Annual Report 2011 - Mandarin Oriental Hotel Group

22 Mandarin Oriental International Limited
Financial Review Continued
Cash flow continued
The Group’s total investment in the new Paris hotel
was approximately US$75 million as outlined in
the table below:
Mandarin Oriental, Paris
2010
and
before 2011 Total
US$m US$m US$m
Leasehold improvements and furniture
& equipment
Pre-opening expenses
35 25 60
(charged to profit and loss) 2 13 15
Total 37 38 75
In 2011, US$25 million was capitalized and
US$13 million of pre-opening expenses were charged
to profit and loss (and hence included in the cash flow
under operating activities).
Purchase of intangible assets includes amounts spent
on computer software, leasehold improvements and
other expenditure incurred in order to secure long-term
management contracts.
In 2011, the Group made US$1 million
(2010: US$3 million) in aggregate of investments
in, and loans to, associate hotels in The Americas.
In 2011, the Group received US$3 million from
the repayment of loans given to the owners of managed
hotels in prior years. Conversely, in 2010, the Group
provided US$3 million in respect of loans to owners
of managed hotels.
Dividends
The Board is recommending a final dividend of
US¢4.00 per share for a full-year dividend of
US¢6.00 per share (2010: US¢5.00 per share).
No scrip alternative is being offered in respect of
the dividend. The final dividend is payable on
16th May 2012 to shareholders on the register of
members at the close of business on 16th March 2012.
Supplementary information
Although the Group’s accounting policy in respect
of its freehold land and buildings and the building
component of owner-occupied leasehold properties
is based on the cost model, the Directors continue to
review their fair market values in conjunction with an
independent appraiser on an annual basis. The fair
market value of both freehold and leasehold land and
buildings is used by the Group to calculate adjusted
net assets, which the Directors believe gives important
supplementary information regarding net asset value
per share and gearing as outlined below:
2011 2010
Per share Per share
US$m US$ US$m US$
Shareholders’ funds/net
assets at amortized cost
Add surplus for fair
market value of
freehold and leasehold
911 0.91 899 0.90
land and buildings
Adjusted shareholders’
1,781 1.79 1,416 1.43
funds/net assets 2,692 2.70 2,315 2.33
On IFRS basis, the Group’s consolidated net debt
of US$113 million at 31st December 2011 was 12% of
shareholders’ funds, compared with consolidated net
debt of US$144 million at 31st December 2010 which
was 16% of shareholders’ funds. Taking into account
the fair market value of the Group’s interests in
freehold and leasehold land, gearing was 4% of
adjusted shareholders’ funds at 31st December 2011,
compared with 6% at 31st December 2010.