Professional Documents
Culture Documents
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0%
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2007 2008 2009 2010 2011
Mandarin Oriental, Singapore Mandarin Oriental, Bangkok
Mandarin Oriental, Jakarta Mandarin Oriental Hyde Park, London
179 184
152
171
195
88%
84%
74%
86%
89%
50
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250
0%
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100%
2007 2008 2009 2010 2011
209
265
185
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267
75%
66%
69%
81%
82%
50
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150
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300
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100%
2007 2008 2009 2010 2011
269
297 302
325
336
66%
61%
43%
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45%
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400
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2007 2008 2009 2010 2011
68
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141
159
37%
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46%
59%
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2007 2008 2009 2010 2011
886 842 702 720 863
88%
84%
81%
80% 80%
200
400
600
800
1,000
76%
78%
80%
82%
84%
86%
88%
90%
2007 2008 2009 2010 2011
Review of Historical P&L
A decrease in revenue has a disproportionate impact on profit
506
421
487
570
52
39
52
74
100
200
300
400
500
600
700
2008 2009 2010 2011
RevenuefromHotelOwnership RevenuefromHotelManagement
Revenue (US$m)
The large majority of revenue is derived from Hotel
Ownership
Both Hotel Ownership and Hotel Management
experienced a drop in revenue (-17% and -26%
respectively) in 2009 during the Global Financial Crisis,
as occupany and rates plummeted. Hotel Management
also saw a reduction in incentive management fees
Revenue advanced in 2010 and 2011 as occupancy and
rates improved. 2011 revenue is higher than pre-crisis
level
71
22
49 50
15
6
16
31
20
40
60
80
100
2008 2009 2010 2011
UnderlyingEBITfromHotelOwnership
UnderlyingEBITfromHotelManagement
Underlying EBIT (US$m)
EBIT contribution is more evenly split. Hotel
Management has a higher EBIT margin (~30%) than
Hotel Ownership (~15%), partly because Hotel
Management incurs no depreciation expense
Despite cost saving measures adopted, the slid in EBIT
(Hotel Ownership: -69%, Hotel Management: -64%) was
much more severe than the decrease in revenue,
reflecting fixed costs
Other than the Global Financial Crisis, acts of gods e.g.
J apan Tsunami has also impacted results
Review of Balance Sheet and Capital Structure
Properties dominate assets. Significant cash position. Conservative debt level.
861 881
986
1038
515
562
434
470
500
463
253
213
0
500
1000
1500
2000
2500
2008 2009 2010 2011
Tangibleassets Cashatbank Otherassets
Total assets (US$m)
Total assets is mainly made up of tangible assets
(largely freehold and leasehold properties) and
cash at bank
Debt (US$m)
Debt is not excessive relative to equity. Net debt
to equity is especially conservative
Interest expenses can be comfortable met
Steep drop in profttability and interest coverage in
2009 reminds that excessive debt is dangerous in
this industry
7.4
4.5
8.4
10.9
14%
11%
16%
12%
65% 66%
64% 64%
2.0
4.0
6.0
8.0
10.0
12.0
0%
10%
20%
30%
40%
50%
60%
70%
2008 2009 2010 2011
UnderlyingEBITDA/Netfinancingcharges
Netdebt/Totalequity
Debt/Totalequity
Review of Cash Flow
FCF positive albeit heavy recurring capex
Recurring Capex (US$m)
Heavy recurring capex at one-third to one-half of
operating cash flow
Comprises ongoing improvements and major
renovations from time to time
Free cash flow (US$m)
FCF positive in last 4 years
122
86
120
150
78
55
47
41
39
41
45
50
20
40
60
80
100
120
140
160
2008 2009 2010 2011
Cashflowsfromoperatingactivities(adjusted)
Recurringcapex
Depreciationandamortization
44
30
45
84
20
10
6
8
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011
FCFfromsubsidiaries
Dividendsfromassociatesandjointventures
Review of Return on Invested Capital and Dividend Payout
Disappointingly low ROIC which is unlikely to improve in near-term given stiff competition.
Dividend payout of around 100% of PATMI.
ROIC 2008 2009 2010 2011
ROIC (Mandarin) 2% 5% 7%
ROIC (Hotel Ownership) 2% 4% 4%
NOPAT (Mandarin) 67 22 51 63
NOPAT from Hotel Ownership 55 17 38 39
NOPAT from Hotel Management 12 4 13 24
Invested capital 1,002 1,026 970 950
Invested capital - assets 1,206 1,221 1,161 1,173
Invested capital - liabilities 203 195 191 223
ROIC is disappointingly low. The strong Mandarin
Oriental brand has not generated high economic
returns for owners
Opine that it would be difficult to improve ROIC
through increasing hotel rates, given the stiff
competition
Opine that the most realistic strategy to improve
ROIC would be to secure more hotels under
management, as this profit is earned without
having to invest capital
Opine however that hotels under management
cannot be increased rapidly, as in order to uphold
the standards of Mandarin, partner selection, site
selection, staff training etc would be more
arduous than the average hotelier
Dividend Payout 2008 2009 2010 2011
Dividend 69 69 50 60
Dividend as % PATMI 103% 83% 112% 88%
EPS 6.79 8.47 4.48 6.78
DPS 7.00 7.00 5.00 6.00
Interim DPS 2.00 2.00 2.00 2.00
Final DPS 5.00 5.00 3.00 4.00
Historical dividend payout has been maintained at
around 100% (+/-) of PATMI
In 2009, underlying EPS was only US1.26 cents
Mandarin did not cut dividend payout drastically,
bolstered by non-trading gain, maintained
previous year payout of US7.00 cents
Corporate Governance
No criticalities observed
2007 2008 2009 2010 2011
Chairman Simon Keswick Simon Keswick Simon Keswick Simon Keswick Simon Keswick
CEO Edouard Ettedgui Edouard Ettedgui Edouard Ettedgui Edouard Ettedgui Edouard Ettedgui
CFO J ohn Witt J ohn Witt J ohn Witt Stuart Dickie Stuart Dickie
Auditor PwC PwC PwC PwC PwC
Stock Chart
During the GFC, share price slid to US$0.66
US$0.66
US$1.50
Listings
London
Bermuda
Singapore
Major shareholders
18-Mar-09 12-Mar-10 9-Mar-11 22-Mar-12
J ardine Strategic 73% 74% 74% 74%
Neptune Investment Management Limited - 5% 5% 6%
Neptune Investment Management Limited: We offer a wide range of collective investments in the form of Open Ended Investment
Companies (OEICs) and Unit Trusts.
US$2.00
END