Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Dividends
The Board is recommending a final dividend of
US¢5.00 per share for a full year dividend of US¢7.00
per share (2007: US¢6.00 per share). No scrip
alternative is being offered in respect of the dividend.
The final dividend is payable on 13th May 2009 to
shareholders on the register of members at the close
of business on 20th March 2009.
Property valuation
The Group’s accounting policy requires independent
valuations of the Group’s hotel property interests to be
carried out at intervals not exceeding three years, with
the exception of hotels within the first three years of
operations which have not yet stabilized. The last full
independent valuation was carried out at 31st December
2007. In the intervening years, the Directors review the
carrying values of the properties in consultation with the
Group’s independent appraisers and adjustment is made
where there has been a material change.
As a result of the 2008 review, the Directors have
concluded that there were significant movements
in the valuations of certain properties giving rise to a
revaluation deficit of US$43 million (net of deferred
tax), which has been charged against the Group’s
property revaluation reserves.
In addition, the Group’s leasehold land has been
revalued downwards by US$84 million, with the
decrease primarily attributable to the Group’s two
long leaseholds in Hong Kong. This US$84 million
reduction, however, is not recognized in the financial
statements as, under IFRS, interests in land held under
long-term leases must be stated at cost and amortized
over the period of the lease. As shown in the
supplementary information on page 24, the revaluation
surplus relating to leasehold land not recognized in
the financial statements, after taking into account
the US$84 million reduction in value, was
US$1,043 million down from US$1,127 million
in 2007.
Treasury activities
The Group manages its exposure to financial risk using
a variety of techniques and instruments. The main
objective is to manage exchange and interest rate risks
and to provide a degree of certainty in respect of costs.
The Group has fixed or capped interest rates on 51%
of its gross borrowings.
In respect of specific hotel financing, borrowings are
normally taken in the local currency to hedge partially
the investment and the projected income. At
31st December 2008, the Group’s net assets were
denominated in the following currencies:
Adjusted
Net assets net assets*
US$m % US$m %
Hong Kong Dollar 46 5 1,008 49
United States Dollar 549 55 549 27
United Kingdom Sterling 117 12 117 6
Thai Baht 70 7 70 3
Euro 72 7 72 4
Swiss Franc 62 6 62 3
Others 90 8 171 8
1,006 100 2,049 100
* see supplementary information section on page 24
Investment of the Group’s cash, which totalled
US$515 million at 31st December 2008, is managed
so as to minimize risk while seeking to enhance yield.
The treasury function is not permitted to undertake
speculative transactions unrelated to underlying
financial exposures.
Annual Report 2008 23