete and expected developer’s prot margin
in the residual method valuation.
We focused on the valuation of investment property
under development due to the signicant judgements
and estimates involved in determining the valuations.
How our audit addressed the key audit matters
We understood management’s controls and processes for
determining the valuation of investment property under
development 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 qualication and expertise of the valuer,
considering whether there were any matters that might
have aected their objectivity or may have imposed
scope limitations upon its work. We found no evidence
to suggest that the objectivity of the valuers in their
performance of the valuation was compromised.
We read the valuation report to consider whether the
valuation methodology used was appropriate and suitable
for use in determining the fair value.
e audit team, including our valuation experts,
discussed with the valuer the methodology, key
assumptions and climate change risk considerations
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 with available market
data on yields and unit rentals;
– for developer’s prot and other ancillary fees,
compared the adopted parameters with the market
norm in the industry; and
– for the construction costs to complete, examined
the approved project budget, and evaluated past
budget to actual variance to assess the reliability of
the 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 of
available evidence.
We also assessed the adequacy of the disclosures related
to the valuation of the investment property under
development and were satised that appropriate
disclosure has been made.
103Annual Report 2021
Independent Auditors’ Report Continued
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 the
nancial statements.
e Group’s hotel properties are stated at cost less
depreciation and impairment. As at 31st December 2021,
the carrying values of the hotel properties held through
the Group’s subsidiaries, classied under tangible assets
and right-of-use assets, amounted to US$1,098.2 million
and US$273.3 million respectively. e Group also
holds interests in a number of hotel properties
through its associates and joint ventures amounting
to US$315.1 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. e recoverable amount is determined as
the higher of the CGU’s value-in-use and fair value less
costs to sell. In determining the fair value less costs to
sell, a third-party valuer (the ‘valuer’) is engaged by the
Group to perform the valuation of the hotel property.
Management concluded that no impairment provision
was required for the hotel properties.
We focused on this area as the impairment assessment
involves signicant judgements and estimation
uncertainty in respect of future business performance
and key assumptions including discount rates, terminal
yield, occupancy rate, sales growth rate and capital
expenditure necessary to maintain the service standard.
How our audit addressed the key audit matters
We 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 have understood management’s impairment assessment
process and related controls, including the identication
of indicators of impairment and appropriateness of the
valuation models used, including the assessment of
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. is included
the involvement of our valuation experts to assess the
country specic discount rate applied and appropriateness
of the terminal yield with reference made to market data.
We assessed the reasonableness of the forecast occupancy
rates, sales growth rate and capital expenditure by
comparing them with historical results and latest
economic and industry forecasts.
We assessed the qualications, competence and
objectivity of the valuer, discussed the key assumptions,
methodology and climate change risk considerations
with them and read the valuation reports prepared by
the valuers and considered the appropriateness and
consistency of valuation methodologies.
We evaluated management’s future cash ow forecasts
and the process by which they were prepared, including
testing the mathematical accuracy of the underlying
calculations and compared the future cash ow forecasts
with 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 signicant judgements and
estimates adopted by management were appropriate.
We also assessed the adequacy of the disclosures included
in the nancial statements and were satised that these
are appropriate.
104 Mandarin Oriental International Limited
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 nancial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the
industry in which it operates.
e Group’s accounting processes are structured around nance functions, which are responsible for their own
accounting records and controls, which in turn, report nancial information to the Group’s nance function in
Hong Kong to enable them to prepare consolidated nancial statements.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed
by members of the Group engagement team or by component auditors from member rms within the PwC Network
operating under our instruction. Where the work was performed by component auditors, we determined the level of
involvement necessary for us to have in the audit work at those components to be able to conclude whether sucient,
appropriate audit evidence had been obtained as a basis for our opinion on the nancial statements as a whole. e Group
engagement team was involved in the signicant reporting entities in scope for Group reporting during the audit cycle.
In light of the continued restrictions on travel as a response to COVID-19, the lead Group audit partner and other senior
team members were involved throughout the year through the regular use of video conference calls and other forms of
communication to direct and oversee the audit, including the remote review of the work of component teams.
A full scope audit on six of the Mandarin Oriental hotels and two entities engaged in the hotel management services and
holding the investment property under development was performed. ese hotels and entities, together with procedures
performed over specic balances and transactions for a further two of the Mandarin Oriental hotels, one further entity
engaged in hotel management services and on central functions and at the Group level, accounted for 96% of the Group’s
revenue, 80% of the Group’s loss before tax, 70% of the Group’s underlying loss before tax and 98% of the Group’s total
assets. is gave us the evidence we needed for our opinion on the nancial statements as a whole.
Materiality
e scope of our audit was inuenced by our application of materiality. We set certain quantitative thresholds for
materiality. ese, 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 nancial statement line items and disclosures and in evaluating
the eect of misstatements, both individually and in aggregate on the nancial statements as a whole.
Based on our professional judgement, we determined materiality for the nancial statements as a whole as follows:
Overall Group materiality US$3.0 million (2020: US$11.4 million)
How we determined it Based on 5% of underlying loss before tax (2020: Based on 5% of underlying loss
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 of our Group audit, we allocated a materiality that is less than our overall Group
materiality. e range of overall materiality allocated across components was US$0.5 million to US$3.0 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specically, 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 and
disclosures, for example in determining sample sizes. Our performance materiality was 75% (2020: 75%) of overall
materiality, amounting to US$2.3 million (2020: US$8.6 million) for the Group nancial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the eectiveness of controls – and concluded that an amount in the middle of our
normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identied during our audit above
US$0.3 million (2020: US$1.1 million) other than classications within the Consolidated Prot and Loss Account or
Consolidated Balance Sheet, which were only reported above US$2.3 million (2020: US$11.4 million). We also report
misstatements below this amount that, in our view, warranted reporting for qualitative reasons.
105Annual Report 2021
Independent Auditors’ Report Continued
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis of
accounting included:
Evaluating the inherent risks to the Group’s and its businesses’ business models and analysed how those risks might
aect the Group’s nancial resources or ability to continue operations over the going concern period;
Assessing management’s base case and severe but plausible downside scenario models supporting the Board’s going
concern assessment, evaluating the process by which the assessments have been drawn up, ensuring that the
calculations in the model were mathematically accurate and that the overall methodology used was appropriate;
Considering sensitivities over the level of available nancial resources indicated by the Group’s nancial forecasts
taking account of reasonably possible, but not unrealistic, adverse eects 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;
Evaluating the committed nancing facilities currently available to the Group and ensuring that the models
appropriately included all contractual debt repayments and committed capital expenditures;
Agreeing to debt agreements and associated amendments secured, the covenants attached to each facility and
considering the Group’s forecast compliance at the measurement dates included in the going concern assessment
period; and
Agreeing the cash on hand and available facilities included in the going concern assessment to our year end audit work.
Based on the work we have performed, we have not identied any material uncertainties relating to events or conditions
that, individually or collectively, may cast signicant doubt on the Group’s ability to continue as a going concern for
a period of at least 12 months from when the nancial statements are authorised for issue.
In auditing the nancial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the nancial statements is appropriate.
As 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
e other information comprises all of the information in the Annual Report other than the nancial statements and
our auditors’ report thereon. e Directors are responsible for the other information. Our opinion on the nancial
statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of
assurance thereon.
In connection with our audit of the nancial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the nancial 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 misstatement
of the nancial 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 have
nothing to report based on these responsibilities.
Responsibilities for the nancial statements and the audit
Responsibilities of the Directors for the nancial statements
As explained more fully in the Responsibility Statement and the Corporate Governance section, the Directors are responsible
for the preparation of the nancial statements in accordance with the applicable framework and for being satised that
they give a true and fair view. e Directors are also responsible for such internal control as they determine is necessary
to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error.
106 Mandarin Oriental International Limited
In preparing the nancial 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 unless
the 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 nancial statements
Our objectives are to obtain reasonable assurance about whether the nancial 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. Reasonable
assurance 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 considered
material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of
users taken on the basis of these nancial 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 nancial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. is description forms part of our auditors’ report.
Use of this report
is report, including the opinion, has been prepared for and only for the Group’s members as a body in accordance with
Section 90 of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come, including without limitation under any contractual obligations of the Group, save where expressly agreed by
our prior consent in writing.
Partner responsible for the audit
e engagement partner on the audit resulting in this independent auditors’ report is John Waters.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R,
these nancial statements will form part of the ESEF-prepared annual nancial report led on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard
(‘ESEF RTS’). is auditors’ report provides no assurance over whether the annual nancial report will be prepared
using the single electronic format specied in the ESEF RTS.
PricewaterhouseCoopers LLP
Chartered Accountants
London
3rd March 2022
107Annual Report 2021
To Mandarin Oriental International Limited
Dear Sirs
Revaluation of Under Development Leasehold Commercial Investment Property
Further to your instruction, we have valued in our capacity as external valuers of the Causeway Bay site under
development at No. 281 Gloucester Road, Causeway Bay, Hong Kong, being a commercial investment property
held on lease as described in the consolidated nancial statements of Mandarin Oriental International Limited.
We are of the opinion that the market value of the commercial investment property as at 31st December 2021 was
US$2,462,000,000 (United States Dollar Two Billion Four Hundred Sixty-Two Million).
Our valuation was prepared in accordance with the International Valuation Standards by the International Valuation
Standards Council and e HKIS Valuation Standards by e Hong Kong Institute of Surveyors. We have inspected
the property without either conducting site nor structural surveys or testing of the services.
We have been provided with details of tenure, proposed development scheme and other relevant information. e property
has been valued by the direct comparison method and the residual method with equal weighting. e direct comparison
method is based on comparing the property to be valued directly with other comparable properties. e residual method
is based on an assessment of the completed gross development value and the deduction of development costs and the
developer’s return to arrive at the residual value of a development property. For the direct comparison method and
the assessment of the completed gross development value, given the heterogeneous nature of real estate properties,
appropriate adjustments are usually required to allow for any qualitative dierences that may aect the price likely
to be achieved by the property under consideration.
Yours faithfully
Jones Lang LaSalle Limited
Hong Kong
18th February 2022
Report of the Valuers
108 Mandarin Oriental International Limited
Five Year Summary
2017
US$m
2018
US$m
2019
US$m
2020
US$m
2021
US$m
Revenue 610.8 613.7 566.5 183.7 316.9
69.0 70.7 (99.3)
(12.7)
11.5 5.7 (21.8)
69.5 62.2 (133.8)
(7.6)
(141.4)
(141.4)
(68.1)
(11.19)
5.15 3.26 (5.39)
3.00 3.00 1.50 – –
2017
US$m
2018
US$m
2019
US$m
2020
US$m
2021
US$m
53.0 46.7
1,272.0 1,205.9 1,181.5 1,098.2
300.3 273.3
– – 2,967.7 2,528.3 2,462.0
195.7 196.1 203.1 231.6 201.5
11.0 15.2 15.9 16.1 16.5
11.0 11.5 10.6 17.8 13.7
0.2 1.3 5.5 7.1
0.5 5.1 6.2 5.1 8.9
118.5 19.5 113.2
(727.8)
(147.4)
(50.1)
(0.3)
– (3.2)
1,273.5 1,236.2 3,513.2 3,312.3
62.9 63.1 63.2 63.2 63.2
500.5
710.6 671.5 3,550.1 2,745.1
3,509.5 3,308.8
6.1 3.8 3.6 3.7 3.5
1,273.5 1,236.2 3,513.2 3,312.3
1.01 0.98 3.26 2.78 2.62
2017
US$m
2018
US$m
2019
US$m
2020
US$m
2021
US$m
119.9 152.6 112.9 26.4
(32.5)
17.9 83.6 32.5 (6.1)
9.53 12.11 2.09
109Annual Report 2021
Responsibility Statement
e Directors of the Company conrm to the best of their knowledge that:
a) the consolidated nancial statements have been prepared in accordance with International Financial Reporting
Standards, including International Accounting Standards and Interpretations adopted by the International
Accounting Standards Board; and
b) 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
Matthew Bishop
Dire ctors
3rd March 2022
110 Mandarin Oriental International Limited
Overview of governance approach
The Mandarin Oriental Hotel Group (Mandarin Oriental International Limited (the ‘Company’) and its subsidiaries
together known as the ‘Group’) understands the value of good corporate governance 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, and 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. The governance
framework is tailored to the Group’s size, ownership structure, complexity and breadth of the 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 the Board is respected and clear operational accountability rests with the Company’s
executive management teams. Having an effective corporate governance framework supports the Board in delivering 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 the Jardine
Matheson group and the Group is considered a key element of the Group’s success. By coordinating objectives,
establishing shared values and standards, and sharing experience, contacts and business relationships, the Jardine
Matheson group companies 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 in 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 Company’s corporate governance practices beyond the requirements under Bermuda law.
The Company also has secondary listings in Singapore and Bermuda . As the Company has only secondary listings on
these 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.
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; and
The Company’s Memorandum of Association and Bye-laws.
The shareholders can amend the Company’s Bye-laws by way of a special resolution at a general meeting of the Company.
The Company’s standard listing 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 UK Market Abuse Regulation (‘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. In addition, 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.
Corporate Governance
111Annual Report 2021
Corporate Governance Continued
Governance and legal framework continued
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 expected to be followed by companies
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 as were then applicable to the Company’s
premium listing. As a result, the Company has adopted several governance principles (the ‘Governance Principles’) based
on the then applicable requirements for a premium listing, which go further than the standard listing requirements.
The key elements of the Governance Principles are as follows:
When assessing a significant transaction (a larger transaction which would be classified as a class 1 transaction
under the provisions of the UK Listing Rules), the Company will engage an independent financial adviser to provide
a fairness opinion on the terms of the transaction.
If the Company carries out a related party transaction which would require a sponsor to provide a fair and reasonable
opinion under the provisions of the UK Listing Rules, it will engage an independent financial adviser to confirm that
the terms of the transaction are fair and reasonable as far as the shareholders of the Company are concerned.
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 on
a 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 to
market abuse and disclosure of interests in shares.
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 for
which 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 the annual report and accounts;
112 Mandarin Oriental International Limited
The Board continued
Approval of dividend policy and amount and form of interim and final dividend payments for approval by
shareholders as required;
Any significant changes to the Company’s accounting policies or practices upon recommendation from the Audit Committee;
Appointment, re-appointment or removal of the external auditor, subject to shareholder approval, upon
recommendation from 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; and
Approval 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
than significant 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’).
The Company sees the value of regularly reviewing the effectiveness of its processes, and making improvements where
appropriate. The Board will therefore establishing a Board evaluation review process.
Board composition and operational management
The Board’s composition and how 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 that
the chairman of Jardine Matheson, or any Director nominated by him, shall be the Chairman of the Company.
The Company has a dedicated executive management team led by the Group Chief Executive. The Memorandum of
Association of the Company, however, provides for the chairman of Jardine Matheson to be, or to appoint, the Managing
Director of the Company. The chairman of Jardine Matheson has appointed the Jardines Group Managing Director as
Managing Director of the Company. Reflecting this, and the Jardine Matheson group’s 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 finance committee are chaired by the Managing Director and include Mandarin Oriental Hotel Group executives and
Jardine Matheson’s deputy managing director, group finance director and group general counsel.
The presence of Jardine Matheson representatives on the Board and Audit Committee of the Company, as well as on the
board and finance committee of MOHG, provides an added element of stability to the Company’s financial planning
and supervision, enhancing its ability to raise finance and take a long-term view of business development. In addition,
the presence of Jardine Matheson representatives on the Company’s Board, Audit, Nominations and Remuneration
Committees, as well as MOHG’s finance committee, also strengthens the ability of management to work effectively
together in exploiting the full range of the Jardine Matheson group’s commercial strengths.
As at 3rd March 2022, the Company comprises nine Directors, three of whom (33%) – Jinqing Cai, Archie Keswick
and Richard Solomons – are regarded as Independent Non-Executive Directors. The names of all the Directors and brief
biographies appear on pages 31 and 32 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 to ensure an appropriate balance of power and authority.
113Annual Report 2021
Corporate Governance Continued
Chairman
The Chairman’s role is to lead the Board, ensure its effectiveness while taking into account of the Group’s various
stakeholders’ interests, and promote high standards of corporate governance. The Chairman’s principal responsibilities
are strategy, relationships, governance and people. In addition, 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, with the Managing Director and the Group Chief Executive, the development of the culture and values of
the Group;
Supporting the development and maintenance of relationships with existing and new key business partners,
governments and shareholders;
Ensuring together with the Managing Director and Group Chief Executive an appropriate focus on attracting and
retaining the right people and carrying out succession planning for senior management positions;
Creating a culture of openness and transparency at Board meetings;
Building an effective Board supported by a robust governance framework;
Ensuring all Directors effectively contribute to discussions and feel comfortable in engaging in healthy debate and
constructive challenge;
Leading, with the Managing Director, the succession planning for the Group Chief Executive;
Ensuring all Directors receive accurate, timely and clear information; and
Promoting effective communication between Executive and Non-Executive Directors.
Managing Director
The Managing Director acts as chairman of MOHG and of its finance committee and is a member of the Company’s
Nominations and Remuneration Committees. He has responsibility for representing Jardine Matheson, as the major
shareholder in the Company, in its oversight of the day-to-day management by 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 rest with the Group
Chief Executive. The implementation of the Group’s strategy is delegated to the Company’s executive management, with
decision-making authority within designated financial parameters 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 business
or 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; and
Fostering 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, scrutinising the performance of management in achieving
agreed goals and objectives. In addition, Non-Executive Directors work on individual initiatives as appropriate.
114 Mandarin Oriental International Limited
Board meetings
The Board usually holds four meetings each year, and ad hoc procedures are adopted to deal with urgent matters between
scheduled meetings. Board meetings are usually held in different locations around the Group’s markets.
In 2021, 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 Company reviews the information provided to the Board regularly, to
ensure that it remains relevant to the needs of the Board in carrying out its duties.
The Directors of the Company who do not serve on the board of MOHG and who are based outside Asia will usually visit
Asia and Bermuda to discuss the Group’s business and participate in the four strategic reviews that precede regular Board
meetings. In 2021, all of these strategic reviews were held virtually due to the pandemic. These Directors are not directly
involved in the operational management of the Group’s business activities, but their knowledge of the Group’s affairs,
as well as their experience of the wider Jardine Matheson group, provide significant value to the ongoing review by the
Company of the Group’s business and reinforces the Board oversight process.
Board attendance
Directors are expected to attend all Board meetings. The table below shows the attendance at the scheduled Board meetings:
Meetings eligible
to attend Attendance
Current Directors of the Company
Non-Executive Directors
Ben Keswick 4/4 100%
Jinqing Cai
1
1/1 100%
Adam Keswick 4/4 100%
Archie Keswick 4/4 100%
Y.K. Pang 4/4 100%
Richard Solomons
1
1/1 100%
Executive Directors
John Witt 4/4 100%
James Riley 4/4 100%
Matthew Bishop
2
1/1 100%
Former Directors of the Company
Craig Beattie
3
3/3 100%
Jack Chen
4
1/3 33%
Julian Hui
4
3/3 100%
Lincoln K.K. Leong
4
3/3 100%
Anthony Nightingale
4
3/3 100%
James Watkins
5
3/3 100%
Percy Weatherall
4
3/3 100%
1
Jinqing Cai and Richard Solomons joined the Board on 1st December 2021.
2
Matthew Bishop joined the Board as Chief Financial Officer on 1st September 2021.
3
Craig Beattie stepped down as Chief Financial Officer on 31st August 2021.
4
Jack Chen, Julian Hui, Lincoln K.K. Leong, Anthony Nightingale and Percy Weatherall retired from the Board on 1st December 2021.
5
James Watkins retired from the Board on 29th July 2021.
115Annual Report 2021
Corporate Governance Continued
Appointment and retirement of Directors
The Board appoints each new Director, and the Nominations Committee has been established to assist the Board in 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 the appointment. After that, 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.
On 29th July 2021, James Watkins stepped down from the Board. Craig Beattie stepped down as Chief Financial
Officer of the Company on 31st August 2021, and Matthew Bishop joined the Board in his place on 1st September 2021.
On 1st December 2021, Jack Chen, Julian Hui, Lincoln K.K. Leong, Anthony Nightingale and Percy Weatherall retired
from the Board, and Jinqing Cai and Richard Solomons were appointed to the Board.
In accordance with Bye-law 85, Adam Keswick will retire by rotation at this year’s AGM and, being eligible, offer himself
for re-election. In accordance with Bye-law 92, Matthew Bishop, Jinqing Cai and Richard Solomons will also retire
and, being eligible, offer themselves for re-election. Matthew Bishop entered into a service contract with a Company
subsidiary with a notice period of six months. None of the other Directors proposed for re-election has a service contract
with the Company or its subsidiaries.
Directors need to obtain the Chairman’s approval before accepting additional appointments that might affect their time
to devote to the role as a Director of the Company.
Company Secretary
All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all
governance matters.
Committees
The Board is supported by the activities of its Committees (the Nominations, Remuneration and Audit Committees),
which ensure the right level of attention and consideration are given to specific matters. Matters considered by each of
the Committees are set out in their respective terms of reference. Copies of these documents can be obtained from the
Company’s website at www.mandarinoriental.com.
Nominations Committee
The Board established a Nominations Committee (the ‘Nominations Committee’) in March 2021. The key
responsibilities of the Nominations Committee are to:
Review the structure, size and composition of the Board and its committees and make recommendations on any
appointments 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 (considering the promotion of the diversity of
backgrounds, knowledge, experience and skills), taking into account their ability to meet the required time commitments;
Oversee the development of succession pipelines for both the Board and senior management positions to ensure talent
is identified and nurtured to meet the challenges and opportunities facing the Group; and
Satisfy 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 their
role effectively.
116 Mandarin Oriental International Limited
Nominations Committee continued
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 and
more often if necessary, or by the circulation of Committee circulars to make recommendations to the Board for approval
as it deems appropriate. It plays a key role in the process of recruiting senior executives. Candidates for appointment
as Executive Directors of the Company or other senior management positions may be sourced internally or externally,
including 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, and
familiarity 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.
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. However, neither insurance nor indemnity
provides cover where the Director has acted fraudulently or dishonestly.
Delegations of authority
The Group has in place an organisational structure with defined lines of responsibility and delegation of authority.
There are established policies and procedures for financial planning and budgeting, information and reporting systems,
assessment of risk; and monitoring the Group’s operations and performance. The information systems in place are
designed to ensure that the financial information reported is reliable and up to date.
Directors’ responsibilities in respect of the financial statements
Under the Companies Act, the Directors are required to prepare financial statements for each financial year and present
them annually to the Company’s shareholders at the AGM. The financial statements are required to present fairly, in
accordance with International Financial Reporting Standards (‘IFRS’), the financial position of the Group at the end of
the year, and the results of its operations and its cash flows for the year then ended. The Directors consider that applicable
accounting policies under IFRS, applied consistently and supported by prudent and reasonable judgements and estimates, have
been followed in preparing the financial statements. The financial statements have been prepared on a going concern basis.
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 in
the percentage of voting rights which the person holds reaching, exceeding, or falling below, 5%, 10%, 15%, 20%, 25%,
30%, 50% and 75%.
The Company has been informed of the holding of voting rights of 5% or more attaching to the Company’s issued
ordinary share capital by Jardine Strategic Limited (‘Jardine Strategic’), which is directly interested in 1,003,691,509
ordinary shares carrying 79.43% of the voting rights. By virtue of its interest in Jardine Strategic, Jardine Matheson is
also interested in the same ordinary shares. Apart from this shareholding, the Company is not aware of any holders of
voting rights of 5% or more attaching to the Company’s issued ordinary share capital as of 3rd March 2022.
There were no contracts of significance with substantial corporate shareholders during the year under review.
117Annual Report 2021
Corporate Governance Continued
Related party transactions
Details of transactions with related parties entered into by the Company during the course of the year are included in
note 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 the Company’s issued
share capital. When the Board reviews the possibility for share repurchases, it will consider 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 2022 AGM will be held on 5th May 2022. The full text of the resolutions and explanatory notes regarding the
meeting 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.
Group policies
Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are set out in its
Code of Conduct, a set of guidelines to which every employee must adhere. It is reinforced and monitored by an annual
compliance certification process and modelled on the Jardine Matheson group’s code of conduct. The Code of Conduct
requires that all Group companies comply with all laws of general application, all rules and regulations that are industry
specific and proper standards of business conduct. In addition, the Code of Conduct prohibits the giving or receiving of
illicit payments. It 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 area of
compliance. The policy is also set out in the Group’s Code of Conduct.
Data privacy
The Group is committed to being a responsible custodian of the data entrusted to it by customers, employees, suppliers
and other stakeholders. In addition, it is subject to multiple data privacy and security laws and regulations in the global
jurisdictions in which it operates. Accordingly, the Group is dedicated to complying with such laws and regulations,
regularly monitoring for legislative changes and adjusting its policies and procedures when appropriate.
The Group’s Privacy Policy, and internal guidelines and procedures, underline the Group’s commitment to being a
responsible data custodian and ensuring compliance with applicable law.
Whistleblowing policy
The Group has a whistleblowing policy covering how employees can report matters of serious concern. The Audit
Committee has responsibility for overseeing the effectiveness of the formal procedures for colleagues to raise such
matters and is required to review any reports made under those procedures referred to it by the internal audit function.
In addition, the Group has a whistleblowing service managed by an independent service provider to supplement existing
whistleblowing channels to assist employees in reporting suspected illegal or unethical behaviour or other matters of
serious concern and is intended to help foster an inclusive, safe and respectful workplace. The service, which is available
24 hours in multiple languages, accessible through phone hotline or online, and as anonymous submissions, may be
used by colleagues to report a matter of concern to a manager supervisor, Human Resources or Legal representative.
The reports are treated confidentially and any retaliation against a person reporting a potential breach of the Code in
good faith will not be tolerated.
118 Mandarin Oriental International Limited
Inclusion and diversity
The Group will continue to foster a culture of inclusivity and empowerment, where colleagues with different
backgrounds feel comfortable in being themselves, in voicing their ideas and have equal opportunities to thrive.
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 brand necessitate that the Group seeks the
best people from the communities in which it operates most suited to its needs.
All staff are encouraged and supported to develop their full potential and contribute to the sustainable growth of the
Group. Employees views and ideas are essential, and they are encouraged to express them respectfully with colleagues at
all levels within the organisation.
The Company keeps the composition of its Board and senior management positions under review to ensure that it adapts
to the changing business landscape. The Company recognises that gender diversity is an important issue, and this is
something it is actively focused on, with consistent improvement in this area. As of July 2021, nearly a quarter of
colleagues at the CEO level or the level below are female, 39% of our management are women, and 56% of the latest
intake of graduate trainees are women.
The Group is developing a Diversity and Inclusion Policy that is expected to be published in 2022.
Remuneration Report
Message from the Board/Remuneration Committee
The Board is pleased to present shareholders with the 2021 Remuneration Report. This report sets out the Group’s
approach to remuneration for its executives and directors, particularly the link between the Group’s strategy and its
remuneration framework, the link between performance and reward, and remuneration outcomes for senior executives.
The Group’s remuneration philosophy and framework for rewarding staff
The remuneration outcomes in 2021 reflect the intended operation of the remuneration framework.
At the heart of the Group’s remuneration framework is our commitment to deliver competitive remuneration for
excellent performance to attract the best and motivate and retain talented individuals while aligning the interests of
executives and shareholders.
The Group achieves this through:
Performance-based variable compensation;
Incentives based on financial measures and strategic objectives that reflect key goals critical to sustained
organisational success;
Consideration of business and operational risk as well as a sustainability development goal through the design of
performance objectives;
Providing incentives and policies that align the interests of executives to those of shareholders;
Best-practice governance and ensuring remuneration outcomes are reasonable, taking into account community and
stakeholder expectations; and
Targeting remuneration levels and outcomes appropriately reflect the challenge and complexity of being a
multinational Asian conglomerate with diverse businesses.
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 to reflect this. In addition, Executive Directors joining
from outside the Group may be offered an initial fixed-term service contract to reflect any requirement for them to relocate.
119Annual Report 2021
Corporate Governance Continued
The Group’s remuneration philosophy and framework for rewarding staff continued
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 Committee
The Board has overall responsibility for setting remuneration across the Group, ensuring it is appropriate and supports
the Group’s strategy, creating value for stakeholders. The Remuneration Committee has been established to assist the
Board in these remuneration matters.
In March 2021, MOHG, the Group’s Management Company, established a Remuneration Committee to assist the
Board in remuneration matters. In December 2021, the MOHG Remuneration Committee was dissolved and replaced
by a Remuneration Committee (the ‘Remuneration Committee’) established at the Company level. 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; and
Remain abreast of trends and developments in executive compensation and corporate governance related 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. In addition, the Group Chief Executive, the Chief Human Resources
Officer and Jardines group human resources director will generally attend meetings of the Remuneration Committee.
The Remuneration Committee meets at least twice annually and more often if necessary, with its meetings aligned
with the key events in the Group’s annual remuneration cycle or by the circulation of Committee circulars which make
recommendations to the Board for approval as it deems appropriate.
How remuneration framework is linked to the business strategy
The Group’s remuneration strategy is designed to support and reinforce its business and sustainability strategies. The
at-risk components of remuneration are tied to measures that reflect the successful execution of these strategies in both
the short and long terms. Our strategic drivers of ‘Elevating our brand, Lifting our People, Powering our Core and
Exceptional Quality’ are reflected in bonus performance measures. So, the Group’s actual performance directly affects
what executives are paid.
Remuneration outcomes in 2021
For the year ended 31st December 2021, the Directors received from the Group US$4.6 million (2020: US$6.0 million) in
Directors’ fees and employee benefits, being:
US$0.7 million (2020: US$0.4 million) in Directors’ fees;
US$3.7 million (2020: US$5.4 million) in short-term employee benefits, including salary, bonuses, accommodation
and deemed benefits in kind;
US$0.1 million (2020: US$0.1 million) in post-employment benefits; and
US$0.1 million (2020: US$0.1 million) in long-term incentive benefits.
The information set out in the section above headed ‘Remuneration outcomes in 2021’ forms part of the audited
financial statements.
120 Mandarin Oriental International Limited
Share schemes
Share-based long-term incentive plans have also been established to provide incentives for Executive Directors and senior
managers. The scheme trustee grants share options and share awards after consultation between the Chairman and the
Group Chief Executive and other Directors as they consider appropriate. Share options are granted at prevailing market
prices, while share awards will vest free of payment. The share options and share awards normally vest on or after the
third anniversary of the grant date. Grants may be made in several instalments. Share options and share awards are not
granted to Non-Executive Directors.
Directors’ share interests
The Directors of the Company in office on 3rd March 2022 had interests* as set out below in the Company’s ordinary
share capital. These interests include those notified to the Company regarding the Directors’ closely associated persons*.
John Witt 4,894,068
James Riley 180,450
* Within the meaning of MAR
Audit Committee Report
Audit Committee
In December 2021, the Audit Committee established by the Board within MOHG (the ‘Former Audit Committee’) had
been dissolved and replaced by an Audit Committee (the ‘Audit Committee’) established by the Board at the Company
level. The Audit Committee consists of a minimum of three members, the current members of which are Y.K. Pang
(Chairman of the Audit Committee), Graham Baker and Richard Solomons. None of them is directly involved in the
operational management of the Company.
With the appointment of Richard Solomons, an Independent Non-Executive Director, in December 2021 to the Audit
Committee, the Company is moving towards a majority of independent members. Graham Baker is also a member of
the Committee with recent financial experience and expertise. In addition, Graham Baker has a deep understanding of
risk management.
The Managing Director, Group Chief Executive and Chief Financial Officer, and representatives of the internal and
external auditors, also attend the Audit Committee meetings by invitation. In addition, other individuals may attend
part of a meeting for specific agenda items as appropriate. The Audit Committee meets twice a year and reports to the
Board after each meeting.
Its terms of reference govern the role of the Audit Committee. The 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; and
Reviewing and approving the level and nature of non-audit work performed by the external auditors.
Before completion and announcement of the half-year and year-end results, a review of the financial information and
any issues raised in connection with the preparation of the results, including the adoption of new accounting policies, is
undertaken by the Audit Committee with the executive management and a report is received from the external auditors.
The external auditors also have access to the entire Board when necessary, in addition to the Group Chief Executive,
Chief Financial Officer and other senior executives.
121Annual Report 2021
Corporate Governance Continued
The matters considered by the Former Audit Committee during 2021 included:
Reviewing the 2020 annual financial statements and 2021 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 to
the risk profile, as well as the effectiveness of risk management measures and crisis management arrangements;
Receiving updates on the cybersecurity threat landscape and the Group’s cybersecurity environment, risk
management approach, training, priorities and control effectiveness;
Receiving reports from risk management and legal functions on key legal matters and compliance and code of
conduct issues, and the actions taken in addressing those issues and strengthening controls;
Reviewing the annual internal audit plan and status updates;
Reviewing and approving the revised terms of reference of the Group’s internal audit and risk management functions;
Reviewing the Group’s governance approach to cybersecurity management, data security and privacy management
across its businesses;
Reviewing the biennial assessment of the effectiveness of PwC;
Reviewing the independence, audit scope and fees of PwC, and recommending their re-appointment as the external
auditor; and
Conducting a review of the terms of reference of the Audit Committee.
Former Audit Committee attendance
1
The table below shows the attendance at the scheduled Audit Committee meetings:
Meetings eligible
to attend Attendance
Members of the Former Audit Committee
Directors of the Company
John Witt 2/2 100%
Y.K. Pang 2/2 100%
Directors of MOHG
Graham Baker 2/2 100%
Jeremy Parr 1/2 50%
1
The Former Audit Committee was dissolved on 1st December 2021.
Risk management and internal control
The Board has overall responsibility for the Group’s risk management systems and internal control. The Board has
delegated to the Audit Committee responsibility for providing oversight regarding risk management activities. The Audit
Committee considers the Group’s principal risks and uncertainties and potential changes to the risk profile. It reviews
the operation and effectiveness of the Group’s internal control systems (financial, operational and compliance) and the
procedures by which these risks are monitored and mitigated.
The Audit Committee considers the systems and procedures regularly and reports to the Board semi-annually. The internal
control systems are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s assets against
fraud and other irregularities; and give reasonable, but not absolute, assurance against material financial misstatement or
loss. Executive management is responsible for implementing the systems of internal control throughout the Group.
122 Mandarin Oriental International Limited
Risk management and internal control cont inued
The Group has an established risk management process that is reviewed regularly and covers all business units within the
Group. This includes the maintenance of risk registers that detail the emerging and existing risks to the future success of the
business and the relevant key controls and mitigating factors that address those risks. These are reviewed on a regular basis.
The internal audit function also monitors the approach taken by the business units to risk. The internal audit function is
independent of the operating businesses and reports its findings and recommendations for any corrective action required
to the Audit Committee.
The Company’s principal risks and uncertainties are set out on pages 125 to 128.
Risk governance structure
Each business unit is responsible for:
Identifying and assessing principal risks and uncertainties to which it is exposed;
Implementing the most appropriate actions to mitigate and control those risks to an acceptable level;
Providing adequate resources to minimise, offset or transfer the effects of any loss that may occur while managing
acceptable risk/benefit relationships;
Monitoring the effectiveness of the systems of risk management and internal control; and
Reporting periodically to its board of directors and the Group’s Audit and Risk Management function (Group Audit
and Risk Management or ‘GARM’) on the principal risks and uncertainties.
The Company regularly communicate information and guidelines for reporting principal risks and uncertainties.
In addition, risk management initiatives, such as training and sharing sessions, are undertaken by each business unit.
JM Board of Directors JM Audit Committee
MOIL Board of Directors
MOIL Management
MOIL Audit Committee
MOIL Compliance
Group Audit and Risk
Management (‘GARM’)
External Audit
(‘PwC’)
Oversee Report Monitor/
Review
Delegate/
Oversee
123Annual Report 2021
Corporate Governance Continued
Risk Management Framework
Risk management should be integrated into each business unit’s strategic planning, budgeting, decision-making and
operations. Central to this is the continuous and systematic application of:
Risk Management Framework based on ISO 31000 and COSO principles is embedded in the Group to identify, assess
and define the strategies to monitor risks. The risk registers prepared by each business unit provide the basis for the
aggregation process, which summarises the principal risks and uncertainties facing the Group as a whole.
Risk Identification Identify and document the Group’s exposure to uncertainty with existing
strategic objectives
Adopt structured and methodical techniques to identify critical risks
Risk Assessment Evaluate risks by estimating likelihood, financial and reputational damage, and the
speed at which the risk materialises, based on its inherent and residual level
Determine risk rating using the risk heatmap, with four levels of residual risk status
Risk Treatment Tolerate – accept if within the Group’s risk appetite
Terminate – dispose or avoid risks were no appetite
Risks may be accepted if mitigated to an appropriate level via:
Transfer – take out insurance or share risk through contractual arrangements with
business partners
Treat – redesign or monitor existing controls or introduce new controls
Risk Reporting
& Monitoring
Periodic review of principal risks and uncertainties
Setting key risk indicators to enhance monitoring and mitigation of risks
Regular reporting of principal risks and uncertainties from business units to the Group’s
Board of Directors via Audit Committee and Group Audit and Risk Management
Risk Identification
Risk
Treatment
Risk Reporting
& Monitoring
Risk
Assessment
124 Mandarin Oriental International Limited
Principal risks and uncertainties
The following are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to the
DTRs issued by the FCA and are in addition to the matters referred to in the Chairman’s Statement, Group Chief
Executive’s Review and other parts of this Report.
Economic risk
The Group’s business is exposed to the risk of adverse developments in global and regional economies and financial
markets, either directly or through the impact on the Group’s investment partners, third-party hotel owners
and developers, 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 its strategic objectives fully. These developments could also adversely affect travel patterns, impacting demand
for the Group’s products and services.
Mitigation measures
Monitor the volatile macroeconomic environment and consider economic factors in strategic and financial
planning processes.
Make agile adjustments to existing business plans and explore new business streams and new markets.
Review pricing strategies.
Insurance programme covering property damage and business interruption.
Commercial 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 highly competitive global hotel industry. Failure to compete effectively in terms of
product quality, service levels, or price can adversely affect earnings. This may also include failure to adapt to rapidly
evolving customer preferences and expectations. Significant competitive pressure or the oversupply of hotel rooms in
a specific market can reduce margins. Advances in technology creating new or disruptive competitive pressures might
also negatively affect the trading environment.
The Group competes with other luxury hotel operators for new opportunities in the 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 regarding acquiring new hotel properties and undertaking significant
renovations 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 opening of new hotels and branded residences. Most of the
Group’s new developments are controlled by third-party owners and developers. As a result, they can be subject to
delays due to issues 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.
Mitigation measures
Utilise market intelligence and deploy strategies for business-to-consumer businesses.
Establish customer relationship management programme and digital commerce capabilities.
Engage in longer-term contracts and proactively approach suppliers for contract renewals.
Re-engineer existing business processes.
125Annual Report 2021
Corporate Governance Continued
Principal risks and uncertainties c ontinued
Financial and treasury risk
The Group’s activities expose it to a variety of financial risks, comprising market risk, credit risk and liquidity risk.
Market risk facing the Group includes i) foreign exchange risk from future commercial transactions, net investments
in foreign operations and net monetary assets and liabilities that are denominated in a currency that is not the entity’s
functional currency; ii) interest rate risk through the impact of rate changes on interest bearing liabilities and assets;
and iii) securities price risk because of its equity investments and limited partnership investment funds which are
measured at fair value through profit and loss, and debt investments which are measured at fair value through other
comprehensive income.
The Group’s credit risk is primarily attributable to deposits with banks, contractual cash flows of debt investments
carried at amortised cost and those measured at fair value through other comprehensive income, credit exposures to
customers and derivative financial instruments with a positive fair value.
The Group exercises prudent liquidity risk management which 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.
Mitigation measures
Limit foreign exchange and interest rate risks to provide a degree of certainty about costs.
The investment of the Group’s cash resources is managed so as to minimise risk, while seeking to enhance yield.
Appropriate credit guidelines are in place to manage counterparty risk.
When economically sensible to do so, borrowings are taken in local currency to hedge foreign exchange exposures
on investments.
A portion of borrowings is denominated in fixed rates. Adequate headroom in committed facilities is maintained
to facilitate the Group’s capacity to pursue new investment opportunities and to provide some protection against
market uncertainties.
The Group’s funding arrangements are designed to keep an appropriate balance between equity and debt from
banks and capital markets, both short and long term in tenor, to give flexibility to develop the business.
The Group’s treasury operations are managed as cost centres and are not permitted to undertake speculative
transactions unrelated to underlying financial exposures.
The detailed steps taken by the Group to manage its exposure to financial risk are set out in the Financial Review on
pages 29 and 30 and note 36 to the financial statements on pages 88 to 95.
Pandemic, terrorism and natural disasters
A global or regional pandemic would impact the Group’s business, affecting 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 through 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.
Management recognise that there is an increased talent management and labour shortage risk, primarily due to
the pandemic.
Mitigation measures
Flexible work arrangements and compliance with hygiene protocols.
Supply chain stabilisation includes sourcing backup suppliers and better coordination with logistics partners.
Engage external consultants for climate risk analysis.
Business Continuity Plans are tested and audited periodically.
Insurance programmes that provide robust cover for natural disasters.
126 Mandarin Oriental International Limited
Principal risks and uncertainties c ontinued
Key agreements
The Group’s business relies upon joint venture and partnership agreements, property leasehold arrangements,
management, license, branding and services agreements or other key contracts. Accordingly, cancellation, expiry
or termination, or the renegotiation of any of these key agreements and contracts could have an adverse effect on
the financial performance of individual hotels and the wider Group.
Mitigation measures
Strengthen existing relationships with partners through complying with partnership agreements, property
leasehold arrangements, management, license, branding and services agreements or other key contracts.
Engage in longer-term contracts and proactively approach suppliers for contract renewals.
Regular communication with partners and strengthen quality assurance programmes.
Engage external consultants and legal experts where necessary.
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
and services and to achieving acceptable revenues and profit margins. Accordingly, any damage to the Group’s brand
equity or reputation, including as a result of adverse effects relating to health and safety, acts or omissions by Group
personnel, and any allegations of socially irresponsible policies and practices, might adversely impact the attractiveness
of the Group’s properties or the loyalty of the Group’s guests.
Mitigation measures
Perform regular cybersecurity and data vulnerability assessment at least annually and/or penetration testing to
identify weaknesses.
Active monitoring and use of social media.
Engage external consultants and experts where necessary.
Regulatory and political risk
The nature of the Group’s global operations means 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 can impact the operations
and profitability of the Group’s business. Non-compliance with laws and regulations could result in fines and/or
penalties. Changes in the political environment, including prolonged civil unrest in the territories in which the Group
operates, could adversely affect the Group’s business.
Mitigation measures
Stay connected and informed of relevant new and draft regulations.
Engage external consultants and legal experts where necessary.
Raise awareness via principal’s brand conference with an annual update on new regulations that may have been
implemented in other markets.
Cybersecurity risk
The Group’s business is ever more reliant on technology in its operations and faces increasing cyberattacks from groups
targeting both individuals and businesses. As a result, the privacy and security of guests and corporate information are
at risk of being compromised through a breach of our or our suppliers’ IT systems or the unauthorised or accidental
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
business systems, resulting in business interruption, lost revenues, repair, reputation damage or other costs.
127Annual Report 2021
Corporate Governance Continued
Cybersecurity risk continued
Mitigation measures
Engage external consultants to perform assessments on the business units with industry benchmarks.
Define cybersecurity programme and centralised function to provide oversight, manage cybersecurity matters,
and strengthen cyber defences and security measures.
Perform regular vulnerability assessments and/or penetration testing to identify weaknesses.
Maintain disaster recovery plans and backup for data restoration.
Arrange security awareness training and phishing testing to raise users’ cybersecurity awareness.
People risk
The competitiveness of the Group’s businesses depends on the quality of the people that it attracts and retains.
Unavailability of needed human resources may impact the ability of the Group’s businesses to operate at capacity,
implement initiatives and pursue opportunities.
The pandemic has accelerated corporate investments in digital projects and stimulated global consumer demand for
e-commerce. This has created heightened demand and competition across industries for various skillsets, particularly
in IT and supply chain. Pandemic-related travel restrictions and a more stringent approach to issuing work visas to
non-locals in some of the key markets have also disrupted the availability of labour across borders, exacerbating
labour shortages as economies rebound.
Mitigation measures
Ensure proactive manpower planning and succession planning are in place.
Enhance modern employer branding, training for colleagues, compensation and benefits, talent development plan.
Implement strategy to promote diversity and inclusion across the Group.
Provide employee retention programmes.
Environmental and climate risk
Global climate change has led to a trend of increased frequency and intensity of potentially damaging natural
events for the Group’s assets and operations. With interest in sustainability surging in recent years from investors,
governments and other interested parties, expectations by regulators and other stakeholders for accurate corporate
sustainability reporting and commitments towards carbon neutrality and other sustainability related goals are also
growing. This brings increasing challenges to the Group and its businesses to meet key stakeholders’ expectations.
Mitigation measures
Executive Advisory Panel, Sustainability Leadership Council and Hotel Sustainability Committees have been in
place to mobilise and coordinate sustainability efforts across the Group.
Renewed environmental targets for 2025 and 2030 have been determined per property through a Group-wide
inventory management plan.
Environmental initiatives span across energy reduction, carbon reduction, renewable energy, water conservation,
waste reduction and switching to LED lighting.
Perform climate risk assessments and adaptation action plans across the Group.
Identify environmental impact opportunities that address multiple problems and risks and gaps that are generally
relevant to all properties and society in general.
Assess emerging ESG reporting standards and requirements, and align the Group’s disclosures to best market practice.
Effectiveness review of risk management and internal control systems
The effectiveness of these systems is monitored by the internal audit function, which reports functionally to the Audit
Committee of the Group. The findings of the internal audit function and recommendations for any corrective action
required are reported to the Audit Committee and, if appropriate, to the Jardine Matheson Audit Committee.
Principal risks and uncertainties c ontinued
128 Mandarin Oriental International Limited
Financial calendar
2021 full-year results announced 3rd March 2022
Annual General Meeting to be held 5th May 2022
2022 half-year results to be announced 28th July 2022 *
Shares quoted ex-dividend 18th August 2022 *
Share registers to be closed 22nd to 26th August 2022 *
2022 interim dividend payable 12th October 2022 *
* Subject to change
Dividends
In light of the substantially reduced levels of business, no nal dividend in respect of the 2021 nancial 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, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, United Kingdom
Press releases and other nancial information can be accessed through the internet at www.mandarinoriental.com.
Shareholder Information
129Annual Report 2021
Hong Kong Corporate Office
8th oor One Island East
Taikoo Place
18 Westlands Road
Quarry Bay, Hong Kong
Telephone +852 2895 9288
mandarinoriental.com
A
Mandarin Oriental, Bangkok
48 Oriental Avenue
Bangkok 10500
ailand
Telephone +66 (0) 2 659 9000
Email mobkk-reservations
@
mohg.com
Mandarin Oriental Wangfujing, Beijing
No. 269 Wangfujing Street, Dongcheng District
Beijing 100006, China
Telephone +86 (10) 8509 8888
Email mow-reservations
@
mohg.com
Mandarin Oriental, Guangzhou
389 Tianhe Road, Tianhe District
Guangzhou 510620, China
Telephone +86 (20) 3808 8888
Email mogzh-reservations
@
mohg.com
Mandarin Oriental, Hong Kong
5 Connaught Road Central
Hong Kong
Telephone +852 2522 0111
Email mohkg-reservations
@
mohg.com
e Landmark Mandarin Oriental, Hong Kong
e Landmark
15 Queen’s Road Central
Hong Kong
Telephone +852 2132 0188
Email lmhkg-reservations
@
mohg.com
Mandarin Oriental Hotel Group Contact Addresses
Mandarin Oriental, Jakarta
Jalan M H amrin
Jakarta 10310
Indonesia
Telephone +62 (21) 2993 8888
Email mojkt-reservations
@
mohg.com
Mandarin Oriental, Kuala Lumpur
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia
Telephone +60 (3) 2380 8888
Email mokul-reservations
@
mohg.com
Mandarin Oriental, Macau
N.945, Avenida Dr Sun Yat Sen
NAPE, Macau, China
Telephone +853 8805 8888
Email momac-reservations
@
mohg.com
Mandarin Oriental, Sanya
12 Yuhai Road
Sanya 572000
Hainan, China
Telephone +86 (898) 8820 9999
Email mosan-reservations
@
mohg.com
Mandarin Oriental Pudong, Shanghai
111 Pudong Road (S), Pudong
Shanghai 200120, China
Telephone +86 (21) 2082 9888
Email mopud-reservations
@
mohg.com
Mandarin Oriental, Shenzhen
No. 5001 Huanggang Road
Futian District, Shenzhen
Guangdong, China
Telephone +86 (755) 8802 6888
Email moszn-reservations
@
mohg.com
130 Mandarin Oriental International Limited
Mandarin Oriental, Singapore
5 Raes Avenue, Marina Square
Singapore 039797
Telephone +65 6338 0066
Email mosin-reservations
@
mohg.com
Mandarin Oriental, Taipei
No. 158 Dunhua North Road
Taipei 10548, Taiwan
Telephone +886 2 2715 6888
Email motpe-reservations
@
mohg.com
Mandarin Oriental, Tokyo
2-1-1 Nihonbashi Muromachi, Chuo-ku
Tokyo 103-8328, Japan
Telephone +81 (0) 3 3270 8800
Email motyo-reservations
@
mohg.com
E
UROPE
, M
IDDLE
E
AST
AND
A
FR ICA
Emirates Palace, Abu Dhabi
West Corniche Road
Abu Dhabi, United Arab Emirates
Telephone +971 2 690 8888
Email epauh-reservations
@
mohg.com
Mandarin Oriental, Barcelona
Passeig de Gràcia, 38-40
08007 Barcelona, Spain
Telephone +34 93 151 88 88
Email mobcn-reservations
@
mohg.com
Mandarin Oriental, Bodrum
Göltürkbükü Mahallesi 314.
Sokak No. 10, 48483
Bodrum, Mugla, Turkey
Telephone +90 (252) 311 18 88
Email mobod-reservations
@
mohg.com
Mandarin Oriental, Doha
Barahat Msheireb Street
Msheireb Downtown Doha
PO Box 23643
Doha, Qatar
Telephone +974 4008 8888
Email modoh-reservations
@
mohg.com
Mandarin Oriental Jumeira, Dubai
Jumeirah Beach Road, Jumeira 1
PO Box 62092
Dubai, United Arab Emirates
Telephone +971 4 777 2222
Email modub-reservations
@
mohg.com
Mandarin Oriental, Geneva
Quai Turrettini 1
1201 Geneva, Switzerland
Telephone +41 (22) 909 0000
Email mogva-reservations
@
mohg.com
Mandarin Oriental Bosphorus, Istanbul
Kuruçeme, Muallim Naci Caddesi No: 62
34345 Beikta, İstanbul, Turkey
Telephone +90 212 349 8888
Email moist-reservations
@
mohg.com
Mandarin Oriental, Lago di Como
Via Caronti, 69
22020 Blevio (Co)
Italy
Telephone +39 031 32 511
Email mocmo-reservations
@
mohg.com
Mandarin Oriental Hyde Park, London
66 Knightsbridge
London, SW1X 7LA
United Kingdom
Telephone +44 (0) 20 7235 2000
Email molon-reservations
@
mohg.com
131Annual Report 2021
Mandarin Oriental Ritz, Madrid
Plaza de la Lealtad 5
28014 Madrid, Spain
Telephone +34 91 701 67 67
Email mrmad-reservations
@
mohg.com
Mandarin Oriental, Marrakech
Route du Golf Royal
40 000 Marrakech, Morocco
Telephone +212 5 24 29 88 88
Email momrk-reservations
@
mohg.com
Mandarin Oriental, Milan
Via Andegari 9
20121 Milan, Italy
Telephone +39 02 8731 8888
Email momln-reservations
@
mohg.com
Mandarin Oriental, Munich
Neuturmstrasse 1
80331 Munich, Germany
Telephone +49 (89) 290 980
Email momuc-reservations
@
mohg.com
Mandarin Oriental, Paris
251 rue Saint-Honoré
75001 Paris, France
Telephone +33 (0)1 70 98 78 88
Email mopar-reservations
@
mohg.com
Mandarin Oriental, Prague
Nebovidská 459/1, Malá Strana
118 00 Prague, Czech Republic
Telephone +420 233 088 600
Email moprg-reservations
@
mohg.com
Al Faisaliah Hotel, Riyadh
PO Box 4148
King Fahad Road, Al Olaya
Riyadh 11491
Saudi Arabia
Telephone +966 11 273 2000
Email reservations.riyadh
@
alfaisaliahhotels.com
A
Mandarin Oriental, Boston
776 Boylston Street
Boston, Massachusetts 02199, USA
Telephone +1 (617) 535 8888
Email mobos-reservations
@
mohg.com
Mandarin Oriental, Canouan
Carenage Bay, Canouan Island VC0450
Saint Vincent and the Grenadines
Telephone +1 (212) 461 8068
Email mocan-reservations
@
mohg.com
Mandarin Oriental, Miami
500 Brickell Key Drive
Miami, Florida 33131, USA
Telephone +1 (305) 913 8288
Email momia-reservations
@
mohg.com
Mandarin Oriental, New York
80 Columbus Circle
New York, New York 10023, USA
Telephone +1 (212) 805 8800
Email monyc-reservations
@
mohg.com
Mandarin Oriental, Santiago
Avenida Presidente Kennedy 4601
7560994 Las Condes, Santiago, Chile
Telephone +56 2 2950 3088
Email mostg-reservations
@
mohg.com
Mandarin Oriental, Washington D.C.
1330 Maryland Avenue SW
Washington, DC 20024, USA
Telephone +1 (202) 554 8588
Email mowas-reservations
@
mohg.com
Mandarin Oriental Hotel Group Contact Addresses Continued
132 Mandarin Oriental International Limited
mandarinoriental.com
Mandarin Oriental International Limited