Mandarin In.sg Regulatory News (MDO)

To: Business Editor 3rd March 2016

For immediate release

Highlights

· Resilient profit despite challenging conditions in a number of key markets

· US$316 million rights issue

· Acquisition of a 50% interest in the Hotel Ritz, Madrid

· Acquisition of Mandarin Oriental, Boston announced

· New hotels in Milan and Marrakech, and three new management contracts announced

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

Results 

The final dividend of US¢3.00 per share will be payable on 11th May 2016, subject to approval at the Annual General Meeting to be held on 4th May 2016, to shareholders on the register of members at the close of business on 18th March 2016.

MANDARIN ORIENTAL INTERNATIONAL LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31ST DECEMBER 2015

OVERVIEW

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

PERFORMANCE

Underlying earnings before interest, tax, depreciation and amortization for 2015 were US$188 million. This compares with US$217 million reported in 2014, which benefited from US$15 million of branding fees from The Residences at Mandarin Oriental in Bodrum.

Underlying profit of US$90 million was US$7 million lower than the prior year, and underlying earnings per share were US¢7.53 compared with US¢9.29 in 2014. Profit attributable to shareholders was US$89 million, after deducting US$1 million of acquisition transaction costs, compared to US$97 million in 2014.

Following an independent valuation of the Group's hotel properties, the net asset value per share was US$2.84 at 31st December 2015, compared with US$3.02 per share at the end of 2014.

The Directors recommend a final dividend of US¢3.00 per share. This, together with the interim dividend of US¢2.00 per share, will make a total annual dividend on the enlarged share capital of US¢5.00 per share, compared to US¢7.00 per share in 2014.

GROUP REVIEW

In Asia, despite an improved performance in Tokyo due to increased visitor arrivals, softer demand in Hong Kong and Singapore, together with disruption from a renovation in Kuala Lumpur, resulted in a lower contribution from the region.

The Group's performance in Europe was affected by challenging conditions in Paris following the terrorist attacks and by the adverse impact of a renovation in Munich, which were only partially offset by improved results in London. In The Americas, all of the Group's hotels reported higher revenue per available room, with the exception of New York which undertook a refurbishment of suites during the first half of the year.

BUSINESS DEVELOPMENTS

The Group continued to pursue its development strategy of seeking new hotel and residences management contracts, while maintaining the quality of its properties and making selective acquisitions that meet the Group's strategic criteria.

The Group opened Mandarin Oriental, Milan, in July followed by the partial opening of Mandarin Oriental, Marrakech in October. Management contracts were announced for new hotels under development in Beijing, Beirut and Boca Raton. In the first quarter of 2015, the Group ceased management of its hotel in San Francisco.

In May 2015, the Group acquired a 50% interest in the Hotel Ritz, Madrid for €65 million (US$73 million) in a joint venture with The Olayan Group, with Mandarin Oriental managing the hotel under a long-term management agreement. The hotel is to undergo a comprehensive renovation in 2017, currently estimated to cost a total of some €90 million, of which the Group's share will be €45 million (US$49 million).

In January 2016, the Group exercised its right to acquire the 148-room Mandarin Oriental, Boston for US$140 million, with the transaction expected to close by the end of April 2016. The Group has managed the hotel under a long-term contract since it opened in October 2008.

The Group is to undertake a major £85 million (US$126 million) refurbishment of Mandarin Oriental Hyde Park, London, which is scheduled to commence in the third quarter of 2016 and last 18 months.

Mandarin Oriental now operates 29 hotels, and has a further 17 under development. Together these represent more than 11,000 rooms in 24 countries, with 21 hotels in Asia, nine in The Americas and 16 in Europe, Middle East and North Africa. In addition, the Group operates or has under development 15 Residences at Mandarin Oriental connected to its properties.

Within the next 18 months, two hotels are scheduled to open in Doha and Beijing.

PEOPLE

On behalf of the Directors, I would like to acknowledge the contribution of all employees throughout the Group for continuing to provide the exceptional service for which the brand is renowned.

Edouard Ettedgui is to step down as Group Chief Executive on 31st March 2016 and we would like to thank him for his tremendous contribution to the business since his appointment in 1998. Edouard will remain on the Board as a non-executive director. He will be succeeded by James Riley who is currently the Group Finance Director of Jardine Matheson Holdings Limited, and has served on the board of Mandarin Oriental's management company for the past ten years.

Giles White stepped down from the Board on 31st July 2015, and we would like to thank him for his significant contribution. On 1st August 2015, Jeremy Parr joined the Board.

OUTLOOK

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

Ben Keswick

Chairman

GROUP CHIEF EXECUTIVE'S REVIEW

STRATEGY

Mandarin Oriental Hotel Group is an award-winning international hotel investment and management group with deluxe and first class hotels, resorts and residences in sought-after destinations around the world. The Group operates, or has under development, 46 hotels representing 11,000 rooms in 24 countries, with 21 hotels in Asia, nine in The Americas and 16 in Europe, Middle East and North Africa. In addition, the Group operates, or has under development, 15 Residences at Mandarin Oriental connected to its properties.

The Group holds equity interests in a number of its hotels, and had adjusted net assets of approximately US$3.6 billion as at 31st December 2015. Capitalizing on the strength of its brand, Mandarin Oriental also operates hotels on behalf of third party owners that require no equity investment by the Group.

The Group's strategy is to be recognized widely as the world's best luxury hotel group, which it will achieve by investing in its exceptional facilities and its people while continuing to seek further selective opportunities for expansion around the world. This approach, combined with a strong balance sheet, is designed to achieve long-term growth in both earnings and net asset value.

PROGRESS ACHIEVED

The continued growth in recognition of the Mandarin Oriental brand internationally attracted an increasing number of high net worth travellers during 2015. The Group's overall performance benefited from the resilience that comes with a broad portfolio of hotels and residences across many destinations, with some markets experiencing a softening of demand while other markets performed better.

The hotels in Asia performed well against their competition, although the Hong Kong properties were impacted by reduced arrivals to the city from mainland China. The region's results were also affected by softer city-wide demand in Singapore and a renovation of the Group's property in Kuala Lumpur. In Europe, despite a strong performance in London, an extensive renovation in Munich and a drop in city-wide demand in Paris led to a lower contribution overall. In The Americas, most hotels experienced improved demand, although New York was negatively impacted by an extensive suite renovation in the first half of the year.

Mandarin Oriental's global brand recognition was further enhanced in 2015 with the well-received launches of luxury hotels in Milan, Italy and Marrakech, Morocco in July and October, respectively. During the year, three hotel management contracts were announced for new properties in Beijing, Beirut and Boca Raton. The Group's equity participation in its portfolio also increased when it acquired a 50% interest in the Hotel Ritz, Madrid in May. In January of 2016, the Group announced it would acquire Mandarin Oriental, Boston, with the transaction expected to close by the end of April.

The recognition of the Mandarin Oriental brand internationally, together with its strong balance sheet, ensures the Group remains well positioned to take advantage of opportunities for further growth.

PERFORMANCE IN 2015

Set out below is a review of the Group's performance in 2015, with reference to the following strategic objectives:

· Being recognized as the world's best luxury hotel group

· Strengthening our competitive position

· Increasing the number of rooms under operation to 10,000

· Achieving a strong financial performance

1. Being recognized as the world's best luxury hotel group

Mandarin Oriental has created some of the world's most sought-after properties, delivering 21st century luxury with oriental charm. Each hotel ensures its position as one of the best in its market through a combination of tradition, quality and innovation. Throughout the portfolio, the Group invests behind its core brand attributes of creative hotel design, architecture and technology, excellent dining experiences and holistic spa operations. Above all, the delivery of legendary service to our guests remains at the forefront of everything we do.

The Group's increasing global recognition is evidenced by the achievement of many significant awards from respected travel associations and publications worldwide. Highlights include a record 14 hotels listed in Institutional Investor 2015 'Top 100 World's Best Hotels', with seven properties voted as 'Best in the City'. The Group was also well represented with a record 18 hotels being recognized in the 2016 Forbes Travel Guide, with 14 properties around the world gaining the top 'Five Star Hotel' status, and four properties gaining the rare 'triple crown' for hotel, spa and restaurant. Mandarin Oriental, Hong Kong is the only hotel in the world to achieve five 'Five Star' Awards, for the hotel, spa, and three of its restaurants. Furthermore, four of the Group's hotels in the United States achieved the coveted 'Five Diamond Lodging Award' for 2016 from the American Automobile Association.

Condé Nast Traveler, US 'Readers' Choice Awards' 2015 featured a record 19 Mandarin Oriental hotels, with five hotels being listed as one of the top three in their respective cities. In the US, five hotels were awarded 'Best Hotels in the USA' in the US News World Report, 2015. In China, Condé Nast Traveler, China 'Readers' Choice Awards' listed Mandarin Oriental as 'Best Hotel Brand'.

The Group's reputation for excellent and innovative dining experiences was again acknowledged in the most recent 2016 Michelin guides with 11 restaurants being honoured and a total of 16 stars being granted. This is more than any other hotel group in the world. Once again, both Amber at The Landmark Mandarin Oriental, Hong Kong and Dinner at Mandarin Oriental Hyde Park, London were voted as two of the 'Top 50 Restaurants' in the world in the prized San Pellegrino listings.

The Group's spa operations were acknowledged as being among the best, with a record 12 hotels gaining the prestigious Forbes 'Five Star Spa' award. Again, this is more than any other hotel group in the world. In addition, two of the Group's hotels in China were identified as the best in their respective destinations by SpaChina in the 2015 awards.

The Group's commitment to working with some of the best architects and designers was also recognized in 2015. In particular, Mandarin Oriental, Bodrum was honoured twice at the European Hotel Design Awards 2015. Firstly, the resort was recognized as the best 'Newbuild' in the 'Architecture Awards' and was also nominated for 'Best Interior Design for Spa and Wellness'.

The Group's award-winning international advertising campaign now features 30 celebrity 'fans', who regularly stay at Mandarin Oriental hotels. During the last 12 months, the Group welcomed celebrated French actress, Isabelle Huppert, and Chinese actor, singer and model, Chen Kun, to the campaign. In May 2016, the tennis champion, Maria Sharapova, will become its latest fan. The Group's relationship with its celebrity fans goes far beyond their appearance in the advertisements alone, as they frequently stay at the Group's hotels and attend important gala events.

The Group also continues to invest in digital marketing across all online devices and in multiple languages. Online revenues now represent 13% of total room revenue generated from individual travel bookings. Furthermore, the Group actively encourages a global conversation with consumers through its social media strategy, and now has a larger and more connected global digital network than ever before, reaching consumers in all corners of the globe, including a growing following on China's most important social media platforms.

Further brand recognition will be accomplished as more Mandarin Oriental hotels under development open in new and exciting travel destinations.

2. Strengthening our competitive position

Every hotel is focused on maintaining or enhancing its leadership position against primary competitors in its individual market. This is critical to the Group's success. Strong brand recognition, combined with the strength of the hotel management teams, plus the added support provided by an established corporate structure, allows each property to compete effectively and to achieve premium rates. In 2015, the Group's position was further supported by limited new supply in many of the key markets in which it operates.

Demographic trends continue to support the Group's strategy of creating quality services and facilities which attract individuals who will pay a premium for genuine luxury experiences, allowing the hotels to further increase average rates. Demand for understated luxury experiences which are meaningful and of value remains strong amongst the higher spending leisure customers who make up close to 50% of the Group's room nights. These high net worth individuals continue to originate from the Group's traditional markets, but increasingly, the Group is attracting additional customers from emerging markets. This is particularly true of China, which remains the second largest source of business after the United States, accounting for 17% of total visitor arrivals. The contribution from China will continue to grow, as the total number of hotels that the Group now operates or has under development in mainland China has increased to eight, and the outbound market continues to develop.

Across the Group's portfolio, overall Revenue per Available Room ('RevPAR') was down 4% in local currency terms, and 9% in US dollar terms on a like-for-like basis[1], although 2015 results also included the negative impact from hotels undergoing renovations. 

The highlights of each region are as follows:

Asia

The Group's hotels in the region competed effectively in 2015, despite a softening in demand in some markets, particularly in Hong Kong, which put pressure on occupancy and rates. Overall, RevPAR for Asia in 2015 on a like-for-like basis, which was also negatively impacted by a renovation in Kuala Lumpur, was down 7% in local currency terms, and 12% in US dollar terms.

Mandarin Oriental, Hong Kong was affected by reduced demand from mainland China and Europe, particularly in the leisure segment. As a result, the hotel's RevPAR was down 8% over the previous year. Nonetheless, continued strong local demand led to an increase in the hotel's food and beverage revenues of 3% over 2014, and the property successfully retained four Michelin stars.

The Excelsior, the Group's other wholly-owned hotel in Hong Kong, was impacted by the city-wide decline in leisure demand, particularly from mainland China, combined with aggressive rate discounting in their competitive set. As a consequence, RevPAR was down 16%. Despite this decrease, the hotel's food and beverage performance was robust, improving by 5% over 2014.

In Tokyo, the hotel's performance benefited from a further increase in visitor arrivals, and a particularly strong performance in the first quarter when the hotel became the location of a pop-up restaurant for Noma, attracting significant demand. Average rates increased by 14% in local currency terms, leading to an overall RevPAR increase of 20% in local currency and 5% in US dollar terms, with the hotel ending the year as the market leader in the city. Moreover, 2015 was an excellent year for Mandarin Oriental, Tokyo in terms of recognition. The hotel was ranked 'The World's Number 1' in Institutional Investor's 2015 '100 World's Best Hotels' listing. In addition, the property was voted the 'Best Leisure Dining Destination' in the 2015 Robb Report and three of its restaurants were awarded Michelin stars in the 2016 guide, the only hotel in the city to achieve this accolade.

Mandarin Oriental, Singapore was impacted by weaker city-wide corporate and leisure demand, resulting in a 5% decrease in RevPAR in local currency terms compared to 2014. The hotel continues to achieve strong recognition and was awarded the Forbes 'Five Star' status in the annual 2016 Forbes Travel Guide for both the hotel and its spa. It was also voted one of the top city hotels in Asia in Travel + Leisure's 'World's Best Awards' 2015, as well as Singapore's 'Leading Lifestyle Hotel' at the World Travel Awards 2015.

In Bangkok, despite a nine-month renovation of the historic Authors' and Garden Wings, including Le Normandie restaurant, and a terrorist attack in the city in August, the hotel performed well, achieving an overall RevPAR increase of 7% in local currency terms. It was voted 'The World's Number 2' in Condé Nast Traveler's, US 'Readers' Choice Awards' 2015, and is one of only two hotels in Thailand to be listed in the Robb Report's 'Top 100 Hotels', 2015. Furthermore, the hotel also achieved Forbes 'Five Star' status in the 2016 Forbes Travel Guide in Thailand for both the hotel and its spa.

Mandarin Oriental, Kuala Lumpur was negatively affected by the ongoing renovation programme combined with softer city-wide demand. As a result, the hotel's RevPAR was down 20% in local currency terms. The hotel was voted 'Best hotel in Kuala Lumpur' in the 2015 DestinAsian 'Readers' Choice Awards'.

Mandarin Oriental, Jakarta maintained its market share and achieved an overall increase in RevPAR of 7% in local currency terms, despite reduced demand in the city. The weakening Indonesian rupiah, however, led to a 6% decline in RevPAR in US dollar terms. The hotel was voted 'Best Business Hotel in Jakarta' in Robb Report, Singapore 2015 and was again honoured to receive the ASEAN 'Green Hotel Award' 2015 for its corporate responsibility initiatives.

In China, the Group's recently opened hotels in Guangzhou and Shanghai moved further towards stabilization and achieved double digit increases in RevPAR. Both gained increasing recognition for their personalized service and high quality facilities, and were listed in Condé Nast Traveler China's 'Readers' Choice Awards'. Finally, Mandarin Oriental, Taipei, which opened in 2014, was listed in Condé Nast Traveler's, US 2015 'Hot List' as an 'Urbanist Standout' and was awarded 'Taiwan's Best Hotel Spa' in the World Spa Awards, 2015.

Performances at the Group's remaining Asian hotels, in Macau and Sanya, were impacted by reduced demand.

Europe

In Europe, most of the Group's hotels successfully maintained their positions at the top end of their markets, benefiting from resilient demand in the leisure sector. However, weaker city-wide demand in Paris, and a significant renovation in Munich, adversely impacted results. Across the region, RevPAR on a like-for-like basis, which includes disruption caused by the renovation in Munich, was in line with the prior year in local currency terms. When translated into US dollars, however, overall RevPAR on a like-for-like basis decreased by 12%.

Mandarin Oriental Hyde Park, London performed well as a result of strong city-wide demand, which led to an increase in RevPAR of 9% in local currency terms. The hotel was voted 'Best Business Hotel' in the UK in Condé Nast Traveller's, UK 'Readers' Choice Awards' 2015, and one of the 'Top 10 Hotels in London' in Condé Nast Traveler's, US 'Readers' Choice Awards' 2015. Food and beverage performed well, with the hotel's award-winning restaurant, Dinner, being nominated once again as one of the UK's 'Top 100 Restaurants' in the 2015 National Restaurant Awards.

As announced in March 2015, the Group will embark on an £85 million (US$126 million) renovation of the London hotel, scheduled to commence in the third quarter of 2016. It will take approximately 18 months to complete, and will comprise a full renovation of the existing guestrooms, restaurants, bars, meeting facilities and lobby. In addition, two new penthouse suites overlooking Hyde Park will be created as well as an expansion of the spa facilities and improvements to core buildings services. The hotel will remain open during the renovation period with reduced facilities and room inventory.

Mandarin Oriental, Munich's performance was disrupted by an extensive renovation in 2015, which led to a decrease in RevPAR in local currency terms of 21%, and a decrease in EBITDA of US$6 million when compared to the prior year. Nevertheless, the hotel remained the undisputed market leader and the new facilities, which include a lobby lounge, bar and Matsuhisa restaurant by renowned chef Nobu, are expected to extend further its appeal as the best hotel in the city.

In Geneva, a strong performance in the leisure segment helped to offset reduced demand from the corporate and group segment, with overall RevPAR in line with the prior year in local currency terms.

Mandarin Oriental, Paris was impacted by weaker city-wide demand due to travel security concerns following the terrorist incidents during the year. This led to a decline in RevPAR of 15% in local currency terms. The hotel's food and beverage operations, led by renowned chef Thierry Marx, have attained many accolades, and the signature restaurant, Sur Mesure, was once again awarded two Michelin stars in the 2016 listing. The hotel is one of only eight hotels in the city to be honoured with an official 'Palace Distinction', and was also listed in Condé Nast Traveler's, US 'Readers' Choice Awards' 2015.

The Group's 50% joint venture acquisition of the iconic Hotel Ritz in Madrid in May has provided an exciting opportunity to extend Mandarin Oriental's portfolio to another key European capital city, and will complement the Group's top-performing Barcelona hotel. Since the acquisition, the hotel has performed in line with expectations, achieving occupancy of more than 70% at an average rate approaching €300. The hotel is scheduled to undergo a comprehensive renovation in 2017.

Elsewhere in the region, Mandarin Oriental, Barcelona remained the undisputed market leader, while the hotel in Prague successfully maintained its competitive position. Both properties received further global recognition for excellence, and were featured in Condé Nast Traveler's, US 'Readers' Choice Awards' 2015 as two of the top hotels in their respective cities, with Mandarin Oriental, Prague being awarded 'Top Hotel in Central Europe'.

Mandarin Oriental, Bodrum continued to stabilize and increased its reputation as one of the best resorts in the region with an inclusion in the Robb Report's 'Best of the Best' 2015, as well as being nominated by the Daily Telegraph, UK as one of the 'Top 10 Beach Hotels in Turkey'.

The Group's international recognition was further enhanced by the opening of two new hotels in Europe and North Africa in 2015. Just five months after opening, Mandarin Oriental, Milan was awarded the Forbes 'Five Star' award and its fine-dining restaurant, Seta, achieved one Michelin star. Mandarin Oriental, Marrakech, which partially opened in October, was also singled out by Architectural Digest as one of the year's 'Design Discoveries', and was listed in Fodor's Travel Guide 2015 as one of the world's '25 Best New Hotels'.

The Americas

The trading environment in The Americas was generally positive in 2015, however, due to the displacement of business associated with a suite refurbishment in New York, overall RevPAR across the region on a like-for-like basis was flat.

Mandarin Oriental, Washington D.C. benefited from stronger leisure demand which led to a 3% increase in RevPAR. The hotel appeared in numerous reader surveys in prestigious publications and was voted the 'Best Hotel in Washington D.C.' in Institutional Investor's 2015 'World's Best Hotels'.

Mandarin Oriental, New York continued to perform at the top end of the luxury hotel market, however, occupancy was impacted by the suite renovation in the first half of the year, which led to an overall decrease in RevPAR of 5%, despite maintaining a high average rate. The hotel's positioning as one of the world's most luxurious properties was further reinforced through a variety of awards including being one of the 'Top 10 Hotels' in the city in Condé Nast Traveler's, US 'Readers' Choice Awards' 2015, as well as one of the 'Best Hotels in The Americas' in Institutional Investor's 2015 'Top 100 World's Best Hotels'.  Importantly, the hotel retained both the prestigious Forbes 'Five Star' rating and the American Automobile Association's 'Five Diamond Lodging Award'.

At Mandarin Oriental, Miami, favourable market conditions led to an uplift in RevPAR of 3%, and the hotel's newest restaurant and bar, La Mar, continues to gain positive press reviews for its outstanding cuisine.

Mandarin Oriental, Boston maintained its position as market leader, with RevPAR in line with the previous year. The hotel was ranked 'Best Hotel in Boston' in Institutional Investor's 2015 'Top 100 World's Best Hotels', and Bar Boulud continues to be well received by the local community and international guests.

Elsewhere, the Group's hotels in Atlanta and Las Vegas increased their RevPAR over the prior year.

3. Increasing the number of rooms under operation to 10,000

Mandarin Oriental has achieved strong geographic diversification with a well-balanced portfolio across the globe and is on track to meet its mid-term goal of operating 10,000 rooms in key global locations within the next few years. Today, the Group operates over 8,000 rooms in 29 hotels around the world, and, including the hotels under development, the total portfolio now extends to more than 11,000 rooms in 46 hotels located in 24 countries.

Three new hotel management contracts and two new hotel acquisitions have been announced, including one in 2016:

During 2015, the Group ceased to manage its San Francisco hotel and the project in Grand Cayman will no longer proceed.

In total, Mandarin Oriental has 17 new hotels currently under development, all of which are long-term management contracts requiring no capital investment by the Group. Two of these properties will open within the next 18 months. Mandarin Oriental, Doha, the Group's first hotel in the Middle East, followed by Mandarin Oriental, Beijing, located in the iconic CCTV complex.

In addition to the Group's portfolio of hotels, a total of 15 Residences at Mandarin Oriental projects are open or under development. Over the past five years, the associated branding of these projects has, on average, resulted in fees of approximately US$10 million per annum. These fees, together with ongoing revenues from management fees and the use of hotel facilities by the home owners, should provide a growing return for the Group in future years.

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

4. Achieving a strong financial performance

The Group's overall financial performance in 2015 was impacted by softer demand in Hong Kong and Paris, together with disruption from renovations at a number of properties. Nonetheless, overall underlying profitability of the Group at US$90 million was resilient when compared to the record US$97 million result achieved in 2014. Strong competitive performances were maintained across the majority of the portfolio and the Group's development objectives remained active throughout the year.

The Group's balance sheet was further strengthened during the year following a successful US$316 million rights issue, the proceeds of which were used to fund a reduction in the Group's debt and to finance its share of the investment in Madrid.

At 31st December 2015, gearing was 4% of adjusted shareholders' funds, compared to 13% at the end of 2014. Including the impact of the acquisition of Mandarin Oriental, Boston on a pro forma basis (i.e. assuming that the hotel had been acquired on 31st December 2015), gearing would have been 8%.

The Board has recommended a final dividend of US¢3.00 per share, which, when combined with the interim dividend of US¢2.00 per share, makes a full year dividend of US¢5.00 per share on the enlarged shareholder base.

THE FUTURE

While challenging conditions are expected to continue in some markets, demand for the Mandarin Oriental brand remains strong. Despite significant renovations which will begin in London in 2016, the Group's results should benefit from the further stabilization of its recently opened and acquired hotels. Looking forward, the Group will be supported by the continued growth of its global portfolio, by the increasing number of high net worth travellers from both traditional and emerging markets, and by the limited supply of competitive luxury hotels in our key mature markets.

The geographical broadening of the Group's hotel portfolio, and the increasing opportunities for branded Residences projects internationally, underlie the strength of the brand and the growing recognition of Mandarin Oriental as one of the best luxury hotel groups in the world.

Edouard Ettedgui

Group Chief Executive

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

________________________________________________________________________________________________________________________________

Mandarin Oriental International Limited

Notes

1. ACCOUNTING POLICIES AND BASIS OF PREPARATION

The financial information contained in this announcement has been based on the preliminary results for the year ended 31st December 2015 which have been prepared in conformity with International Financial Reporting Standards, including International Accounting Standards and Interpretations adopted by the International Accounting Standards Board.

Amendments effective in 2015 which are relevant to the Group's operations:

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

Annual Improvements to IFRSs 2010 - 2012 Cycle

2011 - 2013 Cycle

The adoption of these amendments does not have a material impact on the Group's accounting policies and disclosures.

Amendments to IAS 19 'Employee Benefits' clarify the accounting for defined benefit plans that require employees or third parties to contribute towards the cost of the benefits. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary.

Annual Improvements to IFRSs 2010 - 2012 Cycle and 2011 - 2013 Cycle comprise a number of amendments to IFRSs. The amendments which are relevant to the Group's operations include the followings:

Amendment to IFRS 2 'Share-based Payment' clarifies the definition of a 'vesting condition' and separately defines 'performance condition' and 'service condition'.

Amendment to IFRS 3 'Business Combinations' clarifies that an obligation to pay contingent consideration which meets the definition of a financial instrument is classified as a financial liability or as equity, on the basis of the definitions in IAS 32 'Financial Instruments: Presentation'. The standard is further amended to clarify that all non-equity contingent consideration, both financial and non-financial, is measured at fair value at each reporting date, with changes in fair value recognized in profit and loss. It also clarifies that IFRS 3 does not apply to the accounting for the formation of any joint arrangement under IFRS 11.

Amendment to IFRS 8 'Operating Segments' requires disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics.

Amendment to IAS 24 'Related Party Disclosures' requires the reporting entity to disclose the fees paid for key management personnel services from another entity ('the management entity'). The reporting entity is not required to disclose the compensation paid by the management entity to the management entity's employees or directors.

Amendment to IFRS 13 'Fair Value Measurement' clarifies that the portfolio exception in IFRS 13, which allows an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis, applies to all contracts within the scope of IAS 39 or IFRS 9.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2. REVENUE

3. EBITDA FROM SUBSIDIARIES (EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION)