Annual Report 2011 - Mandarin Oriental Hotel Group

Financial Review
Accounting policies
The Directors continue to review the appropriateness
of the accounting policies adopted by the Group
having regard to developments in International
Financial Reporting Standards (‘IFRS’).
The accounting policies adopted are consistent with
those of the previous year, except that the Group has
adopted several new standards, amendments and
interpretations to IFRS effective on 1st January 2011,
as more fully detailed in the ‘Basis of preparation’ note
in the financial statements. The adoption of these new
standards, amendments and interpretations did not
have a material impact on the Group’s financial
statements.
Results
Overall
The Group uses earnings before interest, tax,
depreciation and amortization (‘EBITDA’) to analyze
operating performance. Total EBITDA including
the Group’s share of EBITDA from associates and
joint ventures is shown below:
2011 2010
US$m US$m
Subsidiaries 130.3 109.5
Associates and joint ventures 32.7 26.9
Underlying EBITDA 163.0 136.4
Subsidiaries
Annual Report 2011 19
2011 2010
US$m US$m
Underlying EBITDA from subsidiaries
Non-trading items:
130.3 109.5
Gain on One Hyde Park lease space 10.1 –
Provision against asset impairment (1.6 ) –
EBITDA from subsidiaries
Less depreciation and
138.8 109.5
amortization expenses (49.7 ) (44.6 )
Operating profit 89.1 64.9
In 2011, underlying EBITDA from subsidiaries
increased by US$20.8 million or 19%, to
US$130.3 million, from US$109.5 million in 2010.
Improved operating performances by all of the Group’s
Asian subsidiary hotels, except Tokyo, led to higher
EBITDA contributions in 2011. In Hong Kong,
strong demand for the Group’s two subsidiary hotels
Mandarin Oriental, Hong Kong and The Excelsior led
to increases in revenue per available room (‘RevPAR’)
of 14% and 18%, respectively. As a result, the combined
EBITDA contribution from both hotels increased by
22% in 2011. In Tokyo, the hotel’s performance was
negatively impacted following the natural disaster in
March 2011, although occupancy levels recovered
towards the end of the year. The contribution from
Manila increased primarily due to a strong Philippine
Peso, which benefited results when translated into
US dollars. In Jakarta, EBITDA improved as the
hotel’s occupancy level increased in its first full year
of operation after its comprehensive renovation
(which completed in 2010).