Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Financial Review Continued
In 2008, the contribution from management activities
before depreciation was US$16.4 million, largely
unchanged from US$16.2 million in 2007. Revenues
on which management fees are largely based, were stable
year on year, as revenues from newly opened hotels
offset a decline in revenues at existing hotels. In 2008,
the Group’s management activity also benefited from
branding fees from the sales of The Residences at
Mandarin Oriental in Boston which were completed
as the hotel opened. This was offset however, by
higher overheads at the corporate level as the Group
strengthened its management capability to support
new hotel openings.
Depreciation and amortization expenses were
US$39.3 million for 2008 slightly up from
US$38.5 million in 2007.
Associates and Joint Venture
The Group’s share of results from associates and joint
venture was as follows:
2008 2007
US$m US$m
EBITDA
Writeback of an impairment in
38.4 44.0
respect of Kuala Lumpur – 5.1
Less depreciation and
amortization expenses (11.7 ) (11.9 )
Operating profit 26.7 37.2
Less net financing charges (7.8 ) (8.5 )
Less tax (3.6 ) (5.8 )
Share of results of associates
and joint venture 15.3 22.9
The Group’s share of EBITDA from associates and joint
venture decreased by US$5.6 million or 13% from 2007.
20 Mandarin Oriental International Limited
The Macau hotel’s EBITDA fell in 2008, primarily as
a result of the oversupply of hotel rooms in the territory
as well as a slowdown in visitor arrivals from September
onwards. The Group has recently announced that it
will sell its 50% interest in the hotel for proceeds of
approximately US$90 million with a post-tax gain on
disposal of approximately US$75 million. The sale is
expected to close in May 2009.
Singapore increased its contribution to the Group,
however, this was offset by Bangkok’s decline in
EBITDA due to both the political demonstrations in
the later part of the year (which closed both airports in
the city for a period) and the general downturn in the
world economy. Kuala Lumpur’s contribution was
marginally down.
In 2007, the share of results of associates and joint
venture benefited from a US$5.1 million writeback
of the remaining balance on the US$16.9 million
impairment provision, made against the value of the
Group’s interest in the Kuala Lumpur hotel in 1998.
In The Americas, the performance at the Group’s
associate hotel in New York remained solid. The Miami
hotel’s contribution to the Group fell significantly as
local conditions weakened.
Depreciation and amortization expenses from associates
and joint venture were US$11.7 million for 2008, in
line with the US$11.9 million charged in 2007.
The Group’s share of net financing charges from
associates and joint venture was US$7.8 million in
2008, a decrease from US$8.5 million in 2007, due
to falling interest rates.