Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

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CHAIRMAN’S STATEMENT
OVERVIEW
Mandarin Oriental made good progress in its development strategy in 2005 with the opening of two
additional hotels and the announcement of a number of new management contracts. Operationally, the
Group’s results benefited from increasing room rates as demand in many cities strengthened, particularly
in Hong Kong.
PERFORMANCE
Earnings before interest, tax, depreciation and amortization for 2005 were US$124 million, after some
US$11 million of pre-opening costs related to Tokyo, compared with US$99 million in 2004.
Profit attributable to shareholders in 2005 was US$77 million, including a post-tax gain of US$36 million
arising from the disposal of the Group’s property interest in Hawaii. Excluding the gain from this disposal,
profit attributable to shareholders was US$41 million.This compares with US$29 million in the previous
year, which had benefited from a US$10 million investment writeback.
Earnings per share for the year were US¢8.14 including the Hawaii gain. Excluding the gain, earnings
were US¢4.33, compared with US¢3.35 in 2004.
The Group’s net financing charges were reduced following the conversion of the Group’s 6.75%
convertible bonds into shares in the early part of the year. Net debt was also reduced significantly with
the US$97 million proceeds from the Hawaii sale.
The Directors are recommending an increased dividend of US¢1.50 per share compared with US¢1.00
paid in 2004.
The net asset value per share, with leasehold land adjusted to fair market value, was US$1.50 at
31st December 2005, compared with US$1.37 at the prior year end.
GROUP REVIEW
Significant profit increases were achieved at the Group’s wholly-owned Hong Kong hotels as they
benefited from increasing demand and higher room rates.The Group’s other subsidiary hotels also
produced better results in the improved trading environment, including the recently opened property
in Washington D.C., which continued to establish its market position. Operating results from associates
and joint ventures rose with stronger performances at Mandarin Oriental, New York, and at the Group’s
hotels in Singapore, Macau and Miami.
The sale of the Group’s 40% ownership interest in Kahala Mandarin Oriental, Hawaii was completed in
June 2005, as a consequence of which the Group’s management of the hotel has come to an end.The sale
of The Mark hotel in New York was completed in February 2006, and a gain of some US$35 million
arising from the disposal will be recognized in the results of 2006.
The international visibility of the Mandarin Oriental brand has been strengthened considerably in recent
years with the opening of select properties in key destinations and the renovation of existing flagships.
MANDARIN ORIENTAL INTERNATIONAL LIMITED