Mandarin Oriental International : 2023 Preliminary Announcement of Results

7th March 2024

The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.

MANDARIN ORIENTAL INTERNATIONAL LIMITED 2023 PRELIMINARY ANNOUNCEMENT OF RESULTS

HIGHLIGHTS

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

"Mandarin Oriental delivered a strong recovery in 2023. The Group faces some geopolitical and macroeconomic uncertainties entering 2024, but with the appointment of Laurent Kleitman as Group Chief Executive, we are optimistic about the Group's long-term strategy."

Ben Keswick

Chairman

RESULTS

	Year ended 31st December
	2023	2022	Change
	US$m	US$m	%
Combined total revenue of hotels under management(1)	1,890.2	1,568.1	+21
Revenue	558.1	454.1	+23
Underlying EBITDA (Earnings before interest, tax,
depreciation and amortisation)(2)	177.6	111.4	+59
Underlying profit attributable to shareholders(3)	81.0	7.6	+966
Revaluation loss on investment properties	(486.7)	(104.1)	-368
Gain on sale of a subsidiary/asset disposals	41.3	47.0	-12
Loss attributable to shareholders	(365.4)	(49.5)	-638
	US¢	US¢	%
Underlying earnings per share(3)	6.41	0.60	+968
Loss per share	(28.91)	(3.92)	-638
Dividends per share	5.00	-	n/a
	US$	US$	%
Net asset value per share	2.34	2.61	-10
Adjusted net asset value per share(4)	3.67	3.87	-5
Net debt/shareholders' funds	8%	11%
Net debt/adjusted shareholders' funds(4)	5%	8%

1. Combined revenue includes turnover of the Group's subsidiary hotels in addition to 100% of revenue from associate, joint venture and managed hotels.
2. EBITDA of subsidiaries plus the Group's share of EBITDA of associates and joint ventures.
3. The Group uses 'underlying profit' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in note 34 to the financial statements. Management considers this to be a key measure which provides additional information to enhance understanding of the Group's underlying business performance.
4. The Group's investment properties are carried at fair value on the basis of valuations carried out by independent valuers at 31st December 2023. The other freehold and leasehold interests are carried at amortised cost in the consolidated balance sheet. Both the adjusted net asset value per share and net debt/adjusted shareholders' funds at 31st December 2023 have included the market value of the Group's freehold and leasehold interests.

The final dividend of US¢3.50 per share will be payable on 15th May 2024, subject to approval at the Annual General Meeting to be held on 8th May 2024, to shareholders on the register of members at the close of business on 22nd March 2024.

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MANDARIN ORIENTAL INTERNATIONAL LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31ST DECEMBER 2023

OVERVIEW

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

2023 FINANCIAL PERFORMANCE

Underlying profit increased to US$81 million, from US$8 million in 2022, with underlying earnings per share at US¢6.41, compared with US¢0.60 in 2022. Non-trading losses of US$446 million primarily comprised a non-cash revaluation of the Causeway Bay site under development, resulting in a loss attributable to shareholders of US$365 million.

Net debt fell to US$225 million at the end of 2023, from US$376 million at the end of 2022, reflecting significantly higher operating cashflow from the business, net of ongoing capital investment, as well as proceeds from disposals. Gearing as a percentage of adjusted shareholders' funds was 5%, compared to 8% at the end of 2022.

The Directors recommend a final dividend of US¢3.50 per share. This, together with the interim dividend of US¢1.50 per share declared, will result in total dividends of US¢5.00 per share.

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YEAR IN REVIEW

In 2023, Mandarin Oriental, with its distinctive portfolio of hotels, was able to satisfy consumers' continuing robust appetite for luxury leisure travel. The Group's legendary levels of service underpinned an increase in rates, and it continued to build occupancy, which translated into substantial improvements in Revenue Per Available Room ('RevPAR') across almost all hotels.

Hotels in Asia benefitted from the return of travel demand from the Chinese mainland following the removal of restrictions at the beginning of 2023, generating substantially higher management fees. Two of the Group's key owned hotels in the region - Hong Kong and Tokyo

• delivered notably better performance than in 2022. In Europe, the Middle East and Africa ('EMEA'), hotels reported solid growth over 2022 and gained market share, particularly in resort destinations. In America, RevPAR performance remained broadly stable, with easing domestic leisure demand partially offset by higher demand from corporate and group travellers.

SUSTAINABILITY

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

GOVERNANCE

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

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PEOPLE

In September 2023, Laurent Kleitman succeeded James Riley as Group Chief Executive. On behalf of the Board, I would like to thank James for his contribution to the Group and welcome Laurent, who has joined us with many years of experience in building iconic, luxury consumer brands.

Our colleagues play an instrumental role in defining the brand and creating the legendary guest experience for which Mandarin Oriental is renowned. I would like to take this opportunity to express my gratitude to them for the unwavering commitment they show to our guests, which underpins the long-term success of the Group.

OUTLOOK

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

Ben Keswick

Chairman

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GROUP CHIEF EXECUTIVE'S REVIEW

I am delighted to have joined Mandarin Oriental and am pleased to share my initial views of the Group and the progress we have made across several fronts over the past year.

Having been with the Group for a few months and visited most of our properties around the world, met with many of our owners and partners, and spent time listening to and learning from our thousands of colleagues, it is clear to me that Mandarin Oriental is not only a strong business today but also has significant opportunities ahead.

Since my appointment in September 2023, my team and I have been reviewing our strategy to ensure that the Group is able to build on the right foundations to accelerate growth. Strategic thinking and changes are currently underway, with a greater focus on significantly scaling up the Management Business globally, further elevating the brand's desirability, to become the reference point in luxury hospitality, and enriching our proposition to guests and owners. I am very convinced that the Mandarin Oriental brand, together with the exceptional operational expertise of our teams centrally and around the world, has the potential to take a larger share of the global luxury hospitality market in the coming years. Our understanding of excellence, our long-standing service tradition, our interpretation of luxury and our creativity are some of the many assets that we are building upon.

Our dual Asian origin, blending the vibrancy and modernity of Hong Kong - The Mandarin - with the refinement of Bangkok - The Oriental -, makes us the most distinctive and authentic luxury hospitality brand in the world. And today, 50 years after these two iconic hotels were brought together, we have created a formidable Group: from the strength of our growing Management Business to the enormous potential of our brand, from the quality of our operators and 15,000 colleagues to the strength of our partners, Mandarin Oriental has solid foundations from which we will scale up, while retaining our unique sense of high-end luxury.

I look forward to sharing our full new strategic plan in more detail later this year.

Looking back to 2023, we had occasion to celebrate many significant achievements, starting in February with the rebranding of Emirates Palace Mandarin Oriental, Abu Dhabi. This is our third hotel in the Middle East and complements Mandarin Oriental Jumeira, Dubai and Mandarin Oriental, Doha, reinforcing our brand presence in the region. Reflecting our unwavering dedication to elevating the guest experience, Mandarin Oriental, Singapore

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re-opened its doors to guests in September after a transformative renovation. In October, we celebrated the 60th anniversary of one of our historic hotels, Mandarin Oriental, Hong Kong, with Oscar-winning brand ambassador Michelle Yeoh and other distinguished guests showcasing the contemporary luxury and Oriental heritage that differentiate the brand. And finally, as we concluded 2023, we opened the magnificent and iconic Mandarin Oriental Savoy, Zurich after an extensive renovation.

2023 PERFORMANCE

Summary of Performance

The Group manages 38 hotels and nine residences globally, of which 25 properties are managed and 13 properties are owned or partially owned. In 2023, the Management Business delivered strong operating performance and improved profitability. Combined total revenue for hotels under management was US$1.9 billion in 2023, 21% above 2022. This increase was driven primarily by a 29% increase in RevPAR. The improvement in RevPAR was primarily due to a gradual recovery in occupancy across all geographies, a continuation of high rates in Europe, the Middle East and Africa ('EMEA'), and a solid rebound in rates in Asia. Food & Beverage ('F&B') revenue also increased by 18% year-on-year, contributing to the strong top-line outperformance in 2023.

In EMEA, most hotels gained market share in 2023 compared to 2022. Average RevPAR was US$645, up 14% from 2022. While average rates remained fairly stable in 2023 compared to the prior year, occupancy recovered to pre-pandemic levels. RevPAR performance was notably better than 2022 in Bodrum, Abu Dhabi and Marrakech, predominantly driven by robust leisure demand.

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

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In the Americas, RevPAR was US$408, up 3% from 2022. Domestic leisure demand eased marginally from the strong levels seen in 2022 but was compensated by a steady continuing recovery in the corporate transient and group segments.

Management Business

With the openings of two new hotels, the Group continued to execute its strategy of scaling up the Management Business. This growth in scale, combined with RevPAR improvement, resulted in a 30% increase in hotel management fees and a 55% improvement in EBITDA for the Management Business compared to 2022. Most hotels delivered higher fees, with hotels in Asia in particular seeing a robust rebound from 2022.

The sale of branded residences, such as The Residences at Mandarin Oriental, Mayfair - luxury apartments situated in the heart of one of London's most stylish neighbourhoods - and Mandarin Oriental Residences, Fifth Avenue in the heart of Manhattan, remains a strategic focus and contributed some 10% of the total fees earned from the Management Business.

Owned Hotel Performance

Our 13 owned properties reported a combined EBITDA 63% higher than in 2022, and most properties maintained or improved their earnings. Of note were the materially improved contributions produced by Hong Kong and Tokyo, both of which were severely impacted by stringent travel restrictions for the majority of 2022, and the early part of 2023. London and Geneva also delivered considerably improved results driven by better RevPAR and F&B performance. The exceptions with lower earnings in 2023 were Singapore and Miami. After undergoing an extensive renovation for six months, Mandarin Oriental, Singapore has re-opened with a transformed and elevated guest experience with an enhanced appeal to leisure travellers. Against the backdrop of easing domestic leisure demand in America, Miami reported a slight drop in average rates, partially offset by improved occupancy and F&B performance.

Financial Performance

As a result of strong top-line performance, EBITDA for 2023 was US$178 million, a 59% increase from the prior year. Underlying profit substantially improved from US$8 million in 2022 to US$81 million in 2023.

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A YEAR IN REVIEW

The Group's long-term growth strategy is to grow Mandarin Oriental brand's desirability and expand the Management Business through the signing of management contracts in key destinations, whilst retaining some ownership of brand-defining properties.

Management Business

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

In addition to these openings, we underpinned the future growth of our portfolio with the signing of eight hotel and residences projects, all of which will be managed by the Group:

• Luxury residences in the heart of Madrid's most exclusive neighbourhood, Salamanca;
• A scenic beachfront resort in Mallorca;
• A hotel and residences in Athens with contemporary design and unobstructed views of the Aegean Sea;
• A hotel and residences in Bankside - the Group's third property in London;
• A transformative redevelopment of Mandarin Oriental, Miami, in a larger hotel and residences complex in the unique Brickell Island location;
• A secluded resort in Porto Cervo, Sardinia, overlooking the Gulf of Pevero;
• A high-end boutique resort in Setouchi, Japan that consists of three distinctive properties around the Seto Inland Sea; and
• A full renovation and rebranding of the historic Gellért Hotel in Budapest.

Overall, at the end of 2023, the Group has a pipeline of 28 hotels (14 of which have a residences component) and two standalone residences to open over the next five years. And I remain very optimistic about announcing new strategic projects in 2024.

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Owned Assets

As part of our regular review of the Group's assets, in 2023, we decided to sell our owned properties in Jakarta and Paris. The disposal of our Jakarta property was completed in June 2023, with the hotel management contract retained. The Group has also signed an option to sell the Paris hotel property, securing a long-term hotel management contract with the new owner. We expect to complete this transaction in the first half of 2024.

We are making good progress with the redevelopment of our Causeway Bay site in Hong Kong and have begun leasing activities in line with our expectation to complete construction of the building in the first half of 2025. We have updated our valuation for the project to purely reflect residual, value-in-use estimates, in line with normal market practice as the development project progresses toward completion.

Brand

In 2023, we continued to strengthen the desirability of the Mandarin Oriental brand. The Group focussed on increasing the awareness of the brand amongst our target audience, and investing behind our award-winning 'I'm A Fan' advertising campaign, which has featured over 50 celebrities who are genuine fans of Mandarin Oriental. We also celebrated a key milestone for Mandarin Oriental, with the 60th anniversary of our flagship hotel in Hong Kong, which has been at the forefront of luxury hospitality since it opened its doors in 1963.

During the period, we have built awareness and engagement of Mandarin Oriental through extensive media coverage in both lifestyle publications and social channels, focussing on the Group's core brand pillars of craftsmanship and design; innovative dining; holistic wellness; and our legendary service which are at the heart of our Oriental heritage. These focusses have been further strengthened by the attainment of many global awards for excellence, solidifying the Group's reputation for delivering the highest quality. Significant awards in 2023 included Best Luxury Hotel Brand in the annual Luxury Travel Intelligence ranking; 29 Michelin stars won by 18 of our global restaurants; the World's Best Hotel Spa Brand by the World Spa Awards, and the placement of 20 of our properties in Condé Nast Traveller Readers' Choice Awards, more than in any previous year.

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Further, we have forged partnerships with prestigious like-minded brands. These included the hosting of Louis Vuitton's summer pop-up store and co-branded beach bar at Mandarin Oriental, Bodrum, and the development of a dedicated showcase suite for Vacheron Constantin in Dubai.

Transformation

Modernisation of the Management Business remains a strategic focus, with the key aims of supporting growth in scale, enriching the customer experience, delivering improved operating efficiency, and elevating our colleagues value proposition.

In the past year, we continued to advance several transformation initiatives across the organisation in support of this strategic objective. In particular, the Group has embarked on the Guest Experience Programme which will greatly improve our ability to recognise, understand and engage our guests across Mandarin Oriental. A redesign of Fans of M.O. will enable us better to attract and retain both top guests and local fans. We are establishing a bespoke relationship management service to build brand-level loyalty with ultra-high-net-worth guests. Internally, we have made encouraging progress in driving operational efficiency through modernising our systems and processes required to support evolving business needs.

People & Culture

The Group's focus on recruiting and developing the right talent, as well as providing an engaging colleague experience, remains central to our People and Culture strategy. In the past year, the Group has recruited 176 Rising Fans into the new graduate programme. More broadly, we achieved notable improvements in retention, with a reduction in voluntary turnover from 25% to 22%. Our efforts were acknowledged in the Group's latest Colleague Engagement Survey, which indicated improvement across all drivers of sustainable engagement and exceeded both the 'Travel & Leisure' norm and the 'High-Performance' norm.

Our HR transformation journey, The People Project, is a strategic initiative that aims to put the colleague experience at the centre, elevate the role of our people managers, and simplify, harmonise and automate our HR processes. The initiative is a major step towards enabling an engaged workforce through a compelling work experience, laying a solid foundation for the organisation to build on as it scales up.

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