Annual Report - Mandarin Oriental Hotel Group

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Consolidated Cash Flow Statement for the year ended 31st December 2007 Operating activities 2007 2006 Note US$m US$m Operating profit 107.7 121.9 Depreciation 10 37.6 28.4 Amortization of intangible assets 9 0.9 0.3 Non-cash items 27a (3.9 ) (74.7 ) Movements in working capital 27b 5.3 (1.4 ) Interest received 18.5 10.5 Interest and other financing charges paid (34.9 ) (26.5 ) Tax paid (14.0 ) (8.2 ) 117.2 50.3 Dividends and interest from associates and joint ventures 12.3 12.1 Cash flows from operating activities 129.5 62.4 Investing activities Purchase of tangible assets (50.1 ) (135.5 ) Purchase of intangible assets (1.6 ) (0.8 ) Investments in and loans to associates and joint ventures – (0.2 ) Advance of mezzanine loans (3.4 ) – Repayment of mezzanine loan 12.0 – Increase in other investments (3.6 ) (1.2 ) Proceeds on disposal of The Mark 27c – 98.5 Proceeds on disposal related to an associate 27d 70.7 – Capital distribution from associates 27e 14.4 1.2 Cash flows from investing activities 38.4 (38.0 ) Financing activities Issue of shares 3.5 1.6 Drawdown of borrowings 535.9 113.6 Repayment of borrowings (464.4 ) (8.9 ) Dividends paid by the Company 26 (38.7 ) (14.5 ) Cash flows from financing activities 36.3 91.8 Effect of exchange rate changes 1.3 1.6 Net increase in cash and cash equivalents 205.5 117.8 Cash and cash equivalents at 1st January 286.6 168.8 Cash and cash equivalents at 31st December 27f 492.1 286.6 Annual Report 2007 31
Principal Accounting Policies A Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards, including International Accounting Standards and Interpretations adopted by the International Accounting Standards Board. The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. In 2007, the Group adopted the following standards and interpretations to existing standards which are relevant to its operations: IFRS 7 Financial Instruments: Disclosures Amendment to IAS 1 Capital Disclosures IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment IFRS 7, Financial Instruments: Disclosures introduces new disclosures relating to financial instruments. The complementary amendment to IAS 1, Presentation of Financial Statements – Capital Disclosures introduces disclosures about the level of an entity’s capital and how it manages capital. These standards do not have any impact on the classification and valuation of the Group’s financial instruments. IFRIC 8, Scope of IFRS 2 requires consideration of transactions involving the issuance of equity instruments – where the identifiable consideration received is less than the fair value of the equity instruments issued – to establish whether or not they fall within the scope of IFRS 2. Application of this interpretation is not expected to have significant impact to the Group. IFRIC 9, Reassessment of Embedded Derivatives prohibits reassessment of any embedded derivatives contained in a contract since becoming a party to the contract unless there is a change in the terms of the host contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. Application of this interpretation is not expected to have significant impact to the Group. IFRIC 10, Interim Financial Reporting and Impairment prohibits the impairment losses recognized in an interim period in respect of goodwill, investments in equity instruments and investments in financial assets carried at cost from being reversed at a subsequent balance sheet date. Application of this interpretation is not expected to have significant impact to the Group. There have been no changes to the accounting policies as a result of adoption of the above standards and interpretations. Certain comparative figures in the segmental disclosure have been reclassified to conform with current year presentation. The following standards and interpretations to existing standards, which are relevant to the Group’s operations, were published but are not yet effective in 2007: IFRS 3, Business Combinations (effective for annual periods beginning on or after 1st July 2009), which replaces IFRS 3 (as issued in 2004), and the related amendment to IAS 27, Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1st July 2009) provide guidance for applying the acquisition method for business combinations. The Group will apply IFRS 3 and IAS 27 (as amended in 2008) from 1st January 2010 and will revise its accounting policy on business combinations accordingly. 32 Mandarin Oriental International Limited
Page 2 and 3: Mandarin Oriental Hotel Group is an
Page 4 and 5: Corporate Information Directors Sim
Page 6 and 7: Combined total revenue by geographi
Page 8 and 9: Developments The Group announced ei
Page 10 and 11: Finally Mandarin Oriental increased
Page 12 and 13: Despite the political uncertainties
Page 14 and 15: 4) Achieving a strong financial per
Page 16 and 17: E U R O P E Mandarin Oriental Hyde
Page 18 and 19: 2010 and beyond continued Mandarin
Page 20 and 21: Mandarin Oriental Hyde Park, London
Page 22 and 23: In The Americas, the Washington D.C
Page 24 and 25: Capital expenditure on existing pro
Page 26 and 27: Supplementary information Valuation
Page 28 and 29: Lord Leach of Fairford Lord Leach j
Page 30 and 31: Consolidated Balance Sheet as at 31
Page 34 and 35: A Basis of preparation continued IF
Page 36 and 37: E Intangible assets i) Goodwill rep
Page 38 and 39: M Cash and cash equivalents For the
Page 40 and 41: U Derivative financial instruments
Page 42 and 43: Financial Risk Management A Financi
Page 44 and 45: A Financial risk factors continued
Page 46 and 47: Critical Accounting Estimates and J
Page 48 and 49: Notes to the Financial Statements 1
Page 50 and 51: 4 Share of results of associates an
Page 52 and 53: 8 Earnings per share Basic earnings
Page 54 and 55: 10 Tangible assets Freehold Leaseho
Page 56 and 57: 11 Associates and joint ventures co
Page 58 and 59: 13 Pension plans continued The amou
Page 60 and 61: 14 Deferred tax Unremitted Provisio
Page 62 and 63: 15 Debtors and prepayments continue
Page 64 and 65: 17 Borrowings continued Borrowings
Page 66 and 67: 20 Share capital Ordinary shares in
Page 68 and 69: 23 Revenue and other reserves Reven
Page 70 and 71: 24 Non-current asset classified as
Page 72 and 73: 28 Derivative financial instruments
Page 74 and 75: 31 Related party transactions conti
Page 76 and 77: Attributable interest % 2007 2006 I
Page 78 and 79: Five Year Summary Consolidated Prof
Page 80 and 81: The Board continued The Board is sc
Page 82 and 83:
Internal control continued The Comp
Page 84 and 85:
Shareholder Information Financial c
Page 86 and 87:
Europe Mandarin Oriental Hotel du R
Page 88 and 89:
Mandarin Oriental Hotel Group Reser
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Annual Report - Mandarin Oriental Hotel Group

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