Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

16 Borrowings continued
The remaining contractual maturities of the borrowings, including related interest payments, are analyzed below.
The interest payments are computed using contractual rates and, in the case of floating rate borrowings, based on
market rates at the balance sheet date before taking into account of hedging transaction. Cash flows denominated in
currencies other than United States dollars are converted into United States dollars at the rates of exchange ruling at
the balance sheet date.
2008 2007
US$m US$m
Within one year 27.0 45.3
Between one and two years 134.3 38.3
Between two and three years 18.8 143.4
Between three and four years 20.0 28.7
Between four and five years 25.4 28.7
Beyond five years 539.0 577.3
764.5 861.7
Secured 628.8 649.5
Unsecured 32.5 27.8
661.3 677.3
Borrowings of US$628.8 million (2007: US$649.5 million) are secured against the tangible fixed assets of certain
subsidiary undertakings. The book value of these tangible fixed assets as at 31st December 2008 was US$836.8 million
(2007: US$951.0 million).
17 Tax increment financing
2008 2007
US$m US$m
Netted off against the net book value of the property (refer note 9) 29.0 29.8
Loan (refer note 16) 1.7 1.7
30.7 31.5
A development agreement was entered into between one of the Group’s subsidiaries and the District of Columbia
(‘District’), pursuant to which the District agreed to provide certain funds to the subsidiary out of the net proceeds
obtained through the issuance and sale of certain tax increment financing bonds (‘TIF Bonds’) for the development
and construction of Mandarin Oriental, Washington D.C.
The District agreed to contribute to the subsidiary US$33.0 million through the issuance of TIF Bonds in addition
to US$1.7 million issued in the form of a loan, bearing simple interest at an annual rate of 6.0%. The US$1.7 million
loan plus all accrued interest will be due on the earlier of 10th April 2017 or the date of the first sale of the hotel.
The receipt of the TIF Bonds has been treated as a government grant and netted off against the net book value in
respect of the property (refer note 9). The loan of US$1.7 million (2007: US$1.7 million) is included in long-term
borrowings (refer note 16).
Annual Report 2008 63