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20<br />

FINANCIAL REVIEW<br />

A CCOUNTING POLICIES<br />

The Directors continue to review the<br />

appropriateness of the accounting policies<br />

adopted by the Group having regard to<br />

developments in <strong>International</strong> Financial<br />

Reporting Standards (‘IFRS’).The accounting<br />

policies adopted are consistent with those of<br />

the previous year.<br />

The Directors believe it is appropriate to provide<br />

supplementary information in addition to the<br />

financial statements prepared under IFRS, and<br />

this is presented separately in this review.<br />

RESULTS<br />

Overall<br />

The Group uses earnings before interest, tax,<br />

depreciation and amortization (‘EBITDA’) to<br />

analyse operating performance.Total EBITDA<br />

including the Group’s share of EBITDA from<br />

associates and joint ventures is shown below:<br />

MANDARIN ORIENTAL INTERNATIONAL LIMITED<br />

2005 2004<br />

US$m US$m<br />

Subsidiaries 91.0 74.6<br />

Associates and joint ventures 33.0 24.4<br />

Total EBITDA 124.0 99.0<br />

Subsidiaries<br />

2005 2004<br />

US$m US$m<br />

EBITDA 91.0 74.6<br />

Property revaluation movement – 0.2<br />

Less: depreciation and amortization (30.6) (31.4)<br />

Operating profit 60.4 43.4<br />

EBITDA from subsidiaries increased by 22% to<br />

US$91.0 million in 2005 from US$74.6 million<br />

in 2004.<br />

In Asia, results of both <strong>Mandarin</strong> <strong>Oriental</strong>, Hong<br />

Kong and The Excelsior benefited from increases<br />

in the average room rate of over 20%. <strong>Mandarin</strong><br />

<strong>Oriental</strong>,Tokyo opened in December 2005, with<br />

pre-opening expenses charged to the consolidated<br />

profit and loss account of US$10.7 million. Results<br />

at the Manila and Jakarta hotels remained depressed.<br />

In Europe, London continued to perform strongly<br />

and achieved the same occupancy as the previous<br />

year and a slightly improved rate despite the<br />

negative impact of the terrorist attacks in July.<br />

The performance of the Munich hotel was steady,<br />

remaining ahead of the competition in the city. In<br />

Geneva, there was some recovery in the market<br />

and improvements in occupancy and rate<br />

produced an increased Revenue Per Available<br />

Room (‘RevPAR’) of 15%.<br />

In The Americas, the Washington D.C. hotel,<br />

which opened in March 2004, contributed<br />

a positive EBITDA to the Group in 2005,<br />

compared with the previous year in which the<br />

hotel had significant pre-opening expenses and<br />

start-up losses.<br />

In 2005, the contribution from management<br />

activities was US$3.7 million (2004: US$4.7 million)<br />

as an increase in management fees was offset by<br />

higher corporate costs as the Group put into place<br />

additional resources to support its future growth.<br />

Depreciation and amortization was US$30.6 million<br />

for 2005 and was broadly in line with the 2004<br />

charge of US$31.4 million.

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