Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Associates and Joint Ventures
The Group’s share of results from associates and
joint venture hotels was as follows:
2005 2004
US$m US$m
EBITDA 33.0 24.4
Partial writeback of an impairment
in respect of Kuala Lumpur – 9.6
Less: depreciation and amortization (13.9) (13.5)
Operating profit 19.1 20.5
Less: net financing charges (8.8) (7.4)
Less: tax (1.6) (0.5)
Share of results of associates
and joint ventures 8.7 12.6
The Group’s share of EBITDA increased by
35% to US$33.0 million in 2005. Most of the
increase from associates was due to the stronger
performance from Mandarin Oriental, New York
as it built its market position.The hotel’s RevPAR
increased by 48% with an average room rate for
the year at US$695.
The Macau hotel increased its contribution as it
achieved similar average room rate increases to
the two Hong Kong hotels of over 20%. Results
of the Singapore hotel also improved following
an extensive renovation in 2004.
In 2004, the share of results of associates and joint
ventures benefited from a US$9.6 million partial
writeback of an impairment previously made
against the value of the Group’s 25% interest in
the Kuala Lumpur hotel.
Depreciation and amortization for associates
at US$13.9 million was broadly in line with the
previous year’s charge of US$13.5 million.
Net financing charges for associates and joint
ventures increased from US$7.4 million to
US$8.8 million due to higher interest rates in
the territories in which the Group’s associates
operate.
Net financing charges
Net financing charges reduced to US$22.4 million
from US$27.5 million in 2004.Although interest
rates generally increased, the Group’s net debt
decreased from US$517 million in 2004 to
US$311 million primarily due to the conversion
of the Group’s US$75 million of convertible
bonds into equity in early 2005 and the receipt
of US$97 million from the Hawaii sale.
Interest cover in 2005, which is calculated as
operating profit before interest and tax (including
associates) over net financing charges (including
associates), was 2.4 times compared with 1.6 times
in 2004.The Company also uses EBITDA as an
indicator of its ability to service debt and finance
its future capital expenditure. Interest cover on
this basis (including EBITDA from associates) was
3.8 times in 2005, up from 2.8 times in 2004.
Tax
The effective tax rate for the year was 28%
compared with 30% in 2004. Excluding the
impact of the Hawaii disposal, the effective
tax rate for the year would have been 27%.
ANNUAL REPORT 2005 21