Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Financial Review Continued
Cash flow continued
The cash flows from operating activities were
US$124 million in 2008, down by US$6 million
or 5% from US$130 million in 2007.
Under investing activities, capital expenditure on
existing properties totalled US$69 million, compared
with US$50 million in 2007.
Significant renovations were carried out in the year
at the Geneva and Jakarta hotels. Also, the hotel in
London undertook preliminary works in relation to
the One Hyde Park development adjacent to the hotel.
Whilst the One Hyde Park development will principally
house the 80 Residences at Mandarin Oriental, the
agreement with the developer also provides space for
hotel guest facilities, including a swimming pool, a
new fitness centre and car parking facilities. In addition,
office space will be made available to the hotel,
creating space for an additional restaurant in the
existing hotel building.
An analysis of capital expenditure by significant
renovation project is shown below:
2008 2007
US$m US$m
Mandarin Oriental,
Jakarta renovation
Mandarin Oriental,
18 –
Geneva renovation
London – One Hyde Park –
18 –
related works
Mandarin Oriental,
10 –
Hong Kong renovation
Mandarin Oriental,
– 21
Munich renovation
Total capital expenditure on
– 10
significant projects 46 31
Ongoing capex at other hotels 23 19
22 Mandarin Oriental International Limited
69 50
In 2008, the Group made a US$6 million investment
in the Paris project which will open in the first half of
2011. Following a reassessment of the project costs
based on full design drawings, the Group’s investment
will increase to US$60 million from the US$40 million
originally announced in 2007. The increase also
includes the cost of additional features at the hotel
to ensure the property is positioned as one of Paris’ preeminent
palace hotels. The majority of the project costs
will continue to be met by the developer as the hotel will
be operated by the Group under a long-term lease.
In 2007, the Group completed the sale of half of its
50% investment in Mandarin Oriental, New York,
receiving net proceeds of US$71 million.
In 2008, following successful refinancings, capital
distributions were received from both the Miami
and Kuala Lumpur associate hotels, amounting to
US$23 million. Included in the 2007 capital
distribution from associates was a US$13 million
distribution from the New York hotel as a result of
a refinancing of the property following the change
in ownership.
In 2008, the Group provided a US$1 million mezzanine
loan to the owners of the Prague hotel. In 2007, the
Group received repayment of its US$12 million
mezzanine loan previously provided to the owner of
the Boston hotel and made loans totaling US$3 million
to other owners of Group managed hotels, for a net
repayment of mezzanine loans of US$9 million.