Kingdom Hotel Investments2010/05/04 · Raffles Hotels & Resorts is a worldwide collection of...

Kingdom HotelInvestments

Annual report and accounts 2009

Kingdom Hotel Investments Annual report and accounts 2009

Who we are

Kingdom Hotel Investments (KHI) is the leading hotel and resort acquisition and development company focused on emerging markets. The Company has a balanced portfolio of hospitality assets in upscale, upper-upscale and luxury market segments.

What we do

We build shareholder value by acquiring, developing, actively asset managing and financial structuring of high-quality hospitality real estate properties that are leaders within their competitive market sets.

01 Our performance02 KHI at a glance04 Chairman’s letter05 Chief Executive’s review

06 Business model07 Our business16 Financial review20 Supplementary operating and

financial information

38 Board of directors40 Senior management team43 Corporate governance45 Directors’ report46 Remuneration report47 2009 annual report supplementary information48 Directors’ responsibilities49 Our responsibilities

50 Independent auditors’ report51 Consolidated income statement52 Consolidated statement of

comprehensive income53 Consolidated statement of financial position54 Consolidated statement of changes in equity56 Consolidated cash flow statement57 Notes to the consolidated financial statements110 Shareholder information111 Definitions

Strategic & operational highlightsl Company remains profitable and cash generative

l Sale of four assets generated $87m in value and $37m gains

l Monetised associate investments through dividends received of $41.9m

l Physical real estate sales of $15m; development projects proceeding to plan

l KHI spent $181m in 2009 advancing its development projects

Summaryl Group revenues decreased 12% to $246.4m in a continued tough

trading environment

l Hotel System RevPAR fell 11% (ex-forex -9%); Consolidated RevPAR fell 7% (ex-forex -6%)

l Geographic diversification and resilience of Company’s portfolio continue to deliver benefits

l Stringent asset management underpinned retention rates and reduced profit margin erosion

l Defensive actions resulted in G&A savings of $6.8m resulting in G&A 30% below 2008 level

l Balance sheet remains conservatively leveraged, with net-debt-to-equity ratio of 15%

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01Kingdom Hotel Investments Annual report and accounts 2009P

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Consolidated KHI Results

Change

(12 months ended 31 December, US$’000) 2009 2008 $ % Excl. forex

KHI System operating hotels# No. of consolidated hotels {rooms} 18 {3,716} 18 {3,659} {0%}# No. of associated hotels {rooms} 3 {1,177} 4 {1,377} {9%}Total KHI System 21 {4,893} 22 {5,036} {2%}

Total revenues 246,415 278,725 (32,310) (12%)Hotel revenues 218,999 230,948 (11,949) (5%) (4%)Hotel EBITDA 60,561 65,872 (5,312) (8%) (12%)Hotel gross profit 32,008 38,156 (6,149) (16%)Total gross profit 43,277 53,908 (10,631) (20%)Operating profit 20,359 22,461 (2,103) (9%)KHI EBITDA including real estate sales 50,311 51,365 (1,054) (2%)KHI EBITDA excluding real estate sales 45,167 42,021 3,146 7%KHI Adj EBITDA including real estate sales 71,449 94,082 (22,633) (24%)KHI Adj EBITDA excluding real estate sales 61,678 71,103 (9,425) (13%)Net profit 21,842 17,141 4,701 27%Net profit before non-recurring items 17,323 36,640 (19,317) (53%)Cash (351,282) (256,393) (94,889) (37%)IB debt 528,453 405,513 122,940 30%Net debt 177,170 149,120 28,050 19%Equity 1,175,609 1,154,268Avg no shares outstanding 168,512 174,607 (6,095) (3%)EPS $0.13 $0.10 $0.03 32%EPS before non-recurring items $0.10 $0.21 $(0.11) (51%)

Change Key ratios (12 months ended 31 December) 2009 2008 (% points)

KHI EBITDA margin (% total revenue) 20% 18% 2.0Hotel gross margin (% hotel revenues) 15% 17% (1.9)Operating profit margin (% total revenues) 8% 8% 0.2Net profit before non-recurring items (% total revenues) 7% 13% (6.1)Net debt/shareholders’ equity 15% 13% 2.2

Our performance

$246.4mOperating profitUS$million2008:$22.5m

RevenueUS$million2008:$278m

$20.4mAdjusted KHI EBITDA (including real estate sales)US$million2008:$94.1m

$71.4mNet profitUS$million2008:$17.1m

$21.8mFinancial highlights

02 Kingdom Hotel Investments Annual report and accounts 2009

KHI at a glance We have established strategic partnerships with associated world-class hotel operators spanning the upscale to luxury hotel segments and leverage these relationships in most properties – Four Seasons Hotels & Resorts, Fairmont Raffles Hotel International and Mövenpick Hotels and Resorts. We use these strategic operator-owner relationships to execute our business model in the areas of asset management, origination, disposals and capital recycling.

Upper upscale

Upscale

Luxury

Our strategic partners

Four Seasons Hotels & Resorts is an acknowledged leader in the hospitality industry, renowned for making business and leisure travel easier, rewarding and glamorous. Our partnership with this operator spans six operating hotels and one development.

Raffles Hotels & Resorts is a worldwide collection of luxury hotels and resorts that are distinguished by their elegance and residential charm. Each hotel is a landmark in its respective city, positioned at the top of its class and rated among the best hotels in the world. Our partnership with this operator spans two operating hotels and two new developments.

Fairmont Hotels & Resorts’ global portfolio includes elegant landmark hotels, expansive resorts and iconic modern city centre properties. All its operations worldwide present a unique combination of elegance and flair. Our partnership with this operator spans four operating hotels and one development.

InterContinental Hotels & Resorts is the IHG Group’s flagship brand, located in major cities in over 60 countries worldwide. InterCon hotels offer business and leisure travellers high-quality service and facilities. There is currently one KHI-owned InterContinental hotel.

Mövenpick Hotels & Resorts is active in the upscale segment with resort and business and conference hotels. Our partnership with this operator spans six operating hotels and one development.

Swissôtel Hotels & Resorts has a premier portfolio of hotels and resorts in major business and leisure destinations. Each Swissôtel captures modern and functional design, with local character and renowned standards of Swiss hospitality, service efficiency and product quality. There is currently one KHI-owned Swissôtel.

29%

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of KHI System rooms

of KHI System rooms

of KHI System rooms

of KHI System rooms

Four Seasons Hotels & Resorts

Fairmont Hotels & Resorts

Mövenpick Hotels & Resorts

Raffles Hotels & Resorts

InterContinental Hotels & Resorts

Swissôtel Hotels & Resorts

of KHI System rooms


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l Strong growth in the Levant offset significant decline in reported performance in Dubai and Cairo

l Robust recovery in Beirut and Damascus; excluding Beirut, RevPAR of this region dropped 24%

l System RevPAR -12%l System EBITDA -16%

Middle East & North Africa

l Hotels in Kenya reaped the benefits of a renovation programme to post strong results

l Oversupply and a drop in demand caused RevPAR to drop in Mauritius; despite a drop in occupancy levels, average rates and RevPAR registered growth in the InterContinental Hotel Lusaka

l Developments in Ghana, Seychelles, and Marrakech expected to open in H2 2010/H2 2011

l System RevPAR +2%l System EBITDA +19%

Sub-Saharan Africa

l Led the recovery in RevPAR in Q4 2009l KHI’s Asian portfolio (16% of System room revenues and 30% of System

rooms) declined by 18% (17% on a currency neutral basis)l System RevPAR -18%l System EBITDA -27%

Asia

l Four Seasons George V, Paris, a KHI associate hotel, contributed significantly (35% of total System room revenues) to total RevPAR declines

l System RevPAR -10%l System EBITDA -20%

France (Four Seasons George V, Paris)

Our key regionsWe primarily operate in emerging markets.

Where we are

Operating hotel

Development

Paris, France

Beirut, Lebanon

Cairo, EgyptEl Quseir, Egypt

El Gouna, Egypt

Dubai, UAE

Kunshan, China

Manila, Philippines

Langkawi, Malaysia

Jakarta, Indonesia

Mount Kenya, Kenya

Praslin, Seychelles

Norfolk, Kenya

Lusaka, Zambia

Mauritius

Sharm El Sheikh, Egypt

Siem Reap, Cambodia

Phuket, ThailandPhnom Penh, Cambodia

Masai Mara, Kenya

Dar es Salaam, Tanzania

Damascus, SyriaAmman, JordanMarrakech, Morocco

Accra, Ghana


Chairman’sletter

In 2009, KHI successfully blended strong performance with measures that will underpin growth

Against a background of financial turmoil and volatile capital markets, KHI has achieved an increase in net profits and advanced its development pipeline. The Company’s geographic portfolio diversification and capital re-allocation strategy continued to deliver benefits, cementing KHI’s unique niche in the hospitality sector across emerging markets.

We believe in the creation of value as the ultimate driving force behind every investment decision. Through the year, that value was created in taking the decisive action to reduce costs and improve efficiencies as well as to focus on investing for future organic growth.

Focused on maximising results

2009 was a very challenging year for the travel and tourism industry but our business model has proved its resilience. KHI’s Middle East and Africa portfolio, particularly in Beirut and Kenya, performed well to offset declines in Asia, and the Company’s management team are to be commended for maintaining hotel margins across its properties.

Construction projects are proceeding on schedule and the Company spent $181 million in advancing its development pipeline that included the Four Seasons in Beirut which opened with great success in January 2010. The Company’s balance sheet has the capacity to enable us to bring the remaining developments in Ghana, Seychelles, Morocco and the Philippines to fruition over the next two years.

Developing the business for the longer term

KHI has one of the most experienced teams working in hospitality real estate in emerging markets and our expertise and industry insights help us identify value in investment opportunities. With a diverse and far-reaching network of contacts around the world, we have the ability to mobilise influencers and decision makers for the benefit of our stakeholders – this gives KHI a unique competitive edge.

Outlook

I am confident that KHI’s efforts so far have resulted in an increasingly efficient cost structure that positions us well to capitalise on any future upswing. Our priorities are to drive growth and enhance performance and we have a clear vision for the Company’s future.HRH Prince Alwaleed Bin Talal

Bin Abdulaziz Alsaud


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Chief Executive’sreview

2009 was a year of good progress for KHI. Though RevPAR declined year on year, our overall portfolio remained resilient despite the challenging markets and the Company prospered from the diversity of our properties, by geography and market segment. Trading was in line with general market trends as the RevPAR of KHI’s System hotels declined 11% from 2008 levels, with occupancy falling by 4 percentage points and room rates dropping 5%. As a result, group revenues fell 12% to $246.4 million. Against this backdrop, we are pleased to report only a 2% fall in KHI EBITDA and reported net profit increasing 27% to $21.8 million.

Asset management and cost control

KHI remained profitable and cash generative largely as a result of the strong performance in our core asset management business that delivered impressive profit retention and mitigated margin erosion. Focus on cost control in our hotels was matched at the corporate level with a 30% saving over the previous year. While generating over $15 million in real estate sales, we successfully devoted our efforts to cash collections on existing pre-sold units.

Rationalisation and growth

Our portfolio rationalisation has progressed in line with Company strategy and asset sales of $87 million generated $37 million in reported profits. Further, due to the strength of our balance sheet, we completed a share buyback of 3.5% of outstanding shares of the Company for US$6.2 million, providing liquidity for shareholders seeking a monetising event. We continued to invest in our future by advancing our development pipeline. The Company is extraordinarily proud of delivering the Four Seasons Beirut, into a vibrant and undersupplied market. Our development team is now focused on four projects which are in advanced stages of construction – these properties will drive KHI’s organic growth over the next few years.

Outlook

I believe KHI has demonstrated the attributes to weather the downturn and is well positioned to benefit from any economic recovery. We expect Asia to be a prominent driver of our 2010 performance; other key hotels that will drive growth are expected to be in Damascus, Mauritius and Kenya. Our strategy is as relevant today as it was over recent years and we will selectively consider strategic acquisitions during the year. We will continue to build our strong culture of operating as one company, underpinned by a clear set of values and developed by combining capabilities and knowledge. Our culture is performance-based and collaborative, and I would like to thank all our team members for their successful implementation of the KHI strategy. I remain confident in our strategy and realistic in outlook, intending to make further progress and to build on the significant investments of the last few years.

Our focus on asset management and cost control has enabled KHI to successfully manage the business during the downturn

Sarmad N. ZokChief Executive Officer


Businessmodel

Our successful business model relies on driving growth and value through acquisitions and active asset management. Our track record, experience, industry focus, regional expertise and conservative leverage ensure we execute each stage successfully.We acquire or develop, and actively manage quality hotels and resorts in key destinations to achieve long-term return on capital targets of 10-15%.

Value creation

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10-15%Target ROCE

KHI focuses on selectively acquiring and developing hotels and resorts with high growth potential and long-term value. Our investment discipline factors in property cycles, market supply and demand characteristics, property attributes and economic and political trends in the region. To date, majority of our investments have been made in off-market transactions.

Acquisitions

As part of our growth strategy, we acquire and structure greenfield developments, partially completed developments or reposition existing assets through renovation or capacity expansion. Our development projects are focused on single hotel projects, encompassing ancillary real estate for lease or sale that benefits from hotel branding and positioning.

Developments

Our strategy combines mergers, acquisitions, construction and active asset management to maximise growth and profitability. We enhance property asset values through active asset management including re-positioning and re-branding of properties, and adding value to developments through ancillary real estate pre-sales ahead of construction.

Valueienhancement

We use a combination of operating cash flow, non-recourse and parent level bank lending, debt capital markets instruments and share capital to fund our growth. Our objective is to realise cash returns through refinancing events and/or the sale of minority stakes to monetise gains.

Refnancingi/iMonetisation

Our operating acquisitions and developments are subject to a rigorous and structured underwriting process, designed to manage risks and define an asset exit strategy. As assets approach maturity, or if there are other market changes or capital deployment considerations, we seek to sell and recycle capital through asset disposals.

Recycling


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Our business

A hospitality real estate company focused on emerging markets

KHI is a leading publicly listed hospitality real estate investment company focused on emerging markets. The company went public in March 2006 and was listed on NASDAQ Dubai (formerly the Dubai International Financial Centre) and on the London Stock Exchange. The Company was founded in 2000 by His Royal Highness Prince Alwaleed Bin Talal bin Abdulaziz Alsaud, who remains the Company’s Chairman and majority shareholder through his ownership of Kingdom Holding Company.

On 15 March 2010, a cash offer was made by Kingdom 5-KR-211 Ltd (BidCo), a wholly owned subsidiary of Kingdom Holding Company, for the entire issued and to be issued share capital of KHI other than the 94,516,240 KHI shares already owned by the Bidco Group (representing approximately 56.1 per cent of the issued ordinary share capital of KHI), at an Offer Price of US$5.00 in cash for each KHI Share.

The Offer values KHI’s entire existing issued share capital at US$842.9 million and will initially remain open for acceptance until 5.00pm (Dubai time) on 3 May 2010.

Commenting on the recommended Offer, His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, Chairman of KHC, said:

“KHI has a sound business and strong management team. The offer which KHC has announced represents a significant premium to KHI’s historic trading price and is structured to provide minority shareholders with short-term liquidity at an exit price for cash on terms we believe are highly attractive. We are delighted to have already secured the support of the Independent Committee of the Board of KHI and of KHI’s largest minority shareholder for our offer. We look forward to the successful completion of the transaction in due course.”

Commenting on the recommended Offer, the Independent Committee said:

“KHI has a proven business model, strong balance sheet and resilient revenue streams from its diverse portfolio of leading hotels. The business is performing well despite challenging market conditions. However, limited liquidity and low trading volumes have affected and are likely to continue to affect the share price. The offer from KHC allows our minority shareholders the opportunity to crystallise cash value at a premium to the level at which KHI’s shares have been trading historically.”

KHI has a portfolio of high-quality assets managed by renowned hotel operators in strategic locations in Asia, Africa, the Middle East and Europe. We use a combination of acquisitions, partnerships and greenfield developments to diversify the asset base and grow the portfolio.

KHI offers an option to tap into lucrative hospitality assets in emerging markets

As economies in Africa, Asia and Latin America develop scale and influence in the global economy, these markets offer attractive returns on hospitality investments. Despite the global economic slowdown last year, risk-adjusted returns on capital and domestic demand growth is higher than developed countries, continuing to attract capital investments to emerging nations. It is widely expected that emerging markets will continue to be a key driver of global economic growth in 2010. Hospitality and leisure assets in emerging markets are charecterised by operational leverage, longer return cycles, and higher sensitivity to economic trends – all of which calls for intensive asset and investment management. KHI’s dedicated focus on emerging markets, proprietary network of relationships, experience and sector expertise augurs well for real estate investors seeking to leverage returns from this rewarding asset class.

Resilient performance despite challenging markets

$21.8mReported net profitIncreased 27.4% to


Our businesscontinued

KHI has a unique niche in the emerging market hospitality sector. We have one of the most experienced teams working in hospitality real estate in emerging markets and our expertise and industry insights helps us identify and unlock hidden value in investment opportunities. With a diverse and far-reaching network of contacts around the world, we have the ability to mobilise influencers and decision makers for the benefit of our business partners – the strength of our network, people and depth of experience is unparalleled.

Market fundamentals underpin the key drivers of our investment case, enhancing the value of our property assets. Despite the global contraction in travel and tourism in 2009 – tourism demand experienced a sharp downturn in the middle of 2008 and the decline intensified in 2009 from the rapid deterioration of the world economy and the influenza (AH1N1) outbreak – emerging economies proved to be resilient.

Our objective, as a professionally managed property investment company, is to pioneer partnerships and successfully blend sector and geographic expertise to add real value to investment opportunities. We target an unleveraged Return on Capital Employed in excess of 10 – 15% on a stabilised basis and utilise our capital markets discipline and focused mandate to enhance investment returns and minimise risk. Our business model is based on the principles of successful real estate investing, disciplined capital allocation, diversification and asset management parameters to reap superior, risk-adjusted returns.

Sector-focused investment strategy

We have a dedicated focus on emerging markets due to their superior growth potential. The performance of emerging markets has handsomely outpaced that of developing markets in the past five years and we expect this outperformance to continue. With the de-regulation of the travel industry, increased tourism distribution channels and favourable fiscal and regulatory environments in emerging markets, we believe fundamental drivers of growth for hospitality real estate are well established.

We seek to balance our capital commitments between existing assets and new developments to ensure steady revenue generation while building the pipeline for future growth. Our portfolio is geographically diversified and benefits from a healthy mix of operating assets and new developments, and a wide spectrum of city and resort hotels. We also complement our portfolio with a growing ancillary business of branded residential and commercial properties, typically adjacent to our hotel properties, for sale or lease.

The Middle East posted the highest occupancy (61.3%), average room rates ($202) and revPAR in the world during 2009

World: Inbound tourismInternational tourist arrivals(million)

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Developments

In 2009, international tourist arrivals for business, leisure and other purposes declined worldwide by 4% to 880 million, with earnings receipts estimated to have decreased by around 6%. The results for 2009 are better than previously forecast because of a 2% upswing in the last quarter. The world’s travel industry is also in much better shape than overall exports worldwide in 2009, which dropped by 12%.

The global tourism industry is expected to recover strongly in 2010 after the economic crisis and the swine flu pandemic produced “one of the most difficult years” for the sector, according to the UN World Tourism Organisation (UNWTO).

International tourist arrivals for business, leisure and other purposes are estimated to have declined worldwide by 4% in 2009 to 880 million. This represents a slight improvement on the previous estimate as a result of the 2% upswing in the last quarter of 2009. In contrast, international tourist arrivals shrank by 10%, 7% and 2% in the first three quarters respectively. Asia and the Pacific and the Middle East led the recovery with growth already turning positive in both regions in the second half of 2009.

“Still, 2009 is considered to be one of the most difficult years that tourism has seen” for a long time, UNWTO Secretary General Taleb Rifai said in a news conference. “The results of recent months suggest that recovery is underway, and even somewhat earlier and at a stronger pace than initially expected,” although 2010 will still be a demanding year, said Rifai.

On a regional basis, Europe and North America are lagging, while Asia and the Middle East are pushing ahead. The Asia-Pacific region, where tourism was down 2%, showed an extraordinary rebound that is expected to continue in 2010 – while arrivals in that region declined by 7% between January and June, the second half of 2009 saw 3% growth “reflecting regional economic results and prospects.”

Branded as the Raffles Seychelles Resort and Residences, the proposed development is scheduled to open in 2011 with a 90-villa luxury resort hotel and 14 private residential villas for sale. Located on the northeast tip of Praslin Island, the second largest island in the Seychelles, the site measures 300,000 m2, with 500 meters of direct beachfront land. The development is also close to one of the Seychelles natural treasures and a UNESCO World Heritage Site, The Vallee de Mai.

This development is an example of a value creation strategy implemented by KHI. With limited new supply, we believe this offer of a spectacular resort and high-end real estate creates a unique opportunity, illustrating our successful strategy of developing branded residential components alongside our hotels.

Seychelles

Unlocking hidden potential



The last quarter of 2009 saw global hotel sales totalling about $2.2 billion, a 44% decline from the same period last year. In 2009, global average saw $12 billion in hotel assets being traded, with Europe leading the trend with 316 deals, valued at $5,9 billion, followed by North America with 90 deals and $2.1 billion worth of transactions and Asia, with $1.9 billion worth of transactions and 35 deals.

However, analysts predict this trend will see a change with emerging markets such as Asia and the Middle East leading this turnaround. KHI has investments in South East Asia, Middle East and Africa and all these regions lead the way in RevPAR improvements in 2009 and continue to be on the recovery path for the first quarter of 2010.

In 2009, revPAR in Asia Pacific fell 19.4% to $73. Average room rates fell $19, while occupancy dropped 6.9%. Despite year-end RevPAR reporting double-digit declines in the region, hotel performance has been picking up since September 2009 and RevPAR declines have been decelerating. Both November and December reported growth in RevPAR, resulting in a RevPAR increase of 2.6% for the final quarter of the year.

The Middle East and North Africa (MENA) region was driven by strong growth in the Levant that offset significant decline in reported performance in Dubai and Cairo. The Company’s Africa portfolio performed well, indicative of it being the last market to be impacted. Though revenues from Asia declined significantly during the first three quarters of 2009, hotels reversed the trend in the last quarter to achieve RevPAR growth. Development projects are proceeding to plan and, despite the global contraction, KHI generated commendable ancillary real estate sales of 33 physical units sold for US$15 million.

Arrivals were down 6% in the Middle East, but the region had a positive second half performance; Africa, meanwhile, bucked the trend with growth of 5%.

Europe ended 2009 down 6% and destinations in central, eastern and northern Europe were particularly badly hit. In the Americas, where arrivals were down 5%, the Caribbean returned to growth in the last four months of 2009. The performance was more sluggish in the other sub-regions (of the Americas), with the AH1N1 influenza outbreak exacerbating the impact of the economic crisis.

Globally, the hospitality industry is also predicted to regain some lost ground, with RevPAR decline expected to slow its downward spiral by 4% according to a Smith Travel Research (STR) forecast for 2010, which recorded a 16.7% drop in RevPAR last year. Occupancy levels and the average daily tate (ADR) are also expected to rally in 2010, with STR forecasting a 0.6% decrease in the former, compared to 2009’s 8.7% drop. Meanwhile, the ADR decline is forecasted at 3.4%, compared to last year’s 8.8%.

Except for Africa, which bucked the global trend, all world regions show negative results in 2009

We operate as a single firm, leveraging knowledge and resources across the organisation. This approach is the cornerstone of our partnership with our investors – we believe our One Firm approach is critical to our track record of delivering results

AfricaEurope Middle EastAmericasAsia & Pacific

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Our objectives

Distinguished by its long history of investing in emerging markets, its global network of relationships, its commitment to responsible investment and its reputation as a market leader associated with a number of groundbreaking transactions, KHI’s objective is to be the partner of choice for growing businesses in the emerging economies of the world.

We create and realise value through the acquisition, development and management of high-quality urban and resort properties in emerging markets. We have a well-established platform that diversifies business and development risks through geographic spread, property type and customer base. Our strategy consists of:

l Acquiring and developing urban and resort hotel properties with superior growth potential in emerging markets to achieve above-average risk-adjusted returns

l Enhancing property values by active asset management and ancillary real estate pre-sales prior to construction of hotels

l Achieving stabilised annual capital returns in excess of our cost of capital – we target returns of between 10 – 15% without leverage, and realising cash returns through refinancing, monetisation and disposal with a view to recycle capital

l Recruiting and retaining talent in a structured and entrepreneurial operating environment

KHI’s focus on unlocking opportunities in emerging markets led us to invest in Ghana. The Movenpick Ambassador hotel will be the first five-star hotel in Accra when it opens doors at the end of 2010. Located in the Central Business District of Accra, the 259 room hotel will be the anchor of a mixed use development that includes commercial and retail outlets, restaurants, meeting facilities, and a health club and spa.

This development successfully demonstrates KHI’s ability to establish itself as a leading player in a market with high barriers to entry and a shortage of sites in good locations. We are focused on promoting national development and work towards preserving the heritage and culture of the countries within which we operate.

Ghana

Investing for growth



Acquisitions

KHI acquires and invests in assets in prime urban and resort destinations. Our goal is to generate significant capital appreciation and incremental returns on our cost of capital during a defined holding period by following a combination of value and yield enhancing strategies.

Our investment decisions factor in various parameters like property cycles; market supply and demand; location, management and positioning of the property; and political and economic drivers in that market. We source investment opportunities through our well-entrenched, proprietary network – to date, most of our investments have been made in off-market transactions. Our strong balance sheet and liquidity enable us to move fast on our capital deployment strategy and the strength and depth of our team’s expertise helps us to focus on maximising returns with effective risk management.

During 2009, KHI took steps to rationalise its development pipeline and generated US$87.1 million from the sale of its equity stake in four assets. This includes the sale of the Company’s stake in the Fairmont Nile City development, the Da Nang development, the Four Seasons Sharm El Sheikh, and the Kampala development land.

In 2010, based on improved visibility and on the strength of its balance sheet, KHI will selectively consider strategic acquisitions within its target markets.

KHI continues to see considerable potential in North Africa and this is demonstrated by the development of our first hotel investment in Morocco – the Four Seasons Hotel, Marrakech. This is a significant investment in the luxury lodging market in Morocco, a well established upscale destination that has adopted a focused tourism strategy.

This property highlights our strategy of developing a portfolio of outstanding hotel properties that are landmarks in their host cities across the region. Construction is currently underway at the development that will comprise of a 140 room hotel and 43 villas in 15.7 hectares with outstanding views over the Atlas Mountains. French architect Didier Lefort is creating an environment that demonstrates sensitivity to the Moorish architectural heritage of the area, while incorporating premium finishes that appeal to a discerning international clientele.

Planned amenities and facilities include various dining venues, conference facilities, a business centre, a swimming pool, spa and gymnasium and other recreational facilities. This development offers individual investors the chance to own a fully serviced five-star residence managed by The Four Seasons.

Marrakech

Diversified portfolio


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Developments

As part of our growth strategy, we acquire and structure greenfield developments, partially completed developments or reposition existing assets through renovation or capacity expansion. KHI is managing eight capital expenditure projects totalling about US$737 million, of which its equity share is about US$563 million, across three categories of capital spend as at December 31, 2009.

Category # of projects Total KHI share project cost of total (US$ million (US$ million Estimate) Estimate)

New Development (1) 5 734 560

Renovation (2) 3 3 3

Capacity Expansion 0 0 0

Total 8 737 563

1) Includes Four Seasons Beirut which opened in January 2010

2) Includes Hemingway Bar and the marina breakwater enhancements in Mövenpick Beirut as well as improvements in Mövenpick Bur Dubai

The majority of KHI’s capital expenditure programme is allocated to new developments (greenfield) projects. Our development business involves a risk/reward matrix that deals with underwriting project valuation and risk based on market and property specific factors, demand and supply details, project use and construction risk. Our development programmes are primarily focused on single hotel projects with ancillary real estate for lease or sale that benefits from hotel branding and positioning. Our underwriting discipline and objectives rely on the underlying hotel property to be the primary value generator with real estate being a catalyst to core property returns.

We had a soft opening of the Four Seasons Beirut in December 2009; over the next 12-18 months, we expect to complete the construction of the Mövenpick Ambassador hotel in Ghana, the Four Seasons Marrakech, the Raffles Seychelles, and the Fairmont Raffles Hotel & Residences, Philippines. We continue to pre-sell ancillary residential real estate mainly in our Manila and Seychelles developments.

Committed/ Expected Previous late stage developments opening expected opening

Four SeasonsBeirut (Lebanon) H1 2010 H2 2009

Four SeasonsMarrakech (Morocco) H1 2011 H2 2010

Fairmont Makati and Raffles Residences (Philippines) H2 2011 H2 2011

Raffles Praslin Island(Seychelles) H1 2011 H1 2011

Mövenpick AmbassadorAccra (Ghana) H2 2010 H2 2010

Our operating acquisitions and developments are subject to a rigorous underwriting process that is designed to manage risks, maximise flexibility, tax options, governance rights and exit options. Transaction structures – typically multi-tiered and tax-optimised – are devised to allow us to achieve significant direct or indirect control for minimal investment.


Creating value: our asset management strategy

We believe in the creation of value as the ultimate driving force behind every investment decision. When assets are acquired or new developments launched, we ensure these are funded and managed in the most effective way to maximise market positioning, revenue growth, profitability, cash generation and contribution to KHI EBITDA.

We collaborate with our operator partners to assist and empower them to meet target objectives. We align our teams and objectives on initiatives like property repositioning, re-branding, renovation or capacity configuration and actively benchmark and monitor trading results to deliver on annual plans and budgets. The focus is to proactively drive revenues and minimise costs to increase profits and operating leverage. This is affected through revenue yield and mix management, new marketing opportunities, operating and staffing efficiencies, purchasing policies and other cost control measures. We assess incremental capital expenditure opportunities or capital redeployment initiatives within our acquired properties to generate incremental returns on capital and use tax systems to optimise each property’s capital structure to reduce financing costs and manage risks.

Examples of this include room rate increases and customer mix shifts in Dubai, Phuket and Lusaka; repositioning and galvanising volume into Mauritius; profit protection plans to mitigate the impact of declining revenues in Beirut as a result of political events; and cost controls and efficiency measures at The Four Season Damascus to improve margins.

During 2009, the KHI system RevPAR – a portfolio measure of like for like 12-month comparison of all our consolidated and associated investments, irrespective of equity stake or timing of acquisition – declined by 11% (9% on a currency neutral basis) as average daily rates dropped 5% (3% on a currency neutral basis), and occupancy


slid 4 percentage points. The drop is mainly attributable to the performance of KHI’s associate hotels: the Four Seasons George V (35% of System room revenues) and to the Four Seasons Nile Plaza (11% of System room revenues). RevPAR of subsidiary hotels (48% of System room revenues) fell by 7% (6% on a currency neutral basis), while RevPAR of associated hotels (52% of System room revenues) declined by 14% (11% on a currency neutral basis). The Company’s properties in Beirut, Kenya and Lusaka fared better than others and registered RevPAR growth during 2009; the former benefitted from improved political stability while the completion of renovation works led to growth in the latter two.

System EBITDA for all 20 hotels in 2009 decreased by 17% to US$139.0 million (18% on a currency neutral basis), driven by dampened travel demand as a result of the economic downturn. This resulted in a 12% decrease in total hotel revenues to US$422.6 million and margin erosion of 2.3 percentage points. EBITDA of the 17 consolidated hotels (49% of System revenue and 42% of System EBITDA) declined by 11% to US$57.9 million. EBITDA of the three associate hotels (51% of System revenue and 58% of System EBITDA) declined by 21% to US$81.1 million and represented about three-quarters of the overall decline in System EBITDA.

Asset financing, monetisation and recycling

We combine operating cash flow, non-recourse and bank lending, debt capital market instruments and other accumulated capital to fund our development and growth. Our current loan-to-value target to finance operating assets and developments is between 40-60%, utilising non-recourse debt whenever possible. As of 31 December 2009, we had a conservatively funded balance sheet with a debt-to-equity ratio of 15% and a net debt of $177 million. Cash and short-term deposits were US$351.3 million as at 31 December 2009. This US$94.9 million increase

Focused on maximising results


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was primarily due to additional draw-downs of US$56 million on the corporate facility and the disposal proceeds of US$87 million. These were offset by spending on development projects during the period.

Our net capital expenditures were US$195.5 million during the period. We received cash from operations, ancillary real estate sales deposits in Manila, Mauritius and Marrakech as well as proceeds from the sale of: our investment in the Fairmont Nile City, Egypt (US$11.5 million); our development projects in Da Nang, Vietnam (US$2.9 million); and Kampala, Uganda (US$2.7 million); our associate hotel Four Seasons Sharm El Sheikh, Egypt (US$70.0 million). In addition, KHI received dividends from our associate hotel Four Seasons Nile Plaza in Egypt and Four Seasons George V hotel in Paris and from Four Seasons Amman.

We will seek to draw down on committed funds over next two years – an additional $220 million in 2010 and a further $80 million in 2011 – leading to an increase in net debt as a result. We will also execute $20 -30 million of value enhancing capital expenditure across select properties within a 24-month period.

As properties ramp up performance and profitability, our objective is to realise cash returns through refinancing and/or the sale of minority stakes to monetise gains. As assets approach maturity, and if there are capital deployment considerations, we sell and recycle capital through asset disposals.

During 2009, we gained on disposal of US$37.5 million through the disposal of KHI’s equity interest in the Fairmont Nile City development (gain: US$1.3 million); equity interest in the Four Seasons Sharm El Sheikh (gain: US$28.3 million); the Da Nang development land (gain: US$5.7 million) and the Kampala development land (gain: US$2.2 million). We also drew-down on debt commitments at our Beirut, Marrakech and corporate headquarters, and initiated draw-downs under new bank facilities for our developments in Seychelles and Manila. We settled US$30.0 million of installments that were due during the period and we also settled our shareholder loan of US$27.5 million relating to our associate hotel Four Seasons George V in Paris by netting against the entity’s declared dividends.

KHI also completed a share buyback and cancellation of 6,168,531 shares at US$1.00 per share for US$6.2 million to provide liquidity for shareholders seeking a monetising event and accreting value to the shareholders who did not participate. The share capital of the Company has now been reduced to 168,570,213 shares from 174,738,744 shares.

The Philippines has been ranked by the WTTC as one of the fastest growing tourism and travel markets in Asia. To tap into the burgeoning Manila market and to capitalise on the growing demand for luxury accommodation in the region, KHI formed a joint venture (an 80% stake as the managing partner) with Ayala Land, Inc., a leading realestate development firm in the Philippines, to develop hotels and residences in Manila’s urban central business district.

The $171 million development in 7,377m² of land will comprise a 300-room Fairmont Hotel, a 30-suite Raffles hotel and 236 Raffles-branded private residences. The hotels and residences are on schedule to open in the second half of 2011. This is set to be an exceptional hotel with considerable upside in operating performance potential.

Success through active partnership

Manila


Financial review 2009 was a very challenging year for the industry but our business model has proved its resilience. KHI registered a strong performance, driven by its geographic portfolio diversification and capital re-allocation strategy, to report a net profit of $21.8 million, an increase of 27.4% over 2008. We mitigated RevPAR declines by active asset management to generate retention rates of 61% (on a comparable basis) and reduce profit margin erosion to 93bp at 28%. As part of our ongoing efforts to prepare for a worsening macro environment, we began a rigorous operations review programme in 2008, including a review of our spending with a focus on reducing costs, improving productivity and reinvesting against our growth priorities.

I am pleased to report that we have been successful in this task. In fact, our cost discipline helped us achieve strong results in 2009, despite the deterioration in lodging demand. General and administrative defensive actions resulted in savings of $6.8 million or 30% below 2008 levels. KHI’s cash balance, as at 31 December 2009, stood at $351 million; based on the strength of the Company’s balance sheet, we allocated discretionary capital to complete a share buy-back of 3.5% outstanding shares.

l Group revenues decreased 12% to

$246.4 million, reflecting general market conditions

l Despite this reported net profit improved 27% to $21.8 million

l We sold four assets generating $87 million in value and capital gains of $37.5 million

l We realigned our corporate and divisional structures, resulting in annual savings of $6.8 million

Asset growth

KHI’s consolidated net assets per share grew over 3.6% in 2009 to $1.175 billion. Net assets after minority interests stood at $6.97 per share.

The Company’s total assets were $2.08 billion on 31 December 2009 as compared with $1.89 billion for the same period in 2008. We do not revalue our operating asset portfolio and long-term asset values represent consolidated historical build cost or acquisition cost.

In 2009, we sold our stake in four non-core assets generating $87 million in value and capital gains of $37.5 million. This includes our interest in the Fairmont Nile City development (gain: $1.3 million); equity interest in the Four Seasons Sharm El Sheikh (gain: $28.3 million); the Da Nang development land (gain: $5.7 million) and the Kampala development land (gain: $2.2 million). Cash and short-term deposits stood at $351.3 million as at 31 December 2009; the $94.9 million increase was primarily due to additional draw-downs of $56 million on the corporate facility and the disposal proceeds of $87 million.

Through the year, we took decisive action to reduce costs and improve efficiencies. But our commitment to strengthening the quality of our system did not waver – we spent $181 million in 2009 in advancing development projects and the company remains profitable and cash generative

Gordon DrakeChief Financial Officer


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Financial resources and capital structure

KHI’s net investment in development projects were $195.5 million during 2009. This was funded by a combination of cash from operations, ancillary real estate sales deposits in Manila, Mauritius and Marrakech, as well as proceeds from the sale of our investment in the Fairmont Nile City, Egypt ($11.5 million); our development projects in Da Nang, Vietnam ($2.9 million); and Kampala, Uganda ($2.7 million); our associate hotel El Sheikh, Egypt ($70.0 million). We also monetised our associate investments through receipt of dividends $41.9 million ($9.3 million dividend from our investment in the Four Seasons Nile Plaza and $32.6 million dividend from our investment in the Four Seasons George V). Net debt was $177.1 million as at 31 December 2009, compared to a net debt position of $149.1 million in 2008.

Financing activities generated $170.4 million as we added net new borrowings of $122.9 million, and drew down existing credit facilities in Marrakech ($39.5 million), Beirut ($21.7 million), Manila ($24.4 million), Seychelles ($20.3 million) and KHI corporate facility ($56.4 million). We settled $30.0 million of installments that were due during the period and we also settled our shareholder loan of $27.5 million relating to our associate hotel Four Seasons George V in Paris by netting against the entity’s declared dividends. As at 31 December 2009, net cash and cash equivalents for cash flow purposes was US$328.7 million, as compared to $239.5 million as at 31 December 2008, principally due to increased cash generation from disposals and the draw-downs of new bank facilities during the year.

This has increased borrowings by $167.5 million as we drew down on development funding partly offset by $30.0 million in scheduled repayments; payments to minority shareholders of $7.7 million towards dividend payments and net loan repayments; and payment in consideration for the shares buyback scheme in January 2009 of $6.5 million, inclusive of transaction costs.

Gross loans and borrowings increased by $122.9 million from $405.5 million on 31 December 2008 to $528.4 million on 31 December 2009.

Managing the Company’s cash flow, costs and structure of borrowing is a key objective. We target conservative funding levels of 40 – 60% loan-to-value on a stabilised basis, and most of our outstanding borrowings are non-recourse and floating rate, primarily fixed to US$ Libor. During 2009, KHI’s weighted average cost of debt was 4.8%, representing a spread of 400 basis points above the average 90 day US$ Libor rates for the year.

Capital expenditure and developments

Consolidated KHI capital expenditure excluding contractual FF & E replacements are expected to be $306 million over the next two years, representing spending on our development pipeline of eight properties, including renovation

and capacity expansion projects. The Company’s share after JV minorities is expected to be $260 million.

As of December 31 2009, KHI is managing eight capital expenditure projects totalling about US$737 million, of which its equity share is about US$563 million across three categories of capital spend.

Category # of projects Total KHI share project cost of total (US$ million (US$ million Estimate) Estimate)

New development 5 734 560

Renovation 3 3 3

Capacity expansion 0 0 0

Total 8 737 563

The majority of KHI’s capital expenditure programme is allocated to new developments (greenfield) projects and each project is financed through a combination of debt and equity. Where applicable, sale proceeds of ancillary (residential) real estate is used as a funding source; such receipts are typically targeted to occur following the completion of a project and during the first three years of operations, unless a pre-sale programme is in place. Both debt and ancillary real estate sales are expected to reduce KHI’s equity commitments in these projects as they progress along the various stages of construction or post-opening operations.

As of December 31 2009, approximately $428 million has been spent on projects scheduled for completion in 2010-11 (Four Seasons Beirut, Four Seasons Marrakech, Raffles Praslin Island (Seychelles), Fairmont Hotel and Raffles Residences Makati, Philippines and the Mövenpick Ambassador Accra, Ghana), as well as on design and scoping Expenses, tendering and negotiation and post-construction/pre-completion phases.

Almost all of the Company’s total capital expenditures, $734 million (KHI’s estimated share is $560 million), is represented by five developments that are in various stages of the development cycle, of which four are in the construction phase and one is in the post-construction phase. There are three renovation programmes currently in the pipeline as of 31 December 2009.

KHI Debt Maturities ($ million)

12/09 2010 2011 2012 2013 2014 2015 &beyond

-36.3

-77.5

-55.5

-169.0

-138.8

-51.3528.4

2011 peak year for refinancing of corporate facility.


Financial reviewcontinued

All properties under construction are expected to be operating in 2010-11. We continue to pre-sell ancillary residential real estate mainly at our Manila and Seychelles developments and generated $15 million in physical sales in 2009. As at 31 December 2009, 41 of the 43 units in Marrakech have been pre-sold and it is planned that these will be handed over in 2010. Four units out of 45 units remain unsold in Mauritius and six units remain unsold in Phuket.

The residential component of the Raffles Seychelles development includes 14 villas and the first villa will be ready for viewing by the second half of this year.

Sales and marketing spend was curtailed in the first half of 2009 as a result of the sale of our Da Nang development, the postponement of the Langkawi real estate development and the decision to refrain from active marketing of the Raffles Residences in Seychelles. Related marketing expenses were reduced by US$4.7 million to US$1.7 million in 2009.

System portfolio performance

KHI’s system RevPAR declined by 11% (9% on a currency neutral basis) as average daily rates dropped 5% (3% on a currency neutral basis), and occupancy slid 4 percentage points. The drop is mainly attributable to the performance of KHI’s associate hotels: the Four Seasons George V (35% of System room revenues) and to the Four Seasons Nile Plaza (11% of System room revenues). RevPAR of subsidiary hotels (48% of System room revenues) fell by 7% (6% on a currency neutral basis), while RevPAR of associated hotels (52% of System room revenues) declined by 14% (11% on a currency neutral basis). The Company’s properties in Beirut, Kenya and Lusaka fared better than others and registered RevPAR growth during 2009; the former benefitted from improved political stability while the completion of renovation works led to growth in the latter two.

System EBITDA for all 20 hotels in 2009 decreased by 17% to US$139.0 million (18% on a currency neutral basis), impacted by dampened travel demand as a result of the economic downturn. This resulted in a 12% decrease in total hotel revenues to US$422.6 million and margin erosion of 2.3 percentage points.

EBITDA of the 17 consolidated hotels (49% of System revenue and 42% of System EBITDA) declined by 11% to US$57.9 million. EBITDA of the three associate hotels (51% of System revenue and 58% of System EBITDA) declined by 21% to US$81.1 million and represented about three-quarters of the overall decline in System EBITDA.The Middle East North Africa region’s EBITDA (40% of the System revenues and 50% of System EBITDA) decreased by 16% to US$69.2 million as RevPAR decreased and margin retreated by 2.76 percentage points. All hotels with the exception of Beirut saw a drop in profitability; the MENA region accounted for 44% of the System EBITDA decline.

EBITDA from Sub-Saharan Africa (10% of the System revenue and 6% of System EBITDA) grew by US$1.3 million or 19% to US$8.3 million. The Fairmont Hotels in Kenya reduced losses by US$3.4 million, which minimised the reduced profitability at the Mövenpick hotels in Dar es Salaam and Mauritius.

Our Asian portfolio generated EBITDA of US$16.8 million (17% of the System revenue; 12% of total System EBITDA), a US$6.1 million decline (-27%). Negative growth was experienced across the portfolio due to the global economic environment which particularly impacted the region. Asia represented close to a quarter of the overall System EBITDA decline.

EBITDA of the Four Seasons George V (32% of both System revenue and System EBITDA) decreased by 20% to US$44.6 million.

The table above is a list of active development and capital expenditure pipeline projects for the Company:

Latest Budgets & Estimates

Ancillary Project KHI No. of real estate Cost Equity % Type keys sales ($ millions) Opening

Construction/Post-Construction stage

Four Seasons Beirut, Lebanon 38 City 234 n/a 147 Jan 2010

Four Seasons Marrakech, Morocco* 78 City 143 43 villas 159 H1/2011

Mövenpick Accra, Ghana 100 City 259 n/a 103 H2/2010**

Fairmont & Raffles Makati, 236 Philippines* 80 City 309 apartments 171 H2/2011

Raffles Praslin Island, Seychelles 91 Resort 86 14 villas 154 H1/2011

1,031 734

KHI share of project cost 560

Total KHI consolidated developments 734 Estimate

KHI share of project cost 560 Estimate

* At the budgeted exchange rates.** Expected completion of construction.


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Income statement and earnings per share

Operating profit, which we define as consolidated hotel and real estate gross profits after sales, general and administrative costs, was $20.4 million as compared with $22.5 million in 2008 on account of the decline in hotel and real estate EBITDA by 8% and 28% respectively; pre-opening expenses of $4.6 million incurred in relation to the Four Seasons Beirut which opened in January 2010 as opposed to $1.7 million in 2008; and G & A defensive actions resulting in savings of US$6.8 million or 30% below 2008 levels. Real estate sales and marketing expenses were also curtailed during the first half of 2009 as the Company reduced associated expenditure to US$1.7 million.

Reported net profit increased by 27.4% to US$21.8 million while net profit before non-recurring items dropped 53% to US$17.3 million.

l A fall in income from associate hotels to

$20.65 million from $40.42 million in 2008

l A goodwill impairment test resulting in charges of $36.6 million against the entire goodwill ascribed to the Mövenpick Mauritius ($13 million), Mövenpick Karon Beach ($12.3 million) and Swissôtel Kunshan ($11.3 million)

l Sale of four non-core assets generating $87 million in value and $37.5 million in capital gains

l Net interest charges increasing by $4.2 million as a result of draw-downs on the Four Seasons Langkawi loan and the corporate facility, expensing interest on the loan of the newly opened Four Seasons Mauritius and the margin cost of holding significant cash balances.

l Tax charge decreased by $2.6 million primarily as a result of lower profits

EPS increased 32% to $.13; KHI completed a share buyback and cancellation of 6.18 million shares at $1.00 per share and average outstanding shares has been reduced to 168.5 million shares from 174.7 million in 2008.

The Company exited its equity interest in the Four Seasons Sharm el Sheikh and its share in the profit of that property was only consolidated in 31 March 2009. Financing costs increased by US$4.1 million as a result of loan draw-downs and new debt facilities added to fund development projects.

KHI Adjusted EBITDA, which includes KHI’s share in hotel and real estate EBITDA of its non-consolidated equity investments and excludes minority interest in its EBITDA, decreased 24% to $71.4 million. Excluding real estate sales, KHI Adjusted EBITDA fell 13% $61.6 million as a result of:

l KHI’s share of hotel results and real estate

income from associates decreased by $12.8 million and by $9.0 million respectively

l Partially attributable to the $4.6 million decline in hotel EBITDA at the Four Seasons Sharm El Sheikh because of the sale of the Company’s equity interest in this property in the first quarter of 2009

During this year, we expect one-off pre-opening expenses and the charging to earnings of interest and depreciation to have a short-term detrimental effect to reported net profit before the ramp-up of the operating performance of the new hotels.

Outlook

In 2010, we will continue to focus on managing our costs without compromising our long-term growth plans for the company.

Based on current trading conditions, KHI expects to register mid-single digit growth in System RevPAR during 2010. Asia, particularly Phuket, is expected to drive System growth; other key hotels that will drive growth are expected to be in Damascus, Mauritius, Kenya and Langkawi.

We will focus on The Four Seasons Beirut ramp-up which opened in January 2010 into a strong local market. KHI will execute US$20-30 million worth of value-enhancing capital expenditure across select properties within a 24-month period and is targeting a Return On Capital Employed in excess of 15%.

The Company’s development pipeline is on track and three projects in Seychelles, Marrakesh and Accra are expected to reach post-construction/pre-completion phase through 2010. Construction in Manila is also expected to reach advanced stages of construction this year. Net debt is expected to increase substantially as KHI draws on already committed, but so far unutilised, funds for development projects and we remain confident of meeting our debt obligations.

Based on improved visibility and on the strength of its balance sheet, the Company will selectively consider strategic acquisitions within its target markets.


Supplementary operating and financial information

Total KHI Portfolio

No. of Hotels No. of Rooms % Total Rooms

Operating Hotel Portfolio 20 4,803 81%Non-System Additions (Four Seasons Mauritius) 1 90 2%New Hotel Developments 5 1,049 18% – 0%

Total KHI Portfolio 26 5,942 100%

Operating Hotels

% Equity No. of % Total Country Type ownership Rooms Rooms

Mövenpick Resort & Spa El Gouna Egypt Resort 29% 554 9%Four Seasons Nile Plaza, Cairo Egypt City 44% 378 6%Four Seasons Damascus Syria City 55% 297 5%Mövenpick Beirut Lebanon City 81% 292 5%Mövenpick Resort El-Quseir Egypt Resort 95% 250 4%Mövenpick Hotel Dubai & Residence UAE City 100% 312 5%

Middle East/North Africa 2,083 35%

Fairmont Kenya (4 properties) Kenya Resort 94% 396 7%Mövenpick Royal Palm, Dar es Salaam Tanzania City 96% 230 4%InterContinental Lusaka Zambia City 100% 225 4%Mövenpick Resort & Spa Mauritius Mauritius Resort 100% 181 3%Four Seasons Mauritius Mauritius Resort 50% 90 2%

Sub-Saharan Africa 1,122 19%

Swissôtel Kunshan China City 100% 387 7%Four Seasons Jakarta Indonesia City 82% 320 5%Mövenpick Resort & Spa, Karon Beach Thailand Resort 100% 351 6%Raffles Le Royal, Phnom Penh Cambodia City 100% 170 3%Raffles Grand Hotel d’Angkor Siem Reap Cambodia Resort 100% 125 2%Four Seasons Langkawi Malaysia Resort 90% 90 2%

Asia 1,443 24%

Four Seasons George V Hotel, Paris France City 25% 245 4%

Europe 245 4%

Operating Hotel Portfolio 4,893 82%

Hotel Developments & Capacity Expansion

% Equity No. of % Total Country Type ownership Rooms Rooms

Four Seasons Beirut Lebanon City 38% 230 4%Four Seasons Hotel Marrakech Morrocco City 78% 140 2%

Middle East/North Africa 370 6%

Mövenpick Ambassador Hotel, Accra Ghana City 100% 259 4%Raffles Seychelles Resort Seychelles Resort 91% 90 2%

Sub-Saharan Africa 349 6%

Fairmont Makati Hotel & Raffles Hotel Philippines City 80% 330 6%

Asia 330 6%

Hotel Developments & Capacity Expansion Portfolio 1,049 18%


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Cash Invested(1)

Opened/ % Equity No. of Initial Further Investment Net Current Property (In US$ millions) Acquired Country Owned Rooms Investment Investment Repaid Change Investment Debt(2)

Mövenpick Resort & Spa, El Gouna 1996/2002 Egypt 29.3% 554 8.0 – (5.9) (5.9) 2.1 – Four Seasons Nile Plaza, Cairo 2004 Egypt 43.7% 378 48.6 – (29.2) (29.2) 19.3 –Four Seasons Damascus 2005 Syria 55.0% 297 37.0 55.2 (33.3) 21.9 58.8 9.4 Mövenpick Beirut 2002 Lebanon 81.2% 292 72.6 6.4 (14.2) (7.8) 64.8 38.2 Mövenpick Resort El Quseir(3) 1995/2002 Egypt 94.6% 250 23.6 0.1 (6.4) (6.3) 17.3 –Mövenpick Hotel Bur Dubai 2001/2003 UAE 100.0% 312 21.4 57.4 (45.6) 11.9 33.3 22.0 Bur Dubai Residences 2006 UAE 100.0% 57 24.7

Middle East & North Africa 2,140 211.2 119.1 (134.6) (15.5) 195.7 94.3

Fairmont Kenya (4 Properties)(4) Various/2005 Kenya 94.0% 396 23.4 38.3 – 38.3 61.7 5.0 Mövenpick Royal Palm, Dar es Salaam 1995/2004 Tanzania 96.0% 230 11.6 5.6 (1.7) 3.9 15.5 4.4 InterContinental Lusaka 1970/2006 Zambia 100.0% 225 29.0 7.8 (3.3) 4.5 33.5 –Mövenpick Resort & Spa, Mauritius 2005/2006 Mauritius 100.0% 181 25.9 0.7 – 0.7 26.6 20.0 Four Seasons Mauritius 2008/2006 Mauritius 50.0% 90 12.3 0.2 – 0.2 12.5 35.4

Sub-Saharan Africa 1,122 102.1 52.6 (5.0) 47.7 149.8 64.8

Swissôtel Kunshan 2005/2007 China 100.0% 387 41.4 0.3 (0.0) 0.3 41.7 18.2 Four Seasons Jakarta 1995/2007 Indonesia 81.9% 320 44.6 0.3 (0.3) – 44.6 –Mövenpick Resort & Spa, Karon Beach 2006 Thailand 100.0% 351 69.8 3.1 (0.3) 2.7 72.6 23.8 Raffles Le Royal, Phnom Penh 1929/2007 Cambodia 100.0% 170 22.7 – (1.6) (1.6) 21.1 –Raffles Grand Hotel d’Angkor Siem Reap 1932/2007 Cambodia 100.0% 125 13.7 – (2.8) (2.8) 10.9 –Four Seasons Langkawi 2005/2007 Malaysia 90.0% 90 105.9 16.0 (53.4) (37.4) 68.5 50.0

Asia 1,443 298.2 19.6 (58.4) (38.7) 259.4 91.9 Four Seasons George V Hotel, Paris(5) 1999/2006 France 25.0% 245 109.2 – (32.6) (32.6) 76.6 507.2

Europe 245 109.2 – (32.6) (32.6) 76.6 507.2

KHI Total Operating Investments 4,950 720.7 191.4 (230.6) (39.2) 681.5 758.3

Represents actual cash movements (disbursements and returns); does not correspond to KHI financial statements or IFRS.

Property debt represents 100% of the debt at each property.

KHI acquired an additional 7.4% equity interest in El Quseir in step-up acquisition in July 2008.

KHI acquired an additional 30% equity interest in Kenya properties in step-up acquisition in October 2008.

KHI realised cash proceeds of US$31.1 million through two subordinated and shareholder guaranteed loans in late 2007.

Notes

1) KHI’s equity ownership represents the Company’s effective (ie. direct and indirect) ownership in each hotel as at 31 Dec 2009.

2) Cost of investment includes acquisition and transaction costs as well as shareholder’s loans and advances.

3) Property debt; balance sheet value of term loans, overdrafts, finance leases and other non-shareholder borrowings as at 31 Dec 2009

4) KHI receives 92% of the profits of Beirut Mövenpick despite its 81% equity interest.

5) The table excludes investments in operating affiliates as of December 31, 2009 the Four Seasons Amman, Jordan.


Supplementary operating and financial informationcontinued

Non-hotel operationsNon-hotel operations consist of operating activities such as ancillary real estate sales and leasing, business development and asset management fees. Ancillary real estate business comprises of a diversified portfolio of residential and commercial properties that is leased or sold by KHI. These are either branded or unbranded properties attached to or are in the vicinity of our hotels. Besides its existing inventory, KHI has a number of hotel developments under construction that include significant ancillary real estate components.

Non-hotel revenues decreased by US$20.4 million to US$27.4 million while gross profits from non-hotel operations fell by US$4.5 million to US$11.3 million.

KHI System Performance

Occupancy % Average Rate RevPAR

Excl. forex Excl. forex Change % % % % (12 months ended 31 December) 2009 2008 Pts 2009 2008 Change 2009 Change 2009 2008 Change 2009 Change

Mövenpick El Gouna 74.3 86.4 (12.1) $89.3 $92.4 (3%) $89.4 (3%) $66.3 $79.8 (17%) $66.4 (17%)Four Seasons Nile Plaza, Cairo 56.4 65.5 (9.1) $357.9 $406.0 (12%) $357.9 (12%) $202.0 $266.1 (24%) $202.0 (24%)Four Seasons Damascus 56.5 68.6 (12.1) $334.7 $291.2 15% $334.7 15% $189.0 $199.7 (5%) $189.0 (5%)Mövenpick Beirut 74.5 57.3 17.2 $263.0 $230.8 14% $263.0 14% $196.0 $132.3 48% $196.0 48%Mövenpick El Quseir 71.5 77.2 (5.8) $72.3 $78.3 (8%) $72.4 (8%) $51.6 $60.4 (15%) $51.7 (14%)Mövenpick Hotel Bur Dubai 69.0 74.7 (5.8) $138.0 $213.0 (35%) $138.0 (35%) $95.2 $159.2 (40%) $95.2 (40%)

Middle East/North Africa 67.4 73.1 (5.7) $192.7 $201.3 (4%) $192.8 (4%) $129.9 $147.1 (12%) $129.9 (12%)

Fairmont Kenya (4 hotels) 37.2 20.6 16.6 $151.8 $145.9 4% $158.6 9% $56.5 $30.1 88% $59.1 96%Mövenpick Royal Palm, Dar es Salaam 63.5 78.7 (15.2) $139.2 $130.4 7% $139.2 7% $88.4 $102.6 (14%) $88.4 (14%)InterContinental Lusaka 55.5 56.7 (1.2) $132.7 $128.6 3% $132.7 3% $73.6 $73.0 1% $73.6 1%Mövenpick Mauritius 51.6 66.8 (15.2) $115.0 $136.9 (16%) $118.4 (14%) $59.3 $91.4 (35%) $61.0 (33%)

Sub-Saharan Africa 49.6 49.5 0.1 $136.8 $134.0 2% $139.4 4% $67.8 $66.4 2% $69.1 4%

Swissôtel Kunshan 46.1 54.3 (8.3) $98.8 $103.2 (4%) $97.6 (5%) $45.5 $56.1 (19%) $44.9 (20%)Four Seasons Jakarta 55.6 61.0 (5.4) $100.3 $106.7 (6%) $100.6 (6%) $55.8 $65.2 (14%) $55.9 (14%)Mövenpick Karon Beach 57.9 52.4 5.5 $102.5 $146.6 (30%) $107.2 (27%) $59.4 $76.8 (23%) $62.1 (19%)Raffles Phnom Penh 56.7 63.7 (7.0) $123.6 $124.4 (1%) $123.6 (1%) $70.1 $79.2 (12%) $70.1 (12%)Raffles Siem Reap 41.7 53.6 (11.9) $181.9 $187.4 (3%) $181.9 (3%) $75.8 $100.5 (25%) $75.8 (25%)Four Seasons Langkawi 57.4 60.3 (2.9) $593.2 $682.5 (13%) $607.0 (11%) $340.7 $411.5 (17%) $348.6 (15%)

Asia 52.7 56.8 (4.1) $142.3 $161.9 (12%) $144.3 (11%) $75.0 $91.9 (18%) $76.0 (17%)

Four Seasons George V, Paris 75.0 81.2 (6.1) $1,310.9 $1,342.9 (2%) $1,375.6 2% $983.8 $1,090.1 (10%) $1,032.3 (5%)

Europe 75.0 81.2 (6.1) $1,310.9 $1,342.9 (2%) $1,375.6 2% $983.8 $1,090.1 (10%) $1,032.3 (5%)

Total KHI System 59.4 63.4 (4.0) $241.9 $254.7 (5%) $247.2 (3%) $143.8 $161.5 (11%) $146.9 (9%)

Subsidiaries 56.4 58.4 (2.0) $163.4 $170.0 (4%) $164.8 (3%) $92.1 $99.2 (7%) $92.9 (6%)Associates 68.8 78.6 (9.9) $438.3 $445.2 (2%) $453.2 2% $301.4 $350.0 (14%) $311.6 (11%)

Total KHI System 59.4 63.4 (4.0) $241.9 $254.7 (5%) $247.2 (3%) $143.8 $161.5 (11%) $146.9 (9%)


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Non-hotel operationsNon-hotel operations consist of operating activities such as ancillary real estate sales and leasing, business development and asset management fees. Ancillary real estate business comprises of a diversified portfolio of residential and commercial properties that is leased or sold by KHI. These are either branded or unbranded properties attached to or are in the vicinity of our hotels. Besides its existing inventory, KHI has a number of hotel developments under construction that include significant ancillary real estate components.

Non-hotel revenues decreased by US$20.4 million to US$27.4 million while gross profits from non-hotel operations fell by US$4.5 million to US$11.3 million.

KHI System Performance

Occupancy % Average Rate RevPAR

Excl. forex Excl. forex Change % % % % (12 months ended 31 December) 2009 2008 Pts 2009 2008 Change 2009 Change 2009 2008 Change 2009 Change

Mövenpick El Gouna 74.3 86.4 (12.1) $89.3 $92.4 (3%) $89.4 (3%) $66.3 $79.8 (17%) $66.4 (17%)Four Seasons Nile Plaza, Cairo 56.4 65.5 (9.1) $357.9 $406.0 (12%) $357.9 (12%) $202.0 $266.1 (24%) $202.0 (24%)Four Seasons Damascus 56.5 68.6 (12.1) $334.7 $291.2 15% $334.7 15% $189.0 $199.7 (5%) $189.0 (5%)Mövenpick Beirut 74.5 57.3 17.2 $263.0 $230.8 14% $263.0 14% $196.0 $132.3 48% $196.0 48%Mövenpick El Quseir 71.5 77.2 (5.8) $72.3 $78.3 (8%) $72.4 (8%) $51.6 $60.4 (15%) $51.7 (14%)Mövenpick Hotel Bur Dubai 69.0 74.7 (5.8) $138.0 $213.0 (35%) $138.0 (35%) $95.2 $159.2 (40%) $95.2 (40%)

Middle East/North Africa 67.4 73.1 (5.7) $192.7 $201.3 (4%) $192.8 (4%) $129.9 $147.1 (12%) $129.9 (12%)

Fairmont Kenya (4 hotels) 37.2 20.6 16.6 $151.8 $145.9 4% $158.6 9% $56.5 $30.1 88% $59.1 96%Mövenpick Royal Palm, Dar es Salaam 63.5 78.7 (15.2) $139.2 $130.4 7% $139.2 7% $88.4 $102.6 (14%) $88.4 (14%)InterContinental Lusaka 55.5 56.7 (1.2) $132.7 $128.6 3% $132.7 3% $73.6 $73.0 1% $73.6 1%Mövenpick Mauritius 51.6 66.8 (15.2) $115.0 $136.9 (16%) $118.4 (14%) $59.3 $91.4 (35%) $61.0 (33%)

Sub-Saharan Africa 49.6 49.5 0.1 $136.8 $134.0 2% $139.4 4% $67.8 $66.4 2% $69.1 4%

Swissôtel Kunshan 46.1 54.3 (8.3) $98.8 $103.2 (4%) $97.6 (5%) $45.5 $56.1 (19%) $44.9 (20%)Four Seasons Jakarta 55.6 61.0 (5.4) $100.3 $106.7 (6%) $100.6 (6%) $55.8 $65.2 (14%) $55.9 (14%)Mövenpick Karon Beach 57.9 52.4 5.5 $102.5 $146.6 (30%) $107.2 (27%) $59.4 $76.8 (23%) $62.1 (19%)Raffles Phnom Penh 56.7 63.7 (7.0) $123.6 $124.4 (1%) $123.6 (1%) $70.1 $79.2 (12%) $70.1 (12%)Raffles Siem Reap 41.7 53.6 (11.9) $181.9 $187.4 (3%) $181.9 (3%) $75.8 $100.5 (25%) $75.8 (25%)Four Seasons Langkawi 57.4 60.3 (2.9) $593.2 $682.5 (13%) $607.0 (11%) $340.7 $411.5 (17%) $348.6 (15%)

Asia 52.7 56.8 (4.1) $142.3 $161.9 (12%) $144.3 (11%) $75.0 $91.9 (18%) $76.0 (17%)

Four Seasons George V, Paris 75.0 81.2 (6.1) $1,310.9 $1,342.9 (2%) $1,375.6 2% $983.8 $1,090.1 (10%) $1,032.3 (5%)

Europe 75.0 81.2 (6.1) $1,310.9 $1,342.9 (2%) $1,375.6 2% $983.8 $1,090.1 (10%) $1,032.3 (5%)

Total KHI System 59.4 63.4 (4.0) $241.9 $254.7 (5%) $247.2 (3%) $143.8 $161.5 (11%) $146.9 (9%)

Subsidiaries 56.4 58.4 (2.0) $163.4 $170.0 (4%) $164.8 (3%) $92.1 $99.2 (7%) $92.9 (6%)Associates 68.8 78.6 (9.9) $438.3 $445.2 (2%) $453.2 2% $301.4 $350.0 (14%) $311.6 (11%)

Total KHI System 59.4 63.4 (4.0) $241.9 $254.7 (5%) $247.2 (3%) $143.8 $161.5 (11%) $146.9 (9%)



Hotel Rooms (2009) RevPAR (In US$) Total RevPAR (in US$) Hotel Revenue (In $000s) Hotel EBITDA (In $000s) Rooms Rooms Revenue % % $ % $ % (12 months ended 31 December) No. % Total $000’s % Total 2009 2008 Change 2009 2008 Change 2009 2008 Change Change 2009 2008 Change Change

Mövenpick El Gouna 554 12% 13,409 5% $66.3 $79.8 (17%) $108.8 $128.8 (16%) 21,998 26,117 (4,119) (16%) 10,729 13,177 (2,448) (19%)Four Seasons Nile Plaza, Cairo 378 8% 27,366 11% $202.0 $266.1 (24%) $397.1 $483.5 (18%) 53,800 66,580 (12,780) (19%) 25,687 33,218 (7,531) (23%)Four Seasons Damascus 297 6% 20,487 8% $189.0 $199.7 (5%) $300.8 $329.8 (9%) 32,606 35,847 (3,242) (9%) 13,396 15,557 (2,161) (14%)Mövenpick Beirut 292 6% 20,891 8% $196.0 $132.3 48% $341.1 $249.2 37% 36,356 26,628 9,728 37% 10,391 5,933 4,458 75%Mövenpick El Quseir 250 5% 4,713 2% $51.6 $60.4 (15%) $110.0 $124.4 (12%) 10,039 11,384 (1,345) (12%) 4,490 5,294 (804) (15%)Mövenpick Hotel Bur Dubai 255 5% 8,858 4% $95.2 $159.2 (40%) $155.7 $234.9 (34%) 14,496 21,178 (6,682) (32%) 4,535 8,766 (4,231) (48%)

Middle East & North Africa 2,026 43% 95,723 38% $129.9 $147.1 (12%) $229.7 $254.5 (10%) 169,295 187,735 (18,440) (10%) 69,229 81,946 (12,717) (16%)

Fairmont Kenya (4 hotels) 396 8% 8,171 3% $56.5 $30.1 88% $102.4 $62.0 65% 14,795 8,989 5,806 65% 1,259 (2,137) 3,396 159%Mövenpick Royal Palm, Dar es Salaam 230 5% 7,424 3% $88.4 $102.6 (14%) $135.4 $160.8 (16%) 11,370 13,537 (2,167) (16%) 3,070 3,753 (682) (18%)InterContinental Lusaka 225 5% 6,019 2% $73.6 $73.0 1% $124.9 $138.7 (10%) 10,211 11,374 (1,163) (10%) 3,011 3,534 (523) (15%)Mövenpick Mauritius 181 4% 3,918 2% $59.3 $91.4 (35%) $108.6 $162.0 (33%) 7,175 10,730 (3,556) (33%) 926 1,819 (893) (49%)

Sub-Saharan Africa 1,032 22% 25,533 10% $67.8 $66.4 2% $115.7 $118.3 (2%) 43,550 44,630 (1,080) (2%) 8,266 6,969 1,297 19%

Swissôtel Kunshan 387 8% 6,432 3% $45.5 $56.1 (19%) $76.8 $93.6 (18%) 10,843 13,255 (2,412) (18%) 2,611 3,678 (1,067) (29%)Four Seasons Jakarta 320 7% 6,519 3% $55.8 $65.2 (14%) $140.8 $171.3 (18%) 16,442 20,057 (3,615) (18%) 1,416 2,561 (1,144) (45%)Mövenpick Karon Beach 351 7% 7,757 3% $59.4 $76.8 (23%) $93.3 $113.0 (17%) 12,189 14,519 (2,330) (16%) 4,051 5,219 (1,168) (22%)Raffles Phnom Penh 170 4% 4,347 2% $70.1 $79.2 (12%) $131.6 $155.3 (15%) 8,166 9,664 (1,498) (16%) 1,642 1,860 (219) (12%)Raffles Siem Reap 125 3% 3,292 1% $75.8 $100.5 (25%) $141.4 $195.6 (28%) 6,141 8,950 (2,808) (31%) 1,232 1,979 (747) (38%)Four Seasons Langkawi 90 2% 11,192 4% $340.7 $411.5 (17%) $537.6 $659.9 (19%) 17,661 21,737 (4,076) (19%) 5,866 7,589 (1,723) (23%)

Asia 1,443 30% 39,539 16% $75.0 $91.9 (18%) $135.5 $167.0 (19%) 71,442 88,183 (16,741) (19%) 16,818 22,886 (6,068) (27%)

Four Seasons George V, Paris 245 5% 87,972 35% $983.8 $1,090.1 (10%) $1,547.3 $1,752.1 (12%) 138,368 157,114 (18,746) (12%) 44,657 56,100 (11,443) (20%)

Europe 245 5% 87,972 35% $983.8 $1,090.1 (10%) $1,547.3 $1,752.1 (12%) 138,368 157,114 (18,746) (12%) 44,657 56,100 (11,443) (20%)

Total KHI System 4,746 100% 248,766 100% $143.8 $161.5 (11%) $244.3 $275.7 (11%) 422,656 477,663 (55,007) (12%) 138,970 167,901 (28,931) (17%)

Excluding forex impact –9% $251 $276 –9% 433,555 477,663 (44,107) (9%) 138,449 167,901 –18%

Subsidiaries 3,569 75% 120,019 48% 92.1 99.2 (7%) 160.0 174.9 (8%) 208,489 227,851 (19,362) (8%) 57,897 65,406 (7,509) (11%)Associates 1,177 25% 128,747 52% 301.4 350.0 (14%) 501.4 580.8 (14%) 214,167 249,812 (35,645) (14%) 81,073 102,495 (21,422) (21%)

Total KHI System 4,746 100% 248,766 100% $143.8 $161.5 (11%) 244.3 275.7 (11%) 422,656 477,663 (55,007) (12%) 138,970 167,901 (28,931) (17%)


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Hotel Rooms (2009) RevPAR (In US$) Total RevPAR (in US$) Hotel Revenue (In $000s) Hotel EBITDA (In $000s) Rooms Rooms Revenue % % $ % $ % (12 months ended 31 December) No. % Total $000’s % Total 2009 2008 Change 2009 2008 Change 2009 2008 Change Change 2009 2008 Change Change

Mövenpick El Gouna 554 12% 13,409 5% $66.3 $79.8 (17%) $108.8 $128.8 (16%) 21,998 26,117 (4,119) (16%) 10,729 13,177 (2,448) (19%)Four Seasons Nile Plaza, Cairo 378 8% 27,366 11% $202.0 $266.1 (24%) $397.1 $483.5 (18%) 53,800 66,580 (12,780) (19%) 25,687 33,218 (7,531) (23%)Four Seasons Damascus 297 6% 20,487 8% $189.0 $199.7 (5%) $300.8 $329.8 (9%) 32,606 35,847 (3,242) (9%) 13,396 15,557 (2,161) (14%)Mövenpick Beirut 292 6% 20,891 8% $196.0 $132.3 48% $341.1 $249.2 37% 36,356 26,628 9,728 37% 10,391 5,933 4,458 75%Mövenpick El Quseir 250 5% 4,713 2% $51.6 $60.4 (15%) $110.0 $124.4 (12%) 10,039 11,384 (1,345) (12%) 4,490 5,294 (804) (15%)Mövenpick Hotel Bur Dubai 255 5% 8,858 4% $95.2 $159.2 (40%) $155.7 $234.9 (34%) 14,496 21,178 (6,682) (32%) 4,535 8,766 (4,231) (48%)

Middle East & North Africa 2,026 43% 95,723 38% $129.9 $147.1 (12%) $229.7 $254.5 (10%) 169,295 187,735 (18,440) (10%) 69,229 81,946 (12,717) (16%)

Fairmont Kenya (4 hotels) 396 8% 8,171 3% $56.5 $30.1 88% $102.4 $62.0 65% 14,795 8,989 5,806 65% 1,259 (2,137) 3,396 159%Mövenpick Royal Palm, Dar es Salaam 230 5% 7,424 3% $88.4 $102.6 (14%) $135.4 $160.8 (16%) 11,370 13,537 (2,167) (16%) 3,070 3,753 (682) (18%)InterContinental Lusaka 225 5% 6,019 2% $73.6 $73.0 1% $124.9 $138.7 (10%) 10,211 11,374 (1,163) (10%) 3,011 3,534 (523) (15%)Mövenpick Mauritius 181 4% 3,918 2% $59.3 $91.4 (35%) $108.6 $162.0 (33%) 7,175 10,730 (3,556) (33%) 926 1,819 (893) (49%)

Sub-Saharan Africa 1,032 22% 25,533 10% $67.8 $66.4 2% $115.7 $118.3 (2%) 43,550 44,630 (1,080) (2%) 8,266 6,969 1,297 19%

Swissôtel Kunshan 387 8% 6,432 3% $45.5 $56.1 (19%) $76.8 $93.6 (18%) 10,843 13,255 (2,412) (18%) 2,611 3,678 (1,067) (29%)Four Seasons Jakarta 320 7% 6,519 3% $55.8 $65.2 (14%) $140.8 $171.3 (18%) 16,442 20,057 (3,615) (18%) 1,416 2,561 (1,144) (45%)Mövenpick Karon Beach 351 7% 7,757 3% $59.4 $76.8 (23%) $93.3 $113.0 (17%) 12,189 14,519 (2,330) (16%) 4,051 5,219 (1,168) (22%)Raffles Phnom Penh 170 4% 4,347 2% $70.1 $79.2 (12%) $131.6 $155.3 (15%) 8,166 9,664 (1,498) (16%) 1,642 1,860 (219) (12%)Raffles Siem Reap 125 3% 3,292 1% $75.8 $100.5 (25%) $141.4 $195.6 (28%) 6,141 8,950 (2,808) (31%) 1,232 1,979 (747) (38%)Four Seasons Langkawi 90 2% 11,192 4% $340.7 $411.5 (17%) $537.6 $659.9 (19%) 17,661 21,737 (4,076) (19%) 5,866 7,589 (1,723) (23%)

Asia 1,443 30% 39,539 16% $75.0 $91.9 (18%) $135.5 $167.0 (19%) 71,442 88,183 (16,741) (19%) 16,818 22,886 (6,068) (27%)

Four Seasons George V, Paris 245 5% 87,972 35% $983.8 $1,090.1 (10%) $1,547.3 $1,752.1 (12%) 138,368 157,114 (18,746) (12%) 44,657 56,100 (11,443) (20%)

Europe 245 5% 87,972 35% $983.8 $1,090.1 (10%) $1,547.3 $1,752.1 (12%) 138,368 157,114 (18,746) (12%) 44,657 56,100 (11,443) (20%)

Total KHI System 4,746 100% 248,766 100% $143.8 $161.5 (11%) $244.3 $275.7 (11%) 422,656 477,663 (55,007) (12%) 138,970 167,901 (28,931) (17%)

Excluding forex impact –9% $251 $276 –9% 433,555 477,663 (44,107) (9%) 138,449 167,901 –18%

Subsidiaries 3,569 75% 120,019 48% 92.1 99.2 (7%) 160.0 174.9 (8%) 208,489 227,851 (19,362) (8%) 57,897 65,406 (7,509) (11%)Associates 1,177 25% 128,747 52% 301.4 350.0 (14%) 501.4 580.8 (14%) 214,167 249,812 (35,645) (14%) 81,073 102,495 (21,422) (21%)

Total KHI System 4,746 100% 248,766 100% $143.8 $161.5 (11%) 244.3 275.7 (11%) 422,656 477,663 (55,007) (12%) 138,970 167,901 (28,931) (17%)



2009 Hotel Revenues 2009 Hotel EBITDA 2008 Hotel Revenues 2008 Hotel EBITDA KHI % KHI % KHI % KHI % KHI % KHI % KHI % KHI % (12 months ended 31 December, US$ millions) System Total Reported Total System Total Reported Total System Total Reported Total System Total Reported Total

Mövenpick El Gouna 22.0 5% – – 10.7 8% – – 26.1 5% – – 13.2 8% – –Four Seasons Nile Plaza, Cairo 53.8 13% – – 25.7 18% – – 66.6 14% – – 33.2 20% – –Four Seasons Damascus 32.6 8% 32.6 15% 13.4 10% 13.4 22% 35.8 8% 35.8 16% 15.6 9% 15.6 24%Mövenpick Beirut 36.4 9% 36.4 17% 10.4 7% 10.4 17% 26.6 6% 26.6 12% 5.9 4% 5.9 9%Mövenpick El Quseir 10.0 2% 10.0 5% 4.5 3% 4.5 7% 11.4 2% 11.4 5% 5.3 3% 5.3 8%Mövenpick Hotel Bur Dubai 14.5 3% 16.3 7% 4.5 3% 5.7 9% 21.2 4% 21.2 9% 8.8 5% 8.8 13%

Middle East/North Africa 169.3 40% 95.3 44% 69.2 50% 33.9 56% 187.7 39% 95.0 41% 81.9 49% 35.6 54%

Fairmont Kenya 14.8 4% 14.8 7% 1.3 1% 1.3 2% 9.0 2% 9.0 4% (2.1) (1%) (2.1) (3%)Mövenpick Royal Palm, Dar es Salaam 11.4 3% 11.4 5% 3.1 2% 3.1 5% 13.5 3% 13.5 6% 3.8 2% 3.8 6%InterContinental Lusaka 10.2 2% 10.2 5% 3.0 2% 3.0 5% 11.4 2% 11.4 5% 3.5 2% 3.5 5%Four Seasons, Mauritius – 0% 8.7 4% – 0% 1.5 3% – 0% 3.1 1% – 0% 0.5 1%Mövenpick Mauritius 7.2 2% 7.2 3% 0.9 1% 0.9 2% 10.7 2% 10.7 5% 1.8 1% 1.8 3%

Sub-Saharan Africa 43.6 10% 52.3 24% 8.3 6% 9.8 16% 44.6 9% 47.7 21% 7.0 4% 7.4 11%

Swissôtel Kunshan 10.8 3% 10.8 5% 2.6 2% 2.6 4% 13.3 3% 13.3 6% 3.7 2% 3.7 6%Four Seasons Jakarta 16.4 4% 16.4 8% 1.4 1% 1.4 2% 20.1 4% 20.1 – 2.6 2% 2.6 –Mövenpick Karon Beach 12.2 3% 12.2 6% 4.1 3% 4.1 7% 14.5 3% 14.5 6% 5.2 3% 5.2 8%Raffles Cambodia 14.3 3% 14.3 7% 2.9 2% 2.9 5% 18.6 4% 18.6 – 3.8 2% 3.8 –Four Seasons Langkawi 17.7 4% 17.7 8% 5.9 4% 5.9 10% 21.7 5% 21.7 9% 7.6 5% 7.6 12%

Asia 71.4 17% 71.4 33% 16.8 12% 16.8 28% 88.2 18% 88.2 21% 22.9 14% 22.9 25%

Four Seasons George V, Paris 138.4 33% – – 44.7 32% – – 157.1 33% – – 56.1 33% – –

Europe 138.4 33% – – 44.7 32% – – 157.1 33% – – 56.1 33% – –

Operating Hotel Portfolio 422.7 100% 219.0 100% 139.0 100% 60.6 100% 477.7 100% 230.9 83% 167.9 100% 65.9 90%

Subsidiaries 208.5 49% 219.0 100% 57.9 42% 60.6 100% 227.9 48% 230.9 100% 65.4 39% 65.9 100%Associates 214.2 51% – 0% 81.1 58% – 0% 249.8 52% – 0% 102.5 61% – 0%


No. Hotels 20 18 20 18 20 17 20 17No. of Rooms 4,746 3,716 4,746 3,716 4,746 3,626 4,746 3,626


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2009 Hotel Revenues 2009 Hotel EBITDA 2008 Hotel Revenues 2008 Hotel EBITDA KHI % KHI % KHI % KHI % KHI % KHI % KHI % KHI % (12 months ended 31 December, US$ millions) System Total Reported Total System Total Reported Total System Total Reported Total System Total Reported Total

Mövenpick El Gouna 22.0 5% – – 10.7 8% – – 26.1 5% – – 13.2 8% – –Four Seasons Nile Plaza, Cairo 53.8 13% – – 25.7 18% – – 66.6 14% – – 33.2 20% – –Four Seasons Damascus 32.6 8% 32.6 15% 13.4 10% 13.4 22% 35.8 8% 35.8 16% 15.6 9% 15.6 24%Mövenpick Beirut 36.4 9% 36.4 17% 10.4 7% 10.4 17% 26.6 6% 26.6 12% 5.9 4% 5.9 9%Mövenpick El Quseir 10.0 2% 10.0 5% 4.5 3% 4.5 7% 11.4 2% 11.4 5% 5.3 3% 5.3 8%Mövenpick Hotel Bur Dubai 14.5 3% 16.3 7% 4.5 3% 5.7 9% 21.2 4% 21.2 9% 8.8 5% 8.8 13%

Middle East/North Africa 169.3 40% 95.3 44% 69.2 50% 33.9 56% 187.7 39% 95.0 41% 81.9 49% 35.6 54%

Fairmont Kenya 14.8 4% 14.8 7% 1.3 1% 1.3 2% 9.0 2% 9.0 4% (2.1) (1%) (2.1) (3%)Mövenpick Royal Palm, Dar es Salaam 11.4 3% 11.4 5% 3.1 2% 3.1 5% 13.5 3% 13.5 6% 3.8 2% 3.8 6%InterContinental Lusaka 10.2 2% 10.2 5% 3.0 2% 3.0 5% 11.4 2% 11.4 5% 3.5 2% 3.5 5%Four Seasons, Mauritius – 0% 8.7 4% – 0% 1.5 3% – 0% 3.1 1% – 0% 0.5 1%Mövenpick Mauritius 7.2 2% 7.2 3% 0.9 1% 0.9 2% 10.7 2% 10.7 5% 1.8 1% 1.8 3%

Sub-Saharan Africa 43.6 10% 52.3 24% 8.3 6% 9.8 16% 44.6 9% 47.7 21% 7.0 4% 7.4 11%

Swissôtel Kunshan 10.8 3% 10.8 5% 2.6 2% 2.6 4% 13.3 3% 13.3 6% 3.7 2% 3.7 6%Four Seasons Jakarta 16.4 4% 16.4 8% 1.4 1% 1.4 2% 20.1 4% 20.1 – 2.6 2% 2.6 –Mövenpick Karon Beach 12.2 3% 12.2 6% 4.1 3% 4.1 7% 14.5 3% 14.5 6% 5.2 3% 5.2 8%Raffles Cambodia 14.3 3% 14.3 7% 2.9 2% 2.9 5% 18.6 4% 18.6 – 3.8 2% 3.8 –Four Seasons Langkawi 17.7 4% 17.7 8% 5.9 4% 5.9 10% 21.7 5% 21.7 9% 7.6 5% 7.6 12%

Asia 71.4 17% 71.4 33% 16.8 12% 16.8 28% 88.2 18% 88.2 21% 22.9 14% 22.9 25%

Four Seasons George V, Paris 138.4 33% – – 44.7 32% – – 157.1 33% – – 56.1 33% – –

Europe 138.4 33% – – 44.7 32% – – 157.1 33% – – 56.1 33% – –


Subsidiaries 208.5 49% 219.0 100% 57.9 42% 60.6 100% 227.9 48% 230.9 100% 65.4 39% 65.9 100%Associates 214.2 51% – 0% 81.1 58% – 0% 249.8 52% – 0% 102.5 61% – 0%


No. Hotels 20 18 20 18 20 17 20 17No. of Rooms 4,746 3,716 4,746 3,716 4,746 3,626 4,746 3,626



Consolidated KHI Results Change (12 months 31 December, US$000) 2009 2008 $ % Excl. Forex

HotelsRooms revenue 127,527 130,740 (3,213) (2%)F&B revenue 71,609 77,973 (6,364) (8%)Other revenue 19,863 22,234 (2,372) (11%)

Hotel revenues 218,999 230,947 (11,948) (5%) -4%

Rooms cost (21,870) (21,558) (312) (1%)F&B cost (46,258) (49,683) 3,425 7%Other departmental costs (72,737) (75,506) 2,769 4%Management fees (10,759) (12,131) 1,373 11%Other expenses (6,815) (6,197) (618) (10%)

Hotel operating costs (158,438) (165,075) 6,637 4% (0%)Hotel EBITDA 60,561 65,872 (5,312) (8%) -12%Hotel depreciation and amortisation (28,554) (27,716) (838) (3%)

Hotel Gross Profit 32,007 38,156 (6,149) (16%) 28% 29% 0.0087OtherOther revenues 27,416 47,777 (20,362) (43%)Other direct costs (16,146) (32,026) 15,880 50%Other Gross Profit 11,270 15,751 (4,482) (28%)

Total Revenues 246,415 278,725 (32,310) (12%)Total Gross Profit 43,277 53,908 (10,631) (20%)

Corporate general & administrative (15.765) (22.621) 6.856 30%Corporate depreciation and amortisation (907) (693) (214) (31%)Pre-opening expenses (4,589) (1,730) (2,859) (165%)Sales and marketing (1,657) (6,403) 4,745 74%

Operating profit 20.358 22.461 (2.103) (9%)

Share of results in associates 20,653 40,425 (19,771) (49%)Dividends received 492 495 (3) (1%)Interest income (expense), net (17,487) (13,291) (4,196) (32%)Project costs written-off – (26,417) 26,417 0%Impairment of goodwill (36,629) – (36,629) n/aGains from sale of investments 37,522 720 36,801 5109%Other non-operating income or expense 2,680 628 2,052 327%

Profit before tax & minority interests 27,589 25.021 2.569 10%

Income tax (1,697) (4,295) 2,598 60%Non-controlling interests (4,051) (3,585) (466) (13%)

Net profit 21,842 17,141 4,701 27,4%

Avg. no. shares outstanding 168,512 174,607 (6,095) (3%)EPS $0,13 $0,10 $0,03 32%

Before non-recurring items:Net profit before non-recurring items 17,323 36,640 (19,317) (53%)EPS before non-recurring items $0,10 $0,21 $(0,11) (51%)


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Consolidated (continued) Change (12 months 31 December, US$000) 2009 2008 $ % Excl. forex

Operating Hotels:Consolidated hotel investments 18 18 – 0%Associated hotel investments 3 4 (1) (25%)

Total operating hotels 21 22 (1) (5%)

Consolidated hotel rooms 3,716 3,659 57 2%Associated hotel rooms 1,177 1,377 (200) (15%)

Total operational rooms 4,893 5,036 (143) (3%)

Comparable Hotel Results Change (12 months 31 December, US$000) 2009 2008 $ % Excl. forex

120,019 129,286 (9,267) (7%) 69,420 77,239 (7,819) (10%) 19,049 21,326 (2,277) (11%)

208,489 227,851 (19,362) (8%) -7% – (20,845) (21,354) 509 2% (44,761) (49,043) 4,282 9% (68,841) (74,220) 5,378 7% (10,304) (12,009) 1,705 14% (5,841) (5,819) (22) (0%)

(150,592) (162,445) 11,853 7% (3%)

57,897 65,406 (7,509) (11%) -16% (26,431) (26,699) 267 1%

31,465 38,708 (7,242) (19%) 28% 29% 0.0094



2009 2008 $ change % change Hotel Hotel Hotel Hotel Hotel Hotel Hotel Hotel (12 months ended 31 December, US$000) EBITDA Depreciation Gross Profit EBITDA Depreciation Gross Profit EBITDA Gross Profit EBITDA Profit

Four Seasons Damascus 13,396 1,776 11,620 15,557 1,568 13,990 (2,161) (2,370) (14%) (17%)Mövenpick Hotel Bur Dubai 4,536 1,740 2,796 8,766 1,442 7,324 (4,231) (4,528) (48%) (62%)Mövenpick Karon Beach 4,051 3,232 819 5,219 3,303 1,916 (1,168) (1,096) (22%) (57%)Mövenpick Royal Palm, Dar es Salaam 3,070 1,293 1,777 3,753 1,640 2,112 (682) (335) (18%) (16%)Mövenpick Mauritius 926 1,122 (196) 1,819 1,356 463 (893) (659) (49%) (142%)Mövenpick El Quseir 4,490 848 3,642 5,294 792 4,502 (804) (860) (15%) (19%)InterContinental Lusaka 3,011 897 2,114 3,534 1,274 2,260 (523) (146) (15%) (6%)Mövenpick Beirut 10,391 2,809 7,582 5,933 2,802 3,131 4,458 4,450 75% 142%Four Seasons Langkawi 5,866 4,484 1,382 7,589 4,667 2,922 (1,723) (1,540) (23%) (53%)Raffles Cambodia 2,874 2,220 653 3,840 2,389 1,451 (966) (798) (25%) (55%)Swissôtel Kunshan 2,611 2,031 579 3,678 2,004 1,674 (1,067) (1,095) (29%) (65%)Four Seasons Jakarta 1,416 1,462 (45) 2,561 1,451 1,110 (1,144) (1,155) (45%) (104%)Fairmont Kenya 1,259 2,417 (1,158) (2,137) 2,010 (4,147) 3,396 2,989 159% 72%

Comparable hotels 57,897 26,331 31,566 65,406 26,699 38,708 (7,509) (7,142) (11%) (18%)Excluding forex impact (16%) (25%)

Bur Dubai Residences 1,118 808 310 – – – 1,118 310 n/a n/aFour Seasons, Mauritius 1,546 1,414 131 466 1,017 (551) 1,079 683 n/a n/a

Acquisition and new operations impacts 2,664 2,223 441 466 1,017 (551) 1,079 683 n/a n/a

KHI Consolidated Hotels 60,561 28,554 32,007 65,872 27,716 38,156 (6,430) (6,459) (8%) (16%)Excluding forex impact (12%) (23%)


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Other revenues P&L (12 months ended 31 December, US$000) 2009 2008 $ Change

Real estate sales 20,003 39,861 (19,858)Real estate leases/other 6,153 6,039 114Business development asset management fees 1,260 1,877 (617)

Other revenues 27,416 47,777 (20,362)

Real estate cost of sale (14,859) (30,517) 15,658Real estate leasing costs (1,288) (1,510) 222

Other expenses (16,146) (32,026) 15,880

Other gross profit 11,269 15,751 (4,482)



Ancillary Real Estate SalesWe seek to reduce commercial risk on ancillary real estate developments by conducting marketing and pre-sales programmes to obtain reservations or deposit-based sales agreements from interested buyers. International accounting standards, IAS18 and IFRIC 15 for revenue recognition on pre-completion real estate sale, are applied to agreements with buyers to purchase specific unit(s) within a development once it has been built. We typically receive partial payments on development pre-sales and use IFRIC 15 as the basis for assessing the use of ‘completion’ method or ‘percentage of completion’ method for revenue recognition to recognise any revenues until completion.

Our inventory of apartments at the Mövenpick Resort & Spa Karon Beach Phuket is being sold on a 30-year leasehold basis with an option to extend for an additional 30 to 60 years. Sales of the units are recognised as a capital-lease with the cost basis adjusted to reflect the units’ share of excess of purchase price paid over the book value of the assets. The associated land lease is accounted for as an operating lease with annual revenue of about US$50,000. Two units were sold last year; as at 31 December 2009, eight apartments remained for sale.

Our former associated Four Seasons property in Sharm El Sheikh includes ancillary real estate for sale. Only one unit was sold during the period and KHI’s share of the profit was US$0.1 million (2008: US$1.6 million). Our investment in this hotel was sold at the end of Q1 2009 hence our share of net profits only reflects the hotel’s first quarter results.

Real estate sales

Revenue Gross Profit Units Change Change (12-months ended 31 December, US$000) Type 2009 2008 2009 2008 $ % 2009 2008 $ %

Mövenpick Resort & Spa Phuket Residential apts. 2 7 705 2,668 (1,963) (74%) 81 625 (544) (87%)Four Seasons Mauritius Villas 9 32 19,058 37,193 (18,136) (49%) 4,824 8,719 (3,896) (45%)

Consolidated 19,763 39,861 (20,098) (50%) 4,904 9,345 (544) (48%)

Four Seasons Nile Plaza Cairo Residential apts. 11 26 17,458 55,364 (37,906) (68%) 10,277 27,441 (17,164) (63%)Four Seasons Sharm El Sheikh Chalets & Villas 1 12 584 9,556 (8,972) (94%) 347 4,186 (3,840) (92%)

Associates 18,042 64,920 (46,878) (72%) 10,624 31,627 (21,004) (66%)KHI Equity Share in Associates 4,626 13,635 (9,008) (66%)

Ancillary real estate at KHI’s associate Four Seasons property in Cairo is also available for sale. 11 units were sold in 2009; KHI’s share of the profit was US$4.5 million (2008: US$11.9 million).

At the Four Seasons Mauritius property, nine residences were completed and revenues recognised during the year. Four residences remain unsold as at 31 December 2009.

KHI has concluded pre-completion residential unit purchase agreements at the Four Seasons Marrakech for 40 units out of a total of 43. Pre-completion payment collections are very strong at 96% (till November 2009) of invoiced payments.

Real estate pre-sales

Sales Deposits Units Change Change (12-months ended 31 December, US$000) Type 2009 2008 2009 2008 $ % 2009 2008 $ %

Four Seasons Marrakech1 Villas – 3 – 6,540 (6,540) 0% 8,569 25,287 (16,718) (66%)Raffles Makati2 Residential apts. 30 111 12,156 36,037 (23,881) (66%) 10,034 7,613 2,421 32%

Total Developments 12,156 42,577 (30,421) (71%) 18,603 32,900 (14,297) (43%)

Ancillary Real Estate LeasingProfits from ancillary real estate leasing increased by US$0.3 million (+7%) to US$4.8 million.

The Four Seasons Damascus includes an adjacent shopping centre (Damascus Boulevard) which is fully leased and produced revenues of US$3.5 million (a 28% increase) and leasing profits of US$2.9 million (30% increase). This performance improvement is the result of the leasing of all remaining vacant spaces, expiration of rent-free periods and the conversion of office space to commercial space with higher rental yields.

The Mövenpick Beirut includes cabanas, marina and retail areas which are leased on a short-term and seasonal basis, primarily to local non-hotel guests in the summer months. These are managed on KHI’s behalf by the hotel operator and generated leasing profits of US$1.6 million, a 5% decline over the corresponding period last year.


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KHI’s Bur Dubai residence building was converted to hotel serviced apartments in 2008. In 2008, apartments were leased on short-term and long-term contracts ahead of conversion. As a result, a select number of apartment leases continued into 2009. This leasing revenue base in conjunction with the hotel short-term leasing activities in the early part of 2009 has allowed the building to contribute of gross profits of US$0.3 million, a 50% decline from 2008 levels.

40 buyers have signed sales agreements.

Leasing/other real estate revenue

Revenue Gross Profit

Change Change (12-months ended 31 December, US$000) 2009 2008 $ % 2009 2008 $ %

Four Seasons Damascus 3,579 2,799 780 28% 2,995 2,311 685 30%Mövenpick Beirut 2,210 2,095 115 5% 1,601 1,678 (77) (5%)Bur Dubai residences 364 1,145 (782) (68%) 269 541 (272) (50%)

Total leasing/other real estate 6,153 6,039 114 2% 4,865 4,529 335 7%

Sales and Marketing ExpensesWe continue to pre-sell ancillary residential real estate mainly at our Manila and Seychelles developments. Sales and marketing spend was curtailed in the first half of 2009 as a result of the sale of our Da Nang development, the postponement of the Langkawi real estate development and the decision to refrain from active marketing of the Raffles Residences in Seychelles. Related marketing expenses were reduced by US$4.7 million to US$1.7 million in 2009.

In July 2008, we launched the marketing for the Raffles Residences Makati in Manila and sold 141 apartments. 30 units were sold last year, out of which 18 sold in the first half were at a record price for that market. As at 31 December 2009, 141 apartments have been pre-sold out of a total of 236 apartments and we have collected 99% of pre-construction payments. The project continues to see steady demand and units are expected to be handed over in mid 2011. The residential portion of Raffles Seychelles consists of 14 villas. Construction is proceeding on all villas and the first show villa will be ready for viewing by the second half of 2010.



Associates Net Income

Hotel EBITDA Real Estate Sales EBITDA G&A/Tax/Other Depreciation Net Interest Net Income Change Change Change Change Change Change (12 months ended 31 December, US$000) 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ %

Anahita Golf Limited (947) (947) – (947) 0%Four Seasons George V, Paris 44,657 56,100 (11,443) (20%) – – – n/c (6,850) (8,105) 1,255 15% (8,468) (9,134) 666 7% (11,659) (18,742) 7,083 38% 17,681 20,118 (2,438) (12%)Four Seasons Nile Plaza, Cairo 25,687 33,218 (7,531) (23%) 10,277 27,441 (17,164) (63%) (21) 247 (269) (109%) (4,999) (4,520) (478) (11%) 293 1,105 (812) (73%) 31,237 57,491 (26,254) (46%)Mövenpick El Gouna 10,729 13,177 (2,448) (19%) – – – n/c (2,630) (3,259) 629 19% (880) (879) (2) (0%) (1) (55) 54 98% 7,217 8,985 (1,767) (20%)Four Seasons Resort Sharm El Sheikh 2,857 13,805 (10,948) (79%) 347 4,186 (3,840) (92%) (357) 408 (765) (188%) (469) (2,146) 1,677 78% 29 80 (51) (64%) 2,407 16,333 (13,926) (85%)Fairmont Zanzibar – (606) 606 n/c – – – n/c – – – n/c – – – n/c – – – n/c – (606) 606 n/cFairmont Palm Hotel & Resorts – – – n/c – – – n/c – (323) 323 n/c – – – n/c – – – n/c – (323) 323 n/c

Total 83,930 115,694 (31,764) (27%) 10,624 31,627 (21,004) (66%) (9,858) (11,033) 1,174 11% (14,815) (16,679) 1,864 11% (11,338) (17,612) 6,274 36% 58,542 101,997 (43,455) (43%)

Shares of Associates

% Equity Net Income -- KHI Share (12 months ended 31 December, US$000) ownership Change

Anahita Golf Limited 50.0% – – – n/c – (474) – (474) n/aFour Seasons George V, Paris 25.0% (1,713) (2,026) 314 –15% (2,117) 4,420 5,030 (609) –12%Four Seasons Nile Plaza, Cairo 43.7% (9) 108 (117) –109% (2,184) 13,648 25,118 (11,470) –46%Mövenpick El Gouna 29.3% (770) 519 (1,289) –248% (258) 2,113 4,104 (1,990) –49%Four Seasons Resort Sharm El Sheikh 39.3% (140) 160 (301) –188% (184) 946 6,420 (5,474) –85%Fairmont Zanzibar 30.0% – – – n/c – – (182) 182 n/cFairmont Palm Hotel & Resorts 20.1% – (65) 65 n/c – – (65) 65 n/c

Total (1,304) (1,328) 102% (4,743) 20,654 40,424 (19,771) (49%)

$18.540 $15,307Associates Share of EBITDA

% Equity Hotel EBITDA $0 $0 EBITDA -- KHI Share EBITDA -- KHI Share (Exc R/E Sales) (12 months ended 31 December, US$000) ownership Change Change Change Change Change

Anahita Golf Limited ($474) $0 ($474) – – – n/c – – – 0% (474) – (474) 0% (474) – (474) 0%Four Seasons George V, Paris 25.0% 11,164 14,025 (2,861) (20%) – – – n/c (1,713) (2,026) 314 15% 9,452 11,999 (2,547) (21%) 9,452 11,999 (2,547) (21%)Four Seasons Nile Plaza, Cairo 43.7% 11,223 14,513 (3,290) (23%) 4,490 11,989 (7,499) (63%) (9) 108 (117) (109%) 15,703 26,610 (10,907) (41%) 11,213 14,621 (3,408) (23%)Mövenpick El Gouna 29.3% 3,141 3,858 (717) (19%) – – – n/c (770) 519 (1,289) (248%) 2,371 4,377 (2,006) (46%) 2,371 4,377 (2,006) (46%)Four Seasons Resort Sharm El Sheikh 39.3% 1,123 5,427 (4,304) (79%) 136 1,646 (1,509) (92%) (140) 160 (301) (188%) 1,119 7,233 (6,114) (85%) 983 5,587 (4,604) (82%)Fairmont Zanzibar 30.0% – (182) 182 n/c – – – n/c – – – n/c – (182) 182 n/c – (182) 182 n/cFairmont Palm Hotel & Resorts 20.1% – – – n/c – – – n/c – (65) 65 n/c – (65) 65 n/c – (65) 65 n/c

Total 26.178 37,641 (11.463) (30%) 4,626 13,635 (9,008) (66%) (2,632) (1,304) (1,328) (102%) 28.172 49.971 (21.799) (44%) 23.546 36.337 (12.791) (35%)


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Associates Net Income

Hotel EBITDA Real Estate Sales EBITDA G&A/Tax/Other Depreciation Net Interest Net Income Change Change Change Change Change Change (12 months ended 31 December, US$000) 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ % 2009 2008 $ %

Anahita Golf Limited (947) (947) – (947) 0%Four Seasons George V, Paris 44,657 56,100 (11,443) (20%) – – – n/c (6,850) (8,105) 1,255 15% (8,468) (9,134) 666 7% (11,659) (18,742) 7,083 38% 17,681 20,118 (2,438) (12%)Four Seasons Nile Plaza, Cairo 25,687 33,218 (7,531) (23%) 10,277 27,441 (17,164) (63%) (21) 247 (269) (109%) (4,999) (4,520) (478) (11%) 293 1,105 (812) (73%) 31,237 57,491 (26,254) (46%)Mövenpick El Gouna 10,729 13,177 (2,448) (19%) – – – n/c (2,630) (3,259) 629 19% (880) (879) (2) (0%) (1) (55) 54 98% 7,217 8,985 (1,767) (20%)Four Seasons Resort Sharm El Sheikh 2,857 13,805 (10,948) (79%) 347 4,186 (3,840) (92%) (357) 408 (765) (188%) (469) (2,146) 1,677 78% 29 80 (51) (64%) 2,407 16,333 (13,926) (85%)Fairmont Zanzibar – (606) 606 n/c – – – n/c – – – n/c – – – n/c – – – n/c – (606) 606 n/cFairmont Palm Hotel & Resorts – – – n/c – – – n/c – (323) 323 n/c – – – n/c – – – n/c – (323) 323 n/c

Total 83,930 115,694 (31,764) (27%) 10,624 31,627 (21,004) (66%) (9,858) (11,033) 1,174 11% (14,815) (16,679) 1,864 11% (11,338) (17,612) 6,274 36% 58,542 101,997 (43,455) (43%)

Shares of Associates

% Equity Net Income -- KHI Share (12 months ended 31 December, US$000) ownership Change

Anahita Golf Limited 50.0% – – – n/c – (474) – (474) n/aFour Seasons George V, Paris 25.0% (1,713) (2,026) 314 –15% (2,117) 4,420 5,030 (609) –12%Four Seasons Nile Plaza, Cairo 43.7% (9) 108 (117) –109% (2,184) 13,648 25,118 (11,470) –46%Mövenpick El Gouna 29.3% (770) 519 (1,289) –248% (258) 2,113 4,104 (1,990) –49%Four Seasons Resort Sharm El Sheikh 39.3% (140) 160 (301) –188% (184) 946 6,420 (5,474) –85%Fairmont Zanzibar 30.0% – – – n/c – – (182) 182 n/cFairmont Palm Hotel & Resorts 20.1% – (65) 65 n/c – – (65) 65 n/c

Total (1,304) (1,328) 102% (4,743) 20,654 40,424 (19,771) (49%)

$18.540 $15,307Associates Share of EBITDA

% Equity Hotel EBITDA $0 $0 EBITDA -- KHI Share EBITDA -- KHI Share (Exc R/E Sales) (12 months ended 31 December, US$000) ownership Change Change Change Change Change

Anahita Golf Limited ($474) $0 ($474) – – – n/c – – – 0% (474) – (474) 0% (474) – (474) 0%Four Seasons George V, Paris 25.0% 11,164 14,025 (2,861) (20%) – – – n/c (1,713) (2,026) 314 15% 9,452 11,999 (2,547) (21%) 9,452 11,999 (2,547) (21%)Four Seasons Nile Plaza, Cairo 43.7% 11,223 14,513 (3,290) (23%) 4,490 11,989 (7,499) (63%) (9) 108 (117) (109%) 15,703 26,610 (10,907) (41%) 11,213 14,621 (3,408) (23%)Mövenpick El Gouna 29.3% 3,141 3,858 (717) (19%) – – – n/c (770) 519 (1,289) (248%) 2,371 4,377 (2,006) (46%) 2,371 4,377 (2,006) (46%)Four Seasons Resort Sharm El Sheikh 39.3% 1,123 5,427 (4,304) (79%) 136 1,646 (1,509) (92%) (140) 160 (301) (188%) 1,119 7,233 (6,114) (85%) 983 5,587 (4,604) (82%)Fairmont Zanzibar 30.0% – (182) 182 n/c – – – n/c – – – n/c – (182) 182 n/c – (182) 182 n/cFairmont Palm Hotel & Resorts 20.1% – – – n/c – – – n/c – (65) 65 n/c – (65) 65 n/c – (65) 65 n/c

Total 26.178 37,641 (11.463) (30%) 4,626 13,635 (9,008) (66%) (2,632) (1,304) (1,328) (102%) 28.172 49.971 (21.799) (44%) 23.546 36.337 (12.791) (35%)



Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)Net income before interest expense or income, income tax expense, and depreciation and amortisation charges is a commonly used measure of performance in several industries. Management uses its own definitions of EBITDA: “KHI EBITDA” and “Adjusted KHI EBITDA”. These two definitions are used by management:

●● As operating performance measures to compare operating performance and operational cash generation on a consistent basis, as they remove the impact of our asset base (depreciation and amortisation) and items not directly resulting from the Company’s operations;

●● For planning purposes, including the preparation of our internal annual operating budgets and forecasts;●● For analysis of acquisitions and divestitures; including the preparation of target acquisition plans and objectives;●● To establish targets for certain management performance and compensation;●● To evaluate KHI’s capacity to incur and service debt, satisfy operating obligations, fund capital expenditures and reinvest in our

business.

Both KHI EBITDA and Adjusted KHI EBITDA should be used by investors as important but supplemental measures of the Company’s financial performance. KHI EBITDA and Adjusted KHI EBITDA may include funds that are not available for the discretionary use by management due to the need to satisfy contractual capital expenditures in our hotels, committed development and property acquisitions or other commitments and uncertainties. Furthermore KHI EBITDA and Adjusted KHI EBITDA as calculated by the Company are not necessarily comparable to similarly titled measures used by other companies and (a) do not represent net income or cash flows from operating activities as defined by GAAP or IFRS; (b) are not necessarily indicative of cash available to fund cash flow needs; and (c) should not be considered as alternatives to net income, operating income, cash flows from operating activities or other financial information as determined under GAAP and IFRS.

●● KHI EBITDA: We amended the definition of EBITDA (net income before interest expense or income, income tax expense, and depreciation and amortisation charges) to exclude non-recurring gains and losses and non-cash effects of equity investments and minority interests. Examples of non-recurring gains or losses are gains and losses on dispositions of assets or investments, amortisation of deferred gains, impairment losses and write-offs, foreign currency gains or losses and debt prepayment penalties.

●● Adjusted KHI EBITDA: We adjusted KHI EBITDA to account for the full impact of our share in the EBITDA of unconsolidated equity investments and the share of KHI minority partners in the EBITDA of our subsidiaries. The Adjusted KHI EBITDA measure does not include the effect of actual cash distributions from our equity investments or cash distributed to our minority shareholders.

KHI EBITDA and Adjusted KHI EBITDA – Reconciliation to Financials

KHI Adj EBITDA Including Real Estate Sales KHI Adj EBITDA Excluding Real Estate Sales

Change Change (11 months ended 30 November, US$000) 2009 2008 $ % 2009 2008 $ %

KHI Net Profit 21,842 17,141 4,701 27% 16,698 7,797 8,901 114%

Depreciation* 29,461 28,409 1,052 4% 29,461 28,409 1,052 4%Project costs written-off – 26,417 (26,417) 0% – 26,417 (26,417) 0%Minority interests 4,051 3,585 466 13% 4,051 3,585 466 13%Income tax 1,697 4,295 (2,598) (60%) 1,697 4,295 (2,598) (60%)Share of results in associates (20,653) (40,425) 19,771 49% (20,653) (40,425) 19,771 49%Impairment of goodwill 36,629 – 36,629 0% 36,629 – 36,629 0%Interest expense (income), net 17,487 13,291 4,196 32% 17,487 13,291 4,196 32%Gains from sale of investments (37,522) (720) (36,801) (5109%) (37,522) (720) (36,801) (5109%)Other non-operating income or expense (2,680) (628) (2,052) (327%) (2,680) (628) (2,052) (327%)

KHI EBITDA 50,311 51,365 (1,054) (2%) 45,167 42,021 3,146 7%

Share of minory interest in subsidiaries net profit (4,051) (3,585) (466) (13%) (4,051) (3,585) (466) (13%)Share of minory interest in subsidiaries depreciation (2,110) (2,845) 735 26% (2,110) (2,845) 735 26%Share of minory interest in subsidiaries net finance cost (1,173) (1,413) 239 17% (1,173) (1,413) 239 17%Share of minory interest in subsidiaries tax expenses (87) 365 (452) (124%) (87) 365 (452) (124%)Share of minory interest in subsidiaries other gains/losses 387 222 165 74% 387 222 165 74%

Total Share of Minority Interest (7,034) (7,256) 221 3% (7,034) (7,256) 221 3%

Share of associates hotel EBITDA (Excl. R/E Sales) 23,546 36,337 (12,791) (35%) 23,546 36,337 (12,791) (35%)Share of real estate sales in associates 4,626 13,635 (9,008) (66%) – – – n/a

Adjusted KHI EBITDA 71,449 94,081 (22,632) (24%) 61,678 71,102 (9,424) (13%)

* Inclusive of depreciation at the hotel level and also the portion that forms part of Corporate G&A


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Non-recurring itemsKHI’s reported results include a number of one-time or extraordinary items that are non-recurring in nature. The following table provides a reconciliation of net income available to KHI shareholders excluding the effects of one-time items and extraordinary gains or losses as well as real estate sales:

Consolidated Per Share

Change Change (12 months ended 31 December, US$000) 2009 2008 $ % 2009 2008 $ %

Net profit 21,842 17,141 4,701 27% $0.13 $0.10 $0.03 32%

Project costs written-off – 26,417 (26,417) $0.00 $0.15 ($0.15)Gains from sale of investments (37,522) (720) (36,801) ($0.22) ($0.00) ($0.22)Impairment of goodwill 36,629 – 36,629 $0.22 $0.00 $0.22Other non-recurring general and admin expense – 850 (850) $0.00 $0.00 ($0.00)Net income from Sharm El Sheikh (946) (6,420) 5,474 ($0.01) ($0.04) $0.03Other non-operating income or expense (2,680) (628) (2,052) ($0.02) ($0.00) ($0.01)

Non- recurring items (4,519) 19,498 (24,018) (123%) ($0.03) $0.11 ($0.14)

Net profit before non-recurring items 17.323 36.640 (19.317) (53%) $0.10 $0.21 ($0.11) (51%)

Real estate sales and marketing (1,657) (6,403) 4,745 ($0.01) ($0.04) $0.03Profit from real estate sales in subsidiaries 5,144 9,345 (4,200) $0.03 $0.05 ($0.02)Profit from real estate sales in associates 4,626 13,635 (9,008) $0.03 $0.08 ($0.05)

Impact of ancillary real estate sales 8,113 16,576 (8,463) (51%) $0.05 $0.09 ($0.05) (49%)

Net profit before non-recurring items & real estate sales 9,210 20,063 (10,854) (54%) $0.05 $0.11 ($0.06) (52%)

Commitments and future capital expendituresKHI generates aggregate estimates for future capital expenditures based on a combination of estimates for projects that are in the design and construction phases, budgets for projects that have been tendered for construction as well as active construction projects that are in the implementation phase. Investors and shareholders should be aware that these estimates are subject to constant change depending on changed market conditions, regulations, zoning, scope and design, budgets, contractor performance, commodity and material prices, foreign exchange and other relevant variables.

We expect remaining total project costs for the five new development projects and three renovation projects to be US$306 million. KHI’s equity share of these costs is expected to be US$260 million before proceeds from debt financing proceeds or real estate sales.

The following is the estimated timing of cash disbursements (before proceeds from debt financing and real estate sales) for the Four Seasons Beirut, Four Seasons Marrakech, Fairmont & Raffles Makati, Raffles Seychelles and Mövenpick Accra developments:

In US$000,000 Total KHI as at 31 December 2009 Project Share

2010 260 2192011 46 412012 0 0

Total 306 260


Board of Directors

HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud

HRH Prince Alwaleed is the Chairman of our Board, a member of our Executive Committee and the president and a director of Kingdom 5-KR-124 and the president and sole director of Kingdom 5-KR-51, our principal shareholders.

He is the founder and Chairman of the Kingdom Establishment for Commerce and Trade, which was restructured in 1996 into the Kingdom Holding Company, and is a member of the board of directors of several companies in which he holds investments. A citizen of the Kingdom of Saudi Arabia, HRH Prince Alwaleed was born in 1955 and is fluent in English and Arabic.

Tarek Abdel-Meguid

Mr Abdel-Meguid joined the Board in 2006. He serves on the Board’s Remuneration Committee and chairs the Audit Committee. He is a founding partner of Perella Weinberg Partners, an independent, privately-owned financial services firm which provides corporate advisory and asset management services to clients around the world.

Prior to co-founding Perella Weinberg Partners in 2006, Mr Abdel-Meguid had over 25 years of investment banking experience at Morgan Stanley where he headed Worldwide Investment Banking and served on the firm’s 12-member Management Committee from 2000 to 2005. He also founded and managed Prince Gate Investors, a private equity investment vehicle within Morgan Stanley. He currently serves on the Board of Layalina Productions, and is a member of the Middle East Advisory Group of the Carnegie Endowment for International Peace.

Mr Abdel-Meguid holds a B.Sc. degree from McGill University and a Masters of Business Administration from Columbia University. He is a United States citizen, fluent in English and Arabic and has a working knowledge of French.

P.J. Shoucair

Mr Shoucair chairs the Board’s Remuneration Committee. Since 1996 he has been employed by Kingdom Holding Company as the international investment advisor to HRH Prince Alwaleed, and is responsible for direct investments, capital market activities and major investment projects in the Middle East and North Africa region.

Before joining Kingdom Holding Company, he was a senior management consultant in Saudi Arabia for Arthur D. Little. He holds a Masters in Business Administration from the University of Southern California. Born in 1966, Mr Shoucair is a citizen of the United States and is fluent in English and Arabic.

Shadi S. Sanbar, CPA

Mr Sanbar is a member of the Board’s Audit Committee. A United States Certified Public Accountant, Mr Sanbar joined Kingdom Holding Company as Chief Financial Officer in April 2007 and is a member of its Investment Committee. Since June 2005, he has been a special advisor to HRH Prince Alwaleed. In addition, Mr Sanbar is a Director of NASDAQ Dubai.

Mr Sanbar began his career in 1973 with Arthur Andersen in Los Angeles and become a Partner in 1984, heading its worldwide entertainment industry practice. In 1994, he transferred to Arthur Andersen’s Riyadh office. In 1996, he was appointed as a Managing Partner for the Assurance and Business Advisory for the Middle East. After Arthur Andersen’s merger with Ernst & Young in 2002, Mr Sanbar continued to work on large company audits and special examinations.

He holds a BA from the University of California in Los Angeles, and an MBA from the University of Oklahoma. Born in 1948, Mr Sanbar is a US citizen and is fluent in English and Arabic.

KHI’s Board is composed of shareholders, executives and non-executive directors. Their collective experience in the fields of finance, banking, asset management, IT, corporate governance, property and the hospitality industry provides KHI with a singular competitive edge.


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Dr Walid Arab Hashem

Dr Hashem is the CEO of Rotana Video & Audio Visual Company. He has been a Member of Majlis Ash Shura in the Kingdom of Saudi Arabia since April 2005 and is also an Associate Professor in the Economic Department of King Abdul Aziz University. Dr Hashem also serves as Vice President of the Board of Directors of Okaz Press Corporation.

He holds a Bachelor of Arts in Economics from the American University in Cairo and a Ph.D. in Economics from Georgetown University. Born in 1957, Dr Hashem is a citizen of the Kingdom of Saudi Arabia and is fluent in English and Arabic.

Ammar A. Alkhudairy

Mr Alkhudairy joined the Board in March 2007. He is the Chief Executive Officer, Managing Director and founding shareholder of Amwal Alkhaleej. Prior to founding Amwal, Mr Alkhudairy held a number of senior management positions at Saudi banking institutions. He was Banque Saudi Fransi’s Head of Strategic Business Development as well as Central Region Head and Country Head at Gulf International Bank. His professional track record spans a number of banking disciplines including M&A, Project Finance, Corporate Finance, Corporate Banking and Merchant Banking.

Mr Al Khudairy holds a Master’s degree in Engineering Administration from George Washington University as well as a B.Sc. in Civil Engineering. Born in 1963, Mr Alkhudairy is a citizen of the Kingdom of Saudi Arabia and is fluent in English and Arabic.

David Pace

David Pace has thirty years of international experience in finance, IT and management consultancy and holds several independent non-executive directorships (including KHI). Previously he spent 9 years in the GCC as Chief Financial Officer of Unicorn Investment Bank, the Bahrain-based Islamic investment bank, and Chief Financial Officer of Gulf Bank where he played a key role in transforming the Kuwaiti institution into one of the most profitable banks in the Middle East. Before relocating to the Middle East, David had a 17-years career at HSBC during which he has held a number of senior positions in finance.

Sarmad N. Zok

Mr Zok has been Chief Executive Officer of Kingdom Hotel Investments (KHI) since 2001 and its founding executive. He led the company’s US$1.6bn Initial Public Offering in 2006. He is a member of KHI’s Executive Committee and also serves on the Board of Directors. He has worked with Kingdom Hotel Partners LLC, a private equity fund operating in New York and London. Prior to 1999, Mr Zok founded the presence of KHI in the Middle East region and established its portfolio and management team. Prior to joining KHI, Mr Zok headed Forte plc’s development effort in the Emerging Markets and worked at HVS International, a leading hotel consulting and valuation firm in London covering European markets.

Mr Zok holds a Bachelor of Science in Hotel Management from the University of Surrey and a Masters of Arts in Property Valuation and Law from City University Business School in London. Mr Zok is a member of the Executive Committee and the Board of Directors of KHI and is a member of the board of directors of Mövenpick Hotels and Resorts AG, Fairmont Raffles Hotels and Four Seasons Hotels & Resorts. Mr Zok is fluent in English, French and Arabic.

Gordon Drake, ACA AMCT

Mr Drake, previously Finance Director, was appointed as Chief Financial Officer and to the Board on 1 April 2009. Mr Drake joined the Company in July 2007 as Vice President and Group Treasurer. In that role, he has secured financing in excess of $300 million in six separate transactions.

Previously at Rocco Forte Hotels, Mr Drake was Group Treasurer and Corporate Finance Manager with responsibility for capital raising, risk management as well as asset disposals. Prior to that, he worked in the Treasury departments of Pearson plc and Hammerson plc with multi-national capital markets and operational responsibilities. Mr Drake started his career with Ernst & Young in London and is a qualified Chartered Accountant with the Institute of Chartered Accountants for England and Wales.

Mr Drake holds a BSc Hons in Economics and Accounting from University of Bristol and an AMCT professional qualification with the Association of Corporate Treasurers. He is a British citizen.


Senior Management Team

Sarmad N. ZokChief Executive Officer

Samer Abu Ayash Msc. DICSenior Vice President, Design & Construction

Gordon Drake ACA AMCT Chief Financial Officer

Shazmah HakimGeneral Counsel, Corporate Secretary

Joel RussoSenior Vice President, Asset Management

KHI’s senior management team consists of leading industry professionals with hands-on experience of every aspect of successful asset management on both a regional and global basis. Working together, their leadership is helping to accelerate growth while building a platform for lasting success.


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A member of the Association of Engineers in Lebanon, Mr Abu Ayash has a wealth of experience in construction and design. Prior to joining KHI, he was Project Manager/Owner Representative for Société Immobilière Les Dunes in charge of the Holiday Inn Dunes Multi Complex development in Beirut. Previously, Mr Abu Ayash worked at Metito International in London − a leading environmental engineering firm − covering Middle East and Africa markets. Prior to that, he worked in various design and construction roles in the UK at the Engineering Division of Thames Water Utilities Ltd (including the London Water Ring Main Project), Howard Humphreys & Partners Consulting Engineers and Freeman Fox & Partners Consulting Engineers.

Mr Abu Ayash holds a Master of Science/DIC degree in Civil & Environmental Engineering from Imperial College in London and graduated from the American University of Beirut with a Bachelor of Engineering in Civil Engineering. He has dual Lebanese and British citizenship. He is fluent in English, Arabic and has a working knowledge of French.

Joel Russo

Joel Russo was appointed Head of Asset Management in September 2008. He joined the Company in 2006, as a Vice President of Asset Management for the MENA region.

His 18 years’ experience in the hospitality industry spans operations, consulting, valuation, development, design & construction and asset management. Mr Russo started his career at InterContinental Hotels Group in operations. Subsequently, he joined HVS where he performed hotel feasibility/market studies, property valuations and advisory services throughout Europe and the Middle East. He later joined HEI Hotels as Executive Vice President responsible for development, finance and hotel operations.

Mr Russo holds a Bachelor Degree in Hotel Management from the University of Surrey and has pursued post-graduate studies in Property Valuation & Law at the Cass Business School in London. He is a New Zealand citizen.

Shazmah Hakim

Shazmah Hakim was appointed General Counsel and Corporate Secretary on 1 April 2009. She joined the Company in April 2007 as a Vice President of Legal Affairs.

Mrs Hakim has over 11 years of legal experience. She was, prior to joining KHI, a Vice President and Senior Counsel at Marriott International with responsibility for the legal operations of Marriott’s hotels in the United Kingdom, Ireland, Middle East and Africa.

In addition, Mrs Hakim worked as a project finance associate at the Washington D.C. office of Orrick, Herrington & Sutcliffe.

Mrs Hakim holds a Juris Doctor from George Washington University and a Masters in International Business and Politics from New York University.

Sarmad N. Zok

Mr Zok has been Chief Executive Officer of Kingdom Hotel Investments (KHI) since 2001 and its founding executive. He led the company’s US$1.6bn Initial Public Offering in 2006. He is a member of KHI’s Executive Committee and also serves on the Board of Directors. He has worked with Kingdom Hotel Partners LLC, a private equity fund operating in New York and London. Prior to 1999, Mr Zok founded the presence of KHI in the Middle East region and established its portfolio and management team. Prior to joining KHI, Mr Zok headed Forte plc’s development effort in the Emerging Markets and worked at HVS International, a leading hotel consulting and valuation firm in London covering European markets.

Mr Zok holds a Bachelor of Science in Hotel Management from the University of Surrey and a Masters of Arts in Property Valuation and Law from City University Business School in London. Mr Zok is a member of the Executive Committee and the Board of Directors of KHI and is a member of the board of directors of Mövenpick Hotels and Resorts AG, Fairmont Raffles Hotels and Four Seasons Hotels & Resorts. Mr Zok is fluent in English, French and Arabic.

Gordon Drake, ACA AMCT

Mr Drake, previously Finance Director, was appointed as Chief Financial Officer and to the Board on 1 April 2009. Mr Drake joined the Company in July 2007 as Vice President and Group Treasurer. In that role, he has secured financing in excess of $300 million in six separate transactions.

Previously at Rocco Forte Hotels, Mr Drake was Group Treasurer and Corporate Finance Manager with responsibility for capital raising, risk management as well as asset disposals. Prior to that, he worked in the Treasury departments of Pearson plc and Hammerson plc with multi-national capital markets and operational responsibilities. Mr Drake started his career with Ernst & Young in London and is a qualified Chartered Accountant with the Institute of Chartered Accountants for England and Wales.

Mr Drake holds a BSc Hons in Economics and Accounting from University of Bristol and an AMCT professional qualification with the Association of Corporate Treasurers. He is a British citizen.

Samer Abu Ayash Msc. DIC

Samer Abu Ayash was appointed Head of Design & Construction in July 2008. He joined the Company in 1998, as an Owner Representative for the Four Seasons Hotel development in Beirut. In 2002, he became a Vice President Design & Construction with responsibilities for KHI’s hotel development projects in Lebanon as well as other design & construction activities relating to KHI’s Four Seasons, Fairmont and Mövenpick properties.


CorporateGovernance

The Company is registered in the Cayman Islands and its main offices are in the Dubai International Financial Centre. Its operations comply with all applicable corporate governance rules in both jurisdictions.

The Board of Directors

The Company’s business is managed by a Board of nine Directors. The Board is ultimately responsible and accountable for all operations of the Company. The Board approves the Company’s strategic plans and makes all decisions to implement such plans, such as choice of acquisitions, disposals, capital expenditure, budgets and borrowing.

At all times, two independent Directors ensure that the interests of minority shareholders are fairly and objectively represented.

The normal term of office for Directors is three years. However, in order to avoid disrupting the Board every three years, the terms of office of the Directors have been staggered in such a way that renewals or replacements will occur on an individual basis over the first three years following the 2006 IPO.

The Board meets at regular intervals. Typically, the Company holds at least four actual meetings per year. This is in addition to any number of telephonic meetings (as provided by our Articles) that may be required for the approval of decisions that exceed the powers of the Executive Committee (see below).

The Executive Committee

KHI’s management adopts a collective approach to key decision-making and to the formulation of Company procedures and strategies. Members of the management team meet on a regular basis to share information on Company activities and participate together in key decisions relating to the implementation of our strategy. The Chief Executive Officer makes day-to-day decisions. More important decisions, which may have a long-term impact on the development or financial performance of the Company, require the approval of the Executive Committee.

The Executive Committee is composed of HRH Prince Alwaleed, the Chairman of the Company and Sarmad Zok, Chief Executive Officer. The Executive Committee has a delegation of all powers of the Board that may be validly delegated to such a committee in accordance with our Articles of Association and applicable law (including, without limitation, powers in respect of the acquisition and disposition of investments up to US$10 million), provided that the Executive Committee’s exercise of such delegated powers is required to conform to any regulations that may be imposed on it by the Board.

The Directors

The Chairman of the Board is HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, who indirectly holds approximately 54% of the share capital of the Company. Prince Alwaleed is the owner of Kingdom Holding Company, which has interests (among others) in three major hotel operating companies (Mövenpick, Four Seasons and Fairmont Raffles). These companies manage hotels on behalf of the Company. However, at all times management of the Company ensures that all agreements signed with hotel operators partially owned by the Chairman or his group are negotiated and executed on arm’s length terms.

●● Mr P.J. Shoucair is the Executive Director responsible for International Investment at Kingdom Holding Company. ●● Mr Sarmad Zok is Chief Executive Officer of the Company. ●● Mr Gordon Drake is Chief Financial Officer of the Company. ●● Mr Shadi Sanbar is Chief Financial Officer of Kingdom Holding Company. ●● Mr Walid Arab Hashem is the CEO of Rotana Video & Audio Visual Company, a subsidiary of Kingdom Holding Company. ●● Mr Ammar Alkhudairy serves as an Independent Director on the Board of the Company. He founded Amwal Alkhaleej and, prior to

that, held senior management positions at Saudi banking institutions. ●● Mr Tarek Abdel-Meguid serves as an Independent Director on the Board of the Company. He is a founding partner of Perella

Weinberg Partners. ●● Mr David Pace serves as an Independent Director on the Board of the Company.

Our Directors are not under service contracts with the Company with respect to their roles as Directors; nor does the Company have contractual obligations to provide benefits to them upon termination of their directorships.


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The Audit Committee

The Audit Committee comprises four Directors: Mr Shadi Sanbar, Mr Ammar Alkhudairy, Mr Tarek Abdel-Meguid (Chairman) and Mr David Pace. The latter three are independent Directors.

The Committee operates in accordance with charters approved by the Board. The members of the two committees are designated by the Company’s Board. At least one member of the Committee must have particular experience in financial and accounting matters. The Committee may delegate to its members the exercise of particular competences. The Committee holds at least two ordinary meetings each year and may also hold extraordinary meetings when deemed necessary. The Company’s Board annually reviews the Audit Committee’s charter, following a recommendation by the Committee. The Audit Committee’s responsibilities include:

●● Examining and evaluating the efficiency of the Company’s controls and procedures. ●● Examining the Company’s semi-annual and annual financial statements and evaluating their completeness and consistency before

publication. ●● Advising our Board regarding the selection of external auditors. ●● Examining with the external auditors the framework and methodology of the annual audit, its results and any issues that may have

been raised by the external auditors during the execution of their work. ●● Examining and evaluating the independence of the external auditors and suggesting to the Board measures to be taken in order to

maintain that independence.

The Remuneration Committee

The Remuneration Committee comprises of Mr P.J. Shoucair (Chairman), Mr David Pace and Mr Tarek Abdel-Meguid, independent Director.

Our Remuneration Committee operates in accordance with charters approved by the Board. The Remuneration Committee may delegate to its members the exercise of particular competences. The Committee holds at least four ordinary meetings each year and may also hold extraordinary meetings when deemed necessary. Following a recommendation from the Remuneration Committee, the Company’s Board annually reviews the Committee’s charter as well. The Remuneration Committee’s responsibilities include:

●● Monitoring and recommending the level and structure of all direct and indirect remuneration of KHI’s Directors and senior management.

●● Monitoring and recommending awards under any deferred compensation plans and any incentive share plans implemented by the Company.

●● Monitoring and recommending separation agreements for Directors and senior management and determining forfeiture conditions of awards granted to them.

●● Developing a formal and transparent policy for determining the remuneration packages of Directors.

Board attendance

Remuneration Audit and Nomination Board committee committee

Total 3 2 1

Non-executive Directors

HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud 3 N/A N/A

Tarek Abdel-Meguid 3 2 1

P.J. Shoucair 3 N/A 1

Shadi S. Sanbar 3 1 N/A

Dr Walid Arab Hashem 3 N/A N/A

Ammar A. Alkhudairy 3 2 N/A

David Pace* 2 1 N/A

Executive Directors

Sarmad N. Zok 3 N/A N/A

Gordon A. Drake 2 N/A N/A

Ghaith A. Shocair** 1 N/A N/A

* David Pace was appointed a KHI Director on 17 July 2009** Mr Shocair served as KHI Director and Chief Financial Officer until 31 March 2009.


CorporateGovernance

Nomination

Appointments of Directors are made by the Board of Directors meeting as a collective body. The Board gives due consideration to the skills, experience and background of a candidate prior to his or her being considered for a vacancy. A candidate must receive unanimous approval of the existing Board members in order to be appointed to the Board. Each new Director, as well as any Directors that are coming up for reappointment, must submit themselves for election at the next general meeting of the Company following their appointment.

The Company Score is represented as a percentage multiplier with the baseline being 100%. The Board-approved multiplier and Company Score is applied to the Employee’s business-related objectives which account for 75% of the individual performance appraisal. The rating for people objectives, which accounts for 25% of the individual performance appraisal, is not affected by the Company Score.

Relations with shareholders

KHI is committed to transparency with institutional and private shareholders and follows a policy of open communication.

Senior management regularly holds meetings with analysts and institutional shareholders. As a key part of this effort, the senior management team visits London several times a year to participate in roadshows that attract prominent members of the international financial community.

The Company, being ruled by Cayman Islands law, is under no obligation to hold an Annual General Meeting. However, as a commitment towards best practice in corporate governance, the Company undertakes to hold Annual General Meetings open to all shareholders or holders of GDS.

In addition, the Company is committed to providing private investors with an Annual Report, which is also available on request to any shareholder or member of the financial community.

As a further commitment to excellent communication, we also regularly update KHI’s website (www.kingdomhotels. com) and release any price-sensitive information to the Dubai and London stock exchanges for posting on their appropriate sites.

Guidelines regarding insider trading

The Company keeps all members of staff informed about their duties with respect to handling of inside information, as well as dealings in KHI shares. The Directors and staff are well aware of the restrictions, ‘lock-up’ and ‘close’ periods applicable to trading in securities. Memos and guidelines regarding dealings (either selling or buying) in shares have been circulated within the Company. Policies are in place to ensure that no ‘insider dealing’ occurs and such policies will be regularly brought to the attention of all present and future members of KHI’s Board and staff.


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Directors’ report

A review of the Company’s activities and future developments including the financial performance during the year and key performance indicators is given on pages 07 to 49 and forms part of this report.

The description of KHI’s corporate governance arrangements on pages 42 to 44 also forms part of this report.

A description of the Company’s financial risk management objectives and policies and its exposure to price, credit liquidity and cash flow risk is contained in note 29 to the consolidated accounts on pages 95 and 101. Other matters material to the appreciation of the Company’s position are contained in the Chairman’s letter on page 04 and the Chief Executive’s review on page 05.

Results

The results for the year are shown in the consolidated income statement on page 51.

Annual General Meeting

This year’s Annual General Meeting will be held at Company’s offices located at The Gate Precinct, Building 3, Level 6, Dubai International Financial Centre on 11 May 2010 at 11.00am U.A.E. time.

Directors

Mr Ghaith Shocair resigned on 31 March 2009 and is replaced by Mr Gordon Drake.

Mr David Pace was appointed as an additional independent Director of the Company in July 2009. In this role, Mr Pace sits on the Audit and Remunerative Committees.

Biographical details of all the directors are on pages 38 to 39.

Auditor and disclosure of information to the auditor

Each of the Directors in office as of the date of approval of this report confirms that, so far as he/she is aware, there is no relevant audit information (being information needed by the auditor in connection with preparing its report) of which the auditor is unaware and that he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of that information.

Going concern

The Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.

By order of the Board

Shazmah Hakim Company Secretary


Remuneration report

The Remuneration Committee submits its report on remuneration for the year ended 31 December 2009.

The Remuneration Committee

The Remuneration Committee comprises Mr P J Shoucair (Chairman), Mr David Pace and Mr Tarek Abdel-Meguid, independent Directors.

The Remuneration Committee operates in accordance with charters approved by the Board. The Remuneration Committee may delegate to its members the exercise of particular competences. The Committee holds at least four ordinary meetings each year and may also hold extraordinary meetings when deemed necessary. Following a recommendation from the Remuneration Committee, the Company’s Board annually reviews the Remuneration Committee’s charter as well.

The Remuneration Committee’s responsibilities include:

●● Monitoring and recommending the level and structure of all direct and indirect remuneration of KHI’s Directors and senior management.

●● Monitoring and recommending awards under any deferred compensation plans and any incentive share plans implemented by the Company.

●● Monitoring and recommending separation agreements for Directors and senior management and determining forfeiture conditions of awards granted to them.

●● Developing a formal and transparent policy for determining the remuneration packages of Directors.

Long-term incentive plan

Pursuant to the approval of the long-term incentive plan (“LTIP”) by the Board of Directors, some senior management employees were granted a fixed number of Company shares for a three-year cliff vesting period.

There are no cash settlement alternatives. Number of shares (’000) Total fair value (US$’000)

2009 2008 2009 2008

As at 1 January 346 248 2,907 2,262

Granted during the year 502 170 1,255 1,270

Vested during the year (245) (72) (1,575) (333)

As at 31 December 603 346 2,587 3,199

Movements in the reserve for long-term incentive plan during the year are shown in the following table:

2009 2008 US$’000 US$’000

Balance at 1 January 1,809 1,181

Expense recognised during the year 716 1,295

Vested at cost (1,575) (667)

Balance at 31 December 950 1,809


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Short-Term BonusThe Company has a discretionary cash bonus policy. The Annual Plan of the Company outlines a number of key financial and business-related objectives which set the standard for overall performance delivery for both the Company and its employees, year on year. As part of the bonus payout process, the Board of Directors determines a Company Score, taking into consideration the actual performance against the set financial and business objectives.

Long-Term BonusCertain employees of the Company are also eligible to participate in a long-term incentive plan (LTIP) which is a stock-based incentive plan with a three-year cliff vesting period. The purpose of the LTIP plan is to drive long-term performance and help retain key personnel. Participants are selected for grants in a particular year based on seniority level and the individual’s performance and contribution to the business. There is no guarantee of selection from year to year. The Remuneration Committee has approved a range of stock grants for various band levels within the Company. The total quantum of the LTIP awards available for distribution in a particular year is determined by the Remuneration Committee. As far as an individual is concerned, the final rating received by an employee on his or her performance appraisal, determines whether the employee receives shares at the target, mid-point or high end of the range allocated for his or her band level.

Composition of members of the Board of Directors

Non-executive DirectorsIndependent Non-Executive Directors receive an annual payment of US$40,000 plus reimbursement of expenses relating to their directorship.

Executive directorsExecutive Directors do not receive payment for their services as a Board Member. Salary Other benefits Bonus Total LTIP

Sarmad Zok $550,500 $220,000 $550,000 $1,320,000 200,000 shares

Gordon Drake $200,000 $100,000 $150,000 $450,000 9,750 shares

2009 annual report supplementary information


Directors’ responsibilities

The primary responsibility of the Board is to foster the long-term success of the Company. This includes, but is not limited to:

●● Reviewing and guiding corporate strategy, risk management policies, financial planning, annual budgets and business plans as recommended by our management.

●● Selecting, compensating, monitoring and, when necessary, replacing officers and other key executives and overseeing succession planning.

●● Setting performance objectives.●● Monitoring the implementation of hotel management and other related

agreements and corporate performance.●● Overseeing major capital expenditures.●● Approving acquisitions and divestitures that exceed US$10 million.●● Reviewing Remuneration Committee’s resolutions relating to senior

management and Board remuneration.●● Monitoring and managing potential conflicts of interest of senior

management, Board members and shareholders.●● Ensuring the adequacy of our internal accounting and financial reporting

systems, including supporting our independent audit functions and ensuring that appropriate systems of control are in place, particularly systems for monitoring risk, financial controls and compliance with relevant laws.

●● Monitoring the effectiveness of corporate governance practices.●● Overseeing the process of corporate public disclosure and

communications.

Any related-party transaction must be approved by a majority of disinterested Directors. Directors declaring an interest abstain from participating.


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Relations with shareholders

KHI is committed to transparency with institutional and private shareholders and follows a policy of open communication. Senior management regularly holds meetings with analysts and institutional shareholders. As a key part of this effort, the senior management team visits London several times a year to participate in roadshows that attract prominent members of the international financial community.

The Company, being ruled by Cayman Islands law, is under no obligation to hold an Annual General Meeting. However, as a commitment towards best practice in corporate governance, the Company undertakes to hold Annual General Meetings open to all shareholders or holders of GDS.

In addition, the Company is committed to providing private investors with an Annual Report, which is also available on request to any shareholder or member of the financial community. As a further commitment to excellent communication, we also regularly update KHI’s website (www.kingdomhotels.com) and release any price-sensitive information to the Dubai and London stock exchanges for posting on their appropriate sites.

Effectiveness of Board

The Board of Directors of the Company bears responsibility for the Company’s internal controls and their adequacy. In addition, the Board has delegated responsibility relating to certain financial controls of the Company and their effectiveness to the Audit Committee. The Audit Committee also has responsibility for appointing (or renewing) an independent external auditor for the Company and determining their audit fees and terms of engagement. In 2008 the Company hired Ernst & Young to document and formalise its business processes and control framework for the Finance and Design & Construction departments of the Company. The Company has since extended its review of controls and processes with the appointment of Deloitte & Touche to undertake a corporate-wide review of all current business processes as well as to identify and comment on internal controls and key enterprise risks. These reviews began early in 2010 and are expected to be concluded mid-year.

Our responsibilities

At KHI, we are aware of our responsibilities to society and the environment. We recognise that our core business activities will have an impact – either directly or indirectly – on many of our stakeholders. We seek to manage these impacts for the well-being of our stakeholders because it makes good business sense.

The key areas in which we exercise our responsibilities include:

●● The environment: − Employing sustainable design for our developments and investments − Using environmentally-sound materials and practices during the construction of our properties

●● People: − Looking after and developing our own people − Ensuring the health and safety of our own people and sub-contractors − Creating jobs in developing countries, drawing on local expertise and offering training during the operational phase of projects

●● Customers: − Ensuring that KHI developments and investments meet our customers’ and occupiers’ requirements

●● Communities: − Investing in emerging markets which, in turn, raises those countries’ credibility as locations for inward investment − Selling real estate to investors whose confidence derives from the KHI brand − Establishing relationships and supporting local communities in the areas in which we operate.

We take many of these responsibilities into consideration at all stages throughout our projects and are currently evaluating how best to incorporate our responsibilities more formally into KHI’s investment and development criteria.

Our responsibilities


Independent auditors’ reportto the shareholders of Kingdom Hotel Investments

P.O. Box 926728th Floor – Al Attar Business Tower Sheikh Zayed Road Dubai, United Arab Emirates

Tel: 00 971 4332 4000 Fax: 00 971 4332 4004 [email protected] www.ey.com/me

Report on the Financial StatementsWe have audited the accompanying consolidated financial statements of Kingdom Hotel Investments (“the Company”) and its subsidiaries (together “the Group”), which comprise the consolidated balance sheet as at 31 December 2009, and the consolidated income statement, consolidated cash flow statement and consolidated statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2009 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

9 March 2010 Dubai


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Consolidated income statementfor the year ended 31 December 2009

2009 2008 Notes US$’000 US$’000

Revenue 6 246,415 278,725

Direct costs 6 (174,585) (197,101)Depreciation and amortisation of hotel property, plant and equipment 12,13 (28,553) (27,716)

Gross profit 43,277 53,908

General and administrative expenses 7 (15,765) (22,621)Sales and marketing expenses (real estate) (1,657) (6,403)Pre-opening expenses (4,589) (1,730)Depreciation and amortisation 12,13 (907) (693)

Operating profit 20,359 22,461

Share of results of associates 15 20,653 40,425Dividend income 492 495Gain on sale of available-for-sale financial assets 10,17 1,328 4,493Gain (loss) on sale of associates 15 28,312 (273)Gain (loss) on sale of development projects 16 7,882 (3,500)Gain on bargain purchase of subsidiaries 3 – 73Project costs 8 – (25,917)Impairment for available-for-sale financial assets 10,17 – (500)Other income 2,680 555Impairment of goodwill 13 (36,629) –

Profit before tax and finance income (costs) 45,077 38,312

Finance income 2,085 3,918Finance costs (19,572) (17,209)

Profit before tax 27,590 25,021

Income tax expense 9 (1,697) (4,295)

Profit for the year 25,893 20,726

Profit attributable to:Equity holders of the parent company 21,842 17,141Non-controlling interests 4,051 3,585

25,893 20,726

Earnings per share attributable to equity holders of the parent – Basic and diluted 11 US$0.13 US$0.10

The attached notes 1 to 33 form part of these consolidated financial statements.


Consolidated statement of comprehensive incomefor the year ended 31 December 2009

2009 2008 Notes US$’000 US$’000


Other comprehensive incomeNet exchange difference on translation of foreign operations 10 13,376 (27,416)Net movement on cash flow hedges 10 3,574 (7,733)Net (loss) gain on available-for-sale financial assets 10 (11,134) 163

Other comprehensive income for the year 5,816 (34,986)

Total comprehensive income for the year 31,706 (14,260)

Total comprehensive income attributable to:Equity holders of the parent company 27,385 (19,120)Non-controlling interests 4,324 4,860

31,706 (14,260)



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Consolidated statement of financial positionat 31 December 2009

2009 2008 Notes US$’000 US$’000

Assets Non-current assetsProperty, plant and equipment 12 1,261,514 1,053,971Goodwill and other intangible assets 13 66,447 103,788Investment properties 14 4,108 33,839Investments in associates 15 218,642 273,999Available-for-sale financial assets 17 50,665 71,958Other assets 18 30,191 23,898Deferred tax assets 9 14,050 11,291

1,645,617 1,572,744

Current assetsReal estate held for sale 4,105 3,249Inventories 5,358 5,470Trade and other receivables 24,308 21,888Due from related parties 28 594 3,268Pre-payments 52,609 30,898Cash and short-term deposits 19 351,282 256,393

438,256 321,166

Total assets 2,083,873 1,893,910

Equity and liabilitiesEquity attributable to shareholders of the parentShare capital 20 842,851 873,694Treasury shares 20 (63) (1,041)Share premium 21 181,449 181,074Capital reserve 21 24,304 –Foreign currency translation reserve 21 (16,488) (29,591)Cumulative changes in fair value 21 19,705 30,839Retained earnings 125,607 103,765Cash flow hedge reserve 21 (2,706) (6,280)Reserve for long-term incentive plan 21, 31 950 1,809

1,175,609 1,154,269Non-controlling interests 134,746 138,166

Total equity 1,310,355 1,292,435

Non-current liabilitiesInterest-bearing loans and borrowings 22 477,107 334,328Employees’ end of service benefits 23 5,328 4,555Retentions payable 24 8,994 4,638Deferred tax liabilities 9 48,876 46,191Other liabilities 25 18,952 43,764

559,257 433,476

Current liabilitiesTrade and other payables 26 154,868 92,729Interest-bearing loans and borrowings 22 51,346 71,186Retentions payable 24 5,202 2,699Due to related parties 28 2,845 1,385

214,261 167,999

Total liabilities 773,518 601,475

Total equity and liabilities 2,083,873 1,893,910

The attached notes 1 to 33 form part of these consolidated financial statements. Sarmad N. ZokChief Executive Officer

Gordon DrakeChief Financial Officer


Consolidated statement of changes in equityfor the year ended 31 December 2009

Attributable to equity holders of the parent company

Foreign Cash Reserve for currency Cumulative flow long-term Non- Share Treasury Share Capital translation changes in Retained hedge incentive controlling Total capital shares premium reserve reserve fair value earnings reserve plan Total interests equity US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

As at 1 January 2009 873,694 (1,041) 181,074 – (29,591) 30,839 103,765 (6,280) 1,809 1,154,269 138,166 1,292,435

Profit for the year – – – – – – 21,842 – – 21,842 4,051 25,893

Other comprehensive

income – – – – 13,103 (11,134) – 3,574 – 5,543 273 5,816

Total comprehensive

income – – – – 13,103 (11,134) 21,842 3,574 – 27,385 4,324 31,709

Treasury shares

purchased – (222) – – – – – – – (222) – (222)

Cancellation of

buyback shares

(note 20) (30,843) – – 24,304 – – – – – (6,539) – (6,539)

Net loans repaid

to minority

shareholders – – – – – – – – – – (1,271) (1,271)

Payment of

dividend/share

of sale of subsidiary – – – – – – – – – – (6,473) (6,473)

Long-term incentive

plan expense

recognised during

the year (note 31) – – – – – – – – 716 716 – 716

Long-term incentive

plan shares vested

during the year

(note 31) – 1,200 375 – – – – – (1,575) – – –

As at 31 December

2009 842,851 (63) 181,449 24,304 (16,488) 19,705 125,607 (2,706) 950 1,175,609 134,746 1,310,355



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Consolidated statement of changes in equityfor the year ended 31 December 2009

Attributable to equity holders of the parent company

Foreign Cash Reserve for currency Cumulative flow long-term Non- Share Treasury Share translation changes in Retained hedge incentive controlling Total capital shares premium reserve fair value earnings reserve plan Total interests equity US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

As at 1 January 2008 873,694 (1,220) 180,993 (900) 30,676 86,624 1,453 1,181 1,172,501 144,749 1,317,250

Profit for the year – – – – – 17,141 – – 17,141 3,585 20,726

Other comprehensive income – – – (28,691) 163 – (7,733) – (36,261) 1,275 (34,986)

Total comprehensive income – – – (28,691) 163 17,141 (7,733) – (19,120) 4,860 (14,260)

Treasury shares purchased – (407) – – – – – – (407) – (407)

Minority interest in existing

subsidiaries acquired (note 3) – – – – – – – – – (11,419) (11,419)

Minority interest in

development projects – – – – – – – – – 9,567 9,567

Net loans repaid to minority

shareholders – – – – – – – – – (6,008) (6,008)

Payment of dividend – – – – – – – – – (3,583) (3,583)

Long-term incentive

plan expense

recognised during the year

(note 31) – – – – – – – 1,295 1,295 – 1,295

Long-term incentive plan

shares vested during the year

(note 31) – 586 81 – – – – (667) – – –

As at 31 December 2008 873,694 (1,041) 181,074 (29,591) 30,839 103,765 (6,280) 1,809 1,154,269 138,166 1,292,435



Consolidated cash flow statementfor the year ended 31 December 2009

2009 2008 Notes US$’000 US$’000

Operating activitiesProfit before tax 27,590 25,021Adjustments for:Depreciation and amortisation 12,13 29,460 28,409Share of results of associates 15 (20,653) (40,425)Dividend income on available-for-sale financial assets (492) (495)Finance income (2,085) (3,918)Finance costs 19,572 17,209Project costs written off 8 – 25,917Impairment of goodwill 13 36,629 –(Gain) loss on sale of associates 15 (28,312) 273(Gain) loss on sale of development project 16 (7,882) 3,500Gain on sale of available-for-sale financial assets 17 (1,328) (4,493)Impairment for available-for-sale financial assets 17 – 500Gain on bargain purchase of subsidiaries 3 – (73)Employees’ end of service benefits provided 23 1,556 1,978Long-term incentive plan expense 31 716 1,295

54,771 54,698Changes in operating assets and liabilities:Trade and other receivables (2,420) 7,880Pre-payments (17,568) 632Inventories 112 256Other long-term assets 2,700 (32)Trade and other payables 70,813 12,034Other financial liabilities (24,813) 34,067 Real estate held for sale (856) 1,685Related party balances 1,007 (1,459)

Cash generated from operations 83,746 109,761Interest paid (29,130) (20,309)Income taxes paid (2,286) (740)Employees’ end of service benefits paid 23 (797) (612)

Net cash flows from operating activities 51,533 88,100

Investing activitiesNet purchase of property, plant and equipment (185,910) (148,525)Acquisition of non-controlling interests 3 – (12,027)Purchase of investment properties 14 (94) (3,487)Proceeds from sale of available-for-sale investments 17 11,487 8,200Proceeds from sale of associates 15 70,000 15,322Proceeds from sale of development project 16 5,657 23,900Dividends received 12,098 20,445Interest received 2,085 3,918Movement in restricted cash 19 664 (1,441)

Net cash flows used in investing activities (84,013) (93,695)

Financing activitiesRepayment of borrowings (30,000) (31,350)Proceeds from borrowings 167,505 125,444Net loans repaid to minority shareholders (1,271) (6,008)Purchase of treasury shares (6,761) (407)Dividends paid to minority shareholders (6,473) (3,583)

Net cash flows from financing activities 123,000 84,096

Net increase in cash and cash equivalents 90,520 78,501Net foreign exchange difference (1,303) (5,850)Cash and cash equivalents at 1 January 239,502 166,851

Cash and cash equivalents at 31 December 19 328,719 239,502



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Notes to the consolidated financial statementsat 31 December 2009

1 Corporate information

Kingdom Hotel Investments is a limited liability company incorporated in the Cayman Islands under Commercial Registration No. CR-100669 issued on 22 May 2000. The Company’s registered office is c/o Maples & Calder, South Church Street, George Town, PO Box 309, Grand Cayman, Cayman Islands. The Company has a branch in the Dubai International Financial Centre which was registered on 7 September 2005. The Company and its subsidiaries (“the Group”) are engaged in hospitality investments and its objectives are to acquire, develop, finance and actively asset manage high-quality hotels in key destinations in the Middle East, Africa and selectively in Asia and Europe.

The Company is quoted on NASDAQ Dubai and has Global Depository Shares traded on the London Stock Exchange.

Kingdom Hotel Investments is a subsidiary of Kingdom Holding Company (KHC), which is listed on the Saudi Stock Exchange.

A full listing of all group companies, including joint venture companies, is contained in note 32 to these consolidated financial statements.

The consolidated financial statements of Kingdom Hotel Investments (“the Company”) for the year ended 31 December 2009 were authorised for issue in accordance with a resolution of the Directors on 9 March 2010.

2 Summary of significant accounting policies

Basis of preparationThe consolidated financial statements have been prepared on a historical cost basis, except for investment properties, derivative financial instruments and available-for-sale financial assets that have been measured at fair value. The presentation and functional currency of the consolidated financial statements is United States dollars (US$), as a significant proportion of the Group’s assets, liabilities, income and expenses are US$ denominated. However, certain subsidiaries have functional currencies other than US$, in which case the respective local currency is the functional currency and the US$ is the presentation currency. The consolidated financial statements are presented in US dollar and all values are rounded to the nearest thousand (US$’000) except where otherwise stated.

Statement of complianceThe consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.

Basis of consolidationBasis of consolidation from 1 January 2009The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (together “the Group”) as at 31 December 2009.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Losses are attributed to the non-controlling interest even if that results in a deficit balance. If the Group loses control over a subsidiary, it:

– Derecognises the assets (including goodwill) and liabilities of the subsidiary– Derecognises the carrying amount of any non-controlling interest– Derecognises the cumulative translation differences, recorded in equity– Recognises the fair value of the consideration received– Recognises the fair value of any investment retained– Recognises any surplus or deficit in profit or loss– Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss.



2 Summary of significant accounting policies (continued)

Basis of consolidation prior to 1 January 2009In comparison to the above-mentioned requirements which were applied on a prospective basis, the following differences applied:

●● Non-controlling interests represented the portion of profit or loss and net assets that were not held by the Group and were presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from the parent shareholders’ equity. Acquisitions of non-controlling interests were accounted for using the parent entity extension method, whereby the difference between the consideration and the book value of the share of the net assets acquired was recognised in goodwill.

●● Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover these.

●● Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost.

Changes in accounting policies and disclosuresThe accounting policies adopted are consistent with those of the previous financial year except as follows:

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2009:

– IFRS 2 Share-based Payments: Group Cash-settled Share-based Payment Transactions effective 1 January 2010 (early adopted)

– IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective 1 July 2009 (early adopted) including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS 39

– IAS 1 Presentation of Financial Statements effective 1 January 2009

– IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation effective 1 January 2009

– IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items effective 1 July 2009 (early adopted)

– IFRIC 9 Remeasurement of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement effective for periods ending on or after 30 June 2009

– IFRIC 13 Customer Loyalty Programmes effective 1 July 2008

– IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective 1 October 2008

– IFRIC 17 Distributions of Non-cash Assets to Owners

– IFRIC 18 Transfers of Assets from Customers effective 1 July 2009 (early adopted)

– Improvements to IFRSs (May 2008)

– Improvements to IFRSs (April 2009, early adopted)


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Changes in accounting policies and disclosures (continued)Adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group. They did, however, give rise to additional disclosures, including in some cases revisions to accounting policies.

The principal effects of these changes are as follows:

IFRS 2 Share-based Payment (Revised)The IASB issued an amendment to IFRS 2 which clarifies the definition of vesting conditions and prescribes the treatment for an award that is cancelled. The Group adopted this amendment as of 1 January 2009. It did not have an impact on the financial position or performance of the Group as no events occurred that this interpretation relates to.

The IASB issued an amendment to IFRS 2 that clarified the scope and the accounting for group cash-settled share-based payment transactions. The Group adopted this amendment as of 1 January 2009. It did not have an impact on the financial position or performance of the Group.

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)The Group adopted the revised standard from 1 January 2009. IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results.

IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.

The changes by IFRS 3 (Revised) and IAS 27 (Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with non-controlling interests. The change in accounting policy was applied prospectively and had no material impact on earnings per share.

IAS 1 Presentation of Financial StatementsThe revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented in a reconciliation of each component of equity. In addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group has elected to present two statements.

IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations Arising on LiquidationThe standards have been amended to allow a limited scope exception for puttable financial instruments to be classified as equity if they fulfil a number of specified criteria. The adoption of these amendments did not have any impact on the financial position or performance of the Group.

IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged ItemsThe amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The Group has concluded that the amendment will have no impact on the financial position or performance of the Group, as the Group has not entered into any such hedges.

IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and MeasurementThis amendment to IFRIC 9 requires an entity to assess whether an embedded derivative must be separated from a host contract when the entity reclassifies a hybrid financial asset out of the fair value through profit or loss category. This assessment is to be made based on circumstances that existed on the later of the date the entity first became a party to the contract and the date of any contract amendments that significantly change the cash flows of the contract. IAS 39 now states that if an embedded derivative cannot be reliably measured, the entire hybrid instrument must remain classified as at fair value through profit or loss.

IFRIC 13 Customer Loyalty ProgrammesIFRIC 13 requires customer loyalty credits to be accounted for as a separate component of the sales transaction in which they are granted. A portion of the fair value of the consideration received is allocated to the award credits and deferred. This is then recognised as revenue over the period that the award credits are redeemed.

The Group does not have any such programmes.




Changes in accounting policies and disclosures (continued)IFRIC 16 Hedges of a Net Investment in a Foreign OperationThe interpretation is to be applied prospectively. IFRIC 16 provides guidance on the accounting for a hedge of a net investment. As such it provides guidance on identifying the foreign currency risks that qualify for hedge accounting in the hedge of a net investment, where within the group the hedging instruments can be held in the hedge of a net investment and how an entity should determine the amount of foreign currency gain or loss, relating to both the net investment and the hedging instrument, to be recycled on disposal of the net investment.

IFRIC 17 Distributions of Non-cash Assets to OwnersThis interpretation is effective for annual periods beginning on or after 1 July 2009 with early application permitted. It provides guidance on how to account for non-cash distributions to owners. The interpretation clarifies when to recognise a liability, how to measure it and the associated assets, and when to derecognise the asset and liability. The Group does not expect IFRIC 17 to have an impact on the consolidated financial statements as the Group has not made non-cash distributions to shareholders in the past.

IFRIC 18 Transfer of Assets from CustomersIFRIC 18 provides guidance on accounting for transfers of assets where cash is used to purchase those items of property, plant and equipment, which an entity receives from a customer, that is either used to connect the customer to a network, or provide the customer with ongoing access to a supply of goods and services. The interpretation is effective prospectively for financial years beginning on or after 1 July 2009.

Improvements to IFRSsIn May 2008 and April 2009 the IASB issued an omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Group.

●● IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: Clarifies that the disclosures required in respect of non-current assets and disposal groups classified as held for sale or discontinued operations are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required for such non-current assets or discontinued operations. The Group doesn’t have any non-current assets held for sale.

●● IFRS 8 Operating Segments: Clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker.

●● As the Group’s chief operating decision maker does review segment assets and liabilities, the Group has continued to disclose this information in Note 5.

●● IAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in accordance with IAS 39 Financial Instruments: Recognition and Measurement are not automatically classified as current in the statement of financial position. The Group analysed whether the expected period of realisation of financial assets and liabilities differed from the classification of the instrument. This did not result in any reclassification of financial instruments between current and non-current in the statement of financial position.

●● IAS 7 Statement of Cash Flows: Explicitly states that only expenditure that results in recognising an asset can be classified as a cash flow from investing activities. This amendment does not impact the Group as no business combination was completed in 2009.

●● IAS 16 Property, Plant and Equipment: Replaces the term “net selling price” with “fair value less costs to sell”. The Group amended its accounting policy accordingly, which did not result in any change in the financial position.

●● IAS 20 Accounting for Government Grants and Disclosures of Government Assistance: Loans granted with no or low interest will not be exempt from the requirement to impute interest. Interest is to be imputed on loans granted with below-market interest rates. This amendment did not impact the Group as no government assistance or grant has been received.

●● IAS 23 Borrowing Costs: The definition of borrowing costs is revised to consolidate the two types of items that are considered components of ‘borrowing costs’ into one – the interest expense calculated using the effective interest rate method calculated in accordance with IAS 39. The Group has amended its accounting policy accordingly which did not result in any change in its financial position.


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Changes in accounting policies and disclosures (continued)Improvements to IFRSs (continued)●● IAS 36 Impairment of Assets: When discounted cash flows are used to estimate ‘fair value less cost to sell’ additional disclosure is

required about the discount rate, consistent with disclosures required when the discounted cash flows are used to estimate ‘value in use’. This amendment had no immediate impact on the consolidated financial statements of the Group because the recoverable amount of its cash generating units is currently estimated using ‘value in use’.

The amendment also clarified that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. The amendment has no impact on the Group as the annual impairment test is performed before aggregation.

●● IAS 38 Intangible Assets: Expenditure on advertising and promotional activities is recognised as an expense when the Group either has the right to access the goods or has received the service. This amendment has no impact on the Group because it does not enter into such promotional activities.

The reference to there being rarely, if ever, persuasive evidence to support an amortisation method of intangible assets other than a straight-line method has been removed. The Group reassessed the useful lives of its intangible assets and concluded that the straight-line method was still appropriate.

Real estate held for sale Real estate held for sale represents development properties which are valued at the lower of cost and net realisable value. Cost includes development and holding costs and interest incurred from commencement of construction until the point that the property is ready for sale. Net realisable value is based on estimated selling price less any further costs expected to be incurred on completion and disposal.

Revenue from the sale of real estate is recognised when the significant risks and rewards of ownership of the property have passed to the buyer and can be measured reliably. Risks and rewards are considered to have passed to the buyer at the time the purchaser has control of the asset, which is generally when the title passes.

Intangible assetsOther than goodwill, intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the consolidated income statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated income statement in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash -generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

Amortisation is calculated on a straight-line basis over the estimated useful lives to their residual values as follows:

• Land use rights over the period of the use

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.




Share-based payment transactionsEmployees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by the quoted share price of the Company.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the counterparty are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

Transactions in foreign currenciesIn the accounts of individual Group companies, transactions in foreign currencies are recorded initially at the prevailing rate at the date of the transaction. At the year end, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of exchange prevailing at the balance sheet date. All foreign exchange gains and losses are taken to the income statement with the exception of exchange differences arising on monetary assets and liabilities that form part of the Group’s net investment in foreign subsidiaries, associates and joint ventures. These are taken directly to equity until the disposal of the net investment at which time they are recognised in the income statement.

Foreign group companiesThe assets and liabilities of foreign operations are translated into dollars at the rate of exchange prevailing at the balance sheet date and their income statements at average exchange rates for the year. The exchange differences arsing on translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the income statement.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.


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Property, plant and equipment With the exception of land and assets under construction, property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and any impairment in value. Such cost includes the cost of replacing part of the property, plant and equipment when that cost is incurred, if the recognition criteria are met. Depreciation is provided on a straight-line basis over their estimated useful economic life to reduce the assets to their estimated residual values as follows:

Equipment 7 to 10 yearsBuildings and leasehold improvements 40 to 50 years, or shorter of the lease termFurniture and fixtures 10 years Vehicles 4 to 8 years

No depreciation is charged on land or assets under construction.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

Borrowing costsBorrowing costs directly attributable to the construction of qualifying assets, which are assets that necessarily take a substantial period of time to prepare for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognised as interest payable in the income statement in the period in which they are incurred.

Business combinations and goodwill Business combinations are accounted for using the purchase method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquired. The non-controlling interest is measured at the proportionate share of the acquire’s identifiable net assets. Transaction costs directly attributable to the acquisition form part of the acquisition costs.

Business combinations achieved in stages are accounted for as separate steps. Any additional acquired shares of interest do not affect previously recognised goodwill.

Contingent consideration is recognised if, and only if, the Group has a present obligation, the economic outflow is more likely than not and a reliable estimate is determinable. Subsequent adjustments to the contingent consideration affect goodwill.

Goodwill is initially measured at cost being the excess of the consideration transferred over the Group’s net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquired are assigned to those units. Each unit to which goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Available-for-sale financial assetsInvestments classified as available-for-sale are initially stated at cost, being the fair value of consideration given, including acquisition charges associated with the investment.

After initial recognition, available-for-sale financial assets are measured at their fair value using quoted market rates or using recent arms length transactions between knowledgeable willing parties, reference to the current fair value of another instrument that is substantially the same, or discounted cash flow analysis. Gains and losses are recognised as a separate component of equity until the investment is sold or impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.




Impairment of non-financial assets (excluding goodwill)At each balance sheet date, the Group reviews the carrying amounts of its assets to assess whether there is an indication that those assets may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows attributable to the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment is treated as a revaluation increase.

The following criterion is also applied in assessing impairment of specific associates:

AssociatesAfter application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss of the Group’s investment in its associates. The Group determines at each balance sheet date whether there is objective evidence that the investment in associate is impaired. If this is the case the Group calculates the amount of impairment as being the difference between the fair value of the associate and the acquisition cost and recognises the amount in profit or loss.

Interest in a joint ventureA joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The Group combines its share of each of the assets, liabilities, income and expenses of the joint venture with similar items, line by line, in its consolidated financial statements. The financial statements of the joint venture are prepared for the same reporting year as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

When the Group contributes or sells assets to the joint venture, any portion of gain or loss from the transaction is recognised based on the substance of the transaction. When the Group purchases assets from the joint venture, the Group does not recognise its share of the profits of the joint venture from the transaction until it resells the assets to an independent party.

Investments in associatesThe Group’s investments in its associates are accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture.

Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised or separately tested for impairment. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The income statement reflects the share of the results of operations of the associate.

When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised profits and losses resulting from transactions between the Group and its associates are eliminated to the extent of the interest in the associate.

The reporting dates of the associate and the Group are identical and the associates’ accounting policies conform to those used by the Group for like transactions and events in similar circumstances.


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Investment propertiesInvestment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties (completed or under construction) are stated at fair value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal.

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale.

For transfer from investment property to owner-occupation property or inventories, the deemed cost of property for subsequent accounting is its fair value at the date of change in use. If the property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. For a transfer from inventories to investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss. When the Group completes the construction or development of a self-constructed investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss.

InventoriesInventories are stated at the lower of cost and net realisable value. Inventories include food, beverage and other operating supplies and are stated at cost, which is arrived at using the weighted average cost method. Inventories also include operating equipment (including chinaware and silverware) which are stated at cost, net of depreciation.

Net realisable value is the estimated selling price in the ordinary course of business. Cost comprises purchase price. Operating equipment in circulation is expensed once it leaves the stores.

Trade and other receivables Trade receivables are recognised and carried at original invoice amounts less an allowance for any amounts estimated to be uncollectible. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

Cash and cash equivalentsCash and cash equivalents consist of cash at hand and bank and short-term deposits with an original maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents consists of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Interest-bearing loans and borrowingsAll interest-bearing loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs directly attributable to the borrowing.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.




Derecognition of financial assets and liabilitiesFinancial assetsA financial asset (or, where applicable, a part of a financial asset) is derecognised when:

●● the rights to receive cash flows from the asset have expired;

●● the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

●● the Group has transferred its rights to receive cash flows from the asset and either a) has transferred substantially all the risks and rewards of the asset, or b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged or cancelled or it expires.

If an existing financial liability is replaced by another from the same lender, on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in the income statement.

Pensions and employees’ end-of-service benefitsThe Group has various defined contribution pension schemes in accordance with the local conditions and practices in the countries in which it operates. The amount charged to the income statement in respect of pension costs is the contributions payable in the year. Differences between contributions payable during the year and contributions actually paid are shown as either accrued liabilities or prepaid assets in the balance sheet.

Employees’ end-of-service benefits are provided in accordance with the labour laws of the countries in which the Group operates.

LeasesThe Group has entered into various operating leases, the payments under which are treated as rentals and charged to the income statement on a straight-line basis over the lease terms.

Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration receivable excluding discounts, rebates and other sales taxes or value added taxes. The following specific recognition criteria also apply:

Hotels Revenue in respect of hotel accommodation, food and beverage sales and related services is recognised at the point at which the services are rendered.

Other revenue comprises fees from consulting, business development, asset management services and real estate sales. Fees from consulting, business development and asset management services are recognised when the services are provided.

Revenue from the sale of real estate is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered to have passed to the buyer at the time the purchaser has control of the asset, which is generally when the title passes.

Interest incomeInterest income is recognised as the interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

Rental incomeRental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term.

DividendsRevenue is recognised when the Group’s right to receive payment is established.


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Income taxesIncome tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised on all temporary differences at the balance sheet date between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, with the following exceptions:

●● where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

●● in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

●● deferred income tax assets are recognised only to the extent that it is probable that a taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the asset is realised or the liability is settled, based on tax rates and tax laws enacted or substantively enacted at the balance sheet date.

Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise, income tax is recognised in the income statement.

Derivative financial instruments and hedge accountingThe Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as liabilities when the fair value is negative.

The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

For the purposes of hedge accounting, hedges are classified as:

●● fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment (except for foreign currency risk); or

●● cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction foreign currency risk in an unrecognised firm commitment; or

●● hedges of a net investment in a foreign operation.




Derivative financial instruments and hedge accounting (continued)At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the income statement. The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends on the nature of the hedging relationship, as follows:

Fair value hedges The change in the fair value of a hedging derivative is recognised in the income statement. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognised in profit or loss.

For fair value hedges related to items carried at amortised cost, the adjustment to carrying value is amortised through the income statement over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument, for which the effective interest rate method is used, is amortised through the income statement.

If the hedge item is derecognised, the unamortised fair value is recognised immediately in the income statement.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the income statement. The changes in the fair value of the hedging instrument are also recognised in the income statement.

Cash flow hedgesThe effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is recognised immediately in the income statement.

Amounts taken to equity are transferred to the income statement when the hedged transaction affects the income statement, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs.

Start-up cost and pre-operating expenseStart-up cost and non-construction related expenses are expensed as incurred. Pre-operating expenses are expensed as incurred.

Treasury sharesOwn equity instruments which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration is recognised in capital reserves.


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Significant accounting estimatesEstimation uncertaintyThe key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

●● Impairment of goodwill: The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from each cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

●● Valuation of investment properties: The Group hires the services of third party valuers and uses its own resources for obtaining estimates of the valuation of investment properties.

●● Purchase price allocation: The Group hires the services of third party valuers and uses its own resources to complete a final purchase price allocation exercise for assets and liabilities acquired in a business combination.

●● Useful lives of property, plant and equipment: The useful lives, residual values and methods of depreciation of property, plant and equipment are reviewed, and adjusted if appropriate, at each financial year end. In the review process, the Group takes guidance from recent acquisitions, as well as market and industry trends.

●● Impairment of available-for-sale financial assets: The Group classifies certain financial assets as available-for-sale and recognises movements in their fair values in equity. When the fair value declines, management makes assumptions about the decline in value to determine whether it is an impairment that should be recognised in profit or loss.

●● Impairment of non-financial assets: The Group’s impairment test for goodwill and intangible assets with indefinite useful lives is based on value in use calculations that use a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset base of the cash-generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash-generating units, including a sensitivity analysis, are further explained in Note 13.

●● Deferred tax assets: Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

●● Fair value of financial instruments: Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flows model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.



3 Business combination and acquisitions of minority interests

2009There were no acquisitions during the year ended 31 December 2009.

2008a. Increase of effective share in investment in Serena Beach CompanyOn 1 July 2008, the Group acquired, through its subsidiary Kingdom 5-KR 153 Ltd, an additional 7.3% interest in Serena Beach Company for US$2 million.

The increase in goodwill on acquisition is as follows:

2008 US$’000

Cost of the Group’s additional interest in the subsidiary 2,027Non-controlling interest’s share of the assets and liabilities reflected in the consolidated statement of financial position (1,346)

Goodwill 681

b. Increase of effective share in investment in Kingdom Kenya 01 Ltd (Kenya)On 1 November 2008, the Group acquired, through its subsidiary Kingdom �5-KR 166 Ltd, an additional 30% interest in Kingdom 5-KR 181 Ltd which is the 100% shareholder in Kingdom Kenya 01 Limited for US$10 million.

Goodwill on acquisition is as follows:

2008 US$’000

Cost of the Group’s additional interest in the subsidiary 10,000Non-controlling interest’s share of the assets and liabilities reflected in the consolidated statement of financial position (10,073)

Gain on bargain purchase of the subsidiary 73

4 Investment in joint venture

The Group’s joint venture is disclosed in note 32 to the consolidated financial statements. The Group’s aggregate share in the assets and liabilities of the joint venture, which is proportionately consolidated, is as follows:

2009 2008 US$’000 US$’000

Current assets 7,767 7,943Non-current assets 53,982 52,008

61,749 59,951

Current liabilities 16,489 40,468Non-current liabilities 30,279 8,734

46,768 49,202

Net investment in joint venture 14,981 10,749


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4 Investment in joint venture (continued)

The Group’s aggregate share of the income and expenses of the joint venture is as follows:

2009 2008 US$’000 US$’000

Revenues 27,757 40,289Direct costs (21,388) (31,104)

Gross profit 6,369 9,185Other expenses (3,888) (3,859)

2,481 5,326Income tax expense (603) (1,504)


5 Segment information

For management purposes, the Group is organised into business units based on services provided in the hospitality industry, as well as geographical locations.

Business segments comprise:

●● Hotel services, and

●● Real estate sales

The Group’s business segments are based on the nature of the Group’s operations. The primary business segment in which the Group operates comprises the provision of hospitality services to guests through investment in high-quality hotels. Real estate revenue and results are shown separately. However, real estate assets and liabilities cannot be segregated due to impracticality as real estate operations are not viewed as a core business activity and are considered an integral part of the operations of the concerned operating entities.

The geographical areas are organised and managed separately, with each segment representing a strategic business area that offers services to guests. The Group’s operations are organised on a worldwide basis into four geographical segments based on the location of physical assets and where the guests stay:

●● Middle East and North Africa

●● Sub-Saharan Africa

●● Asia

●● Europe

The accounting policies of the segments are the same as those described in note 2. The Group evaluates the performance of its segments and allocates resources to them based on this evaluation. No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements.

Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with third parties.



5 Segment information (continued)

Year ended 31 December 2009

Sub-Saharan Total Corporate MENA(1) Africa Asia Europe operations US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Results:Hotel revenue – 95,307 52,250 71,442 – 218,999Real estate revenue – 6,392 19,058 705 – 26,155Other revenue 1,261 – – – – 1,261

Total revenue 1,261 101,699 71,308 72,147 – 246,415

Hotel results – 25,951 2,669 3,388 – 32,008Real estate results – 5,090 4,607 (1,346) – 8,351Other profit 1,261 – – – – 1,261General and administrative expenses (14,773) (5,234) (490) (764) – (21,261)

Operating profit (loss) (13,512) 25,807 6,786 1,278 – 20,359

Share of results of associates – 16,707 (474) – 4,420 20,653Net interest income (expense) (3,381) (4,652) (2,377) (7,077) – (17,487)Gain on sale of AFS – 1,328 – – – 1,328Gain on sale of associates – 28,312 – – – 28,312Gain on sale of development projects – – 2,211 5,671 – 7,882Dividend income – 492 – – – 492Impairment of goodwill – – (13,000) (23,629) – (36,629)Other income (expense) 2,356 788 (83) (381) – 2,680Income tax (expense) credit – (1,369) (1,188) 860 – (1,697)Non-controlling interests – (5,035) 352 632 – (4,051)

Net profit (loss) (14,537) 62,378 (7,773) (22,646) 4,420 21,842

Assets and liabilities:Segment assets 298,084 682,701 297,143 587,303 – 1,865,231Investments in associates – 125,979 2,615 – 90,048 218,642

Total assets 298,084 808,680 299,758 587,303 90,048 2,083,873

Total liabilities 107,905 330,323 111,127 224,163 – 773,518

Other segmental information:Additions to: Property, plant and equipment 7 62,152 39,227 73,312 – 204,566 Investment properties – 94 – – – 94Finance income 1,656 104 34 291 – 2,085Finance costs (5,037) (4,756) (2,411) (7,368) – (19,572)Depreciation of hotel property, plant and equipment – (7,982) (7,143) (13,540) – (28,665)Income tax (expense) credit – (1,369) (1,188) 860 – (1,697)

(1) Middle East and North Africa: includes Egypt


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5 Segment information (continued)


Sub- Saharan Total Corporate MENA(1) Africa Asia Europe operations US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Results:Hotel revenue – 95,038 47,727 88,183 – 230,948Real estate revenue – 6,039 37,193 2,668 – 45,900Other revenue 1,877 – – – – 1,877

Total revenue 1,877 101,077 84,920 90,851 – 278,725

Hotels results – 28,947 138 9,072 – 38,157Real estate results – 4,529 6,630 (3,688) – 7,471Other profit – 1,877 – – – 1,877General and administrative expense (20,176) (1,361) (2,143) (1,364) – (25,044)

Operating profit (loss) (20,176) 33,992 4,625 4,020 – 22,461

Share of results of associates – 35,577 (182) – 5,030 40,425Net interest income (expense) 555 (5,815) (2,392) (5,639) – (13,291)Gain on sale of AFS – 4,493 – – – 4,493Loss (gain) on sale of associates – (477) 204 – – (273)Loss on sale of developmentproject – – – (3,500) – (3,500)Dividend income 495 – – – – 495Project cost write off (5,167) – – (20,750) – (25,917)Impairment of available for salefinancial assets (500) – – – – (500)Other income (expense) 241 (773) 926 234 – 628Income tax expense – (1,070) (396) (2,829) – (4,295)Non-controlling interests 1,281 (7,466) 1,516 1,084 – (3,585)

Net profit (loss) (23,271) 58,461 4,301 (27,380) 5,030 17,141

Assets and liabilities:Segment assets 168,936 638,515 276,973 535,487 – 1,619,911Investments in associates – 155,766 – – 118,233 273,999

Total assets 168,936 794,281 276,973 535,487 118,233 1,893,910

Total liabilities 82,508 250,767 108,980 159,220 – 601,475

Other segmental information:Additions to: Property, plant and equipment 1,069 23,333 52,149 103,800 – 180,351 Goodwill – 681 – – – 681 Investment properties – 3,487 – – – 3,487Finance income 2,915 827 30 146 – 3,918Finance costs (2,360) (6,642) (2,422) (5,785) – (17,209)Depreciation of hotel property, plant and equipment – (6,604) (7,298) (13,630) – (27,532)Income tax expense – (1,070) (396) (2,829) – (4,295)

(1) Middle East and North Africa: includes Egypt



6 Revenue and direct costs

Revenues and related direct operating costs comprise the following:

2009 2008 US$’000 US$’000

Hotel revenueRooms 127,527 130,741Food and beverage 71,609 77,973Other operating revenue 19,863 22,234

Total hotel revenue 218,999 230,948Real estate sales 20,003 39,861Real estate rental 6,152 6,039Other revenue 1,261 1,877

Total revenue 246,415 278,725

Direct costs Rooms 21,870 21,557Food and beverage 46,258 49,684Other operating services’ costs 9,077 9,630Direct hotel general and administrative expenses 22,210 22,662Sales and marketing 11,848 12,216Fuel, water and electricity 17,071 18,075Repairs and maintenance 12,530 12,922Other direct hotel operating expenses 17,574 18,328Cost of real estate units sold 14,859 30,517Real estate leasing cost 1,288 1,510

Total 174,585 197,101

Included in food and beverage costs is US$19.1 million (2008: US$22.5 million) of inventory recognised as an expense.

Salaries and wages costs included in direct costs were US$46.7 million (2008: US$55.7 million).


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7 General and administrative expenses

General and administrative expenses comprise the following:

2009 2008 US$’000 US$’000

Salaries and employee benefits 10,448 13,184Professional fees 1,961 3,123Travel 340 1,271Insurance 166 296Rent 1,026 1,076Telecommunication 286 460Exhibitions and conferences 4 216Restructuring cost* – 850Office expenses 349 454Repair and maintenance 76 104Others 1,109 1,587

15,765 22,621

* During the fourth quarter of 2008, the Company initiated a programme to reduce costs and improve operating efficiencies in response to the impact of the global slowdown and current

challenges in capital markets. Restructuring plans were completed and approved as at 31 December 2008 with a total cost of US$0.85 million.

Salaries and employees’ benefits include expense arising from share-based payment transactions amounting to US$0.7 million (2008: US$1.3 million) (note 31).

8 Project costs

Amounts provided against costs incurred on development projects which were no longer considered feasible. These costs relate to hotel developments, as follows:

2009 2008 US$’000 US$’000

Hotel developments: Da Nang (note 12, 13) – 16,000Langkawi (note 12) – 4,000Phang Nga (note 12) – 2,907Uganda (note 13) – 2,260Project cost accrual – Da Nang – 750

– 25,917



9 Income tax

The major components of income tax expense are as follows:

2009 2008 US$’000 US$’000

Consolidated income statementCurrent income taxCurrent income tax charge 2,253 2,651

Deferred income taxRelating to original and reversal of temporary differences (556) 1,644

Income tax expenses reported in the consolidated income statement 1,697 4,295

The Company is exempt from income tax in the Cayman Islands. Subsidiaries operate in numerous locations where they are subject to income tax except when they are either making losses or have tax holidays, during which the companies are exempt from taxes for periods of up to seven years from the date of incorporation.

A reconciliation of profit before tax to income tax expenses is as follows:

Profit (loss) Tax at Adjustments Income before Tax domestic for temporary tax (credit) tax rate rates differences expense 31 December 2009 US$’000 US$’000 US$’000 US$’000

Kingdom Kenya 01 Ltd Kenya (1,290) 30% – (240) (240)Marasa Holdings Limited Zambia 2,121 35% 742 319 1,061Serena Beach Company Egypt 3,371 20% 674 92 766Salt Lake Resort Limited Mauritius (895) 15% – (235) (235)Mamlaka Langkawi Sdn. Bhd. Malaysia (1,890) 26% – (958) (958)PT Permadani Khatulistiwa Nustantaraa Indonesia (1,254) 30% – 359 359Raffles Le Royal, Phnom Penh Cambodia 451 9% 41 (23) 18Raffles Grand Hotel d’Angkor Cambodia 54 9% 5 (35) (30)Kunshan Traders Park Hotel Company Ltd China (780) 25% – – –Anahita Hotel Limited Mauritius 2,485 15% 373 230 603EHC Maroc Morocco 133 1% 1 1 2Kingdom Seychelles 01 Seychelles (170) 15% – (250) (250)Merryland Pour les Projects Touristiques (MPPT) Lebanon 6,825 15% 1,024 (423) 601Locations not subject to tax 18,429 – – – –

Total 27,590 2,860 (1,163) 1,697


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9 Income tax (continued)

Profit (loss) Tax at Adjustments Income before Tax domestic for temporary tax (credit) tax rate rates differences expense 31 December 2008 US$’000 US$’000 US$’000 US$’000

Kingdom Kenya 01 Ltd Kenya (3,280) 30% – (2,100) (2,100)Marasa Holdings Limited Zambia 2,044 35% 715 578 1,293Serena Beach Company Egypt 3,999 20% 800 267 1,067Salt Lake Resort Limited Mauritius (1,108) 15% – (301) (301)Mamlaka Langkawi Sdn. Bhd. Malaysia (2,131) 26% – 2,199 2,199PT Permadani Khatulistiwa Nustantaraa Indonesia 991 30% 297 246 543Raffles Le Royal, Phnom Penh Cambodia 217 9% 20 – 20Raffles Grand Hotel d’Angkor Cambodia 1,155 9% 104 (38) 66Kunshan Traders Park Hotel Company Ltd China 59 25% 15 (15) –Anahita Hotel Limited Mauritius 5,326 15% 799 706 1,505EHC Maroc Morocco 76 1% 1 2 3Locations not subject to tax 17,673 – – – –

Total 25,021 2,751 1,544 4,295

Deferred income taxDeferred income tax at 31 December relates to the following:

Consolidated statement of financial Consolidated position income statement

2009 2008 2009 2008 US$’000 US$’000 US$’000 US$’000

Deferred tax liabilitiesAccelerated depreciation for tax purposes:– on existing entities 23,182 20,497 2,685 9,806– on new acquisitions – – – (2,119)Temporary differences arising on Purchase Price Allocation relating to business combinations: – capital gain – property, plant and equipment 25,694 25,694 – –

48,876 46,191 2,685 7,687

Deferred tax assetsProvisions, accruals and others 3,456 2,647 (809) (2,207)Losses available for offset against future axable income 10,594 8,644 (1,950) (5,315)

14,050 11,291 (2,759) (7,522)

(74) 165

Represented by:Exchange adjustments 482 (1,479)Deferred income tax (savings) expense (556) 1,644

(74) 165

Deferred tax assets are only recognised on losses available for offset against future taxable income to the extent that it is probable that taxable profits will be available against which losses can be utilised.

Losses available for offset against future taxable income pertain to Kingdom Kenya and Salt Lake Resort Limited, Mauritius and expire up to 2012.

There are no unrecognised deferred income tax assets as at 31 December 2009. Budgets for the entities in which tax losses have been treated as deferred tax assets support that the tax will be utilised.



10 Components of other comprehensive income

2009 2008 US$’000 US$’000

Translation of foreign operations:Exchange loss on sale of associate recognised in the income statement (note 15) 3,845 –Net exchange difference on translation at year-end 9,531 (27,416)

13,376 (27,416)

Cash flow hedges:Gain (loss) arising during the year 3,574 (7,733)

3,574 (7,733)

Available-for-sale financial assets:Net change in fair value during the year (note 17) (9,806) 4,156Gain on sale of investment recognised in the income statement (note 17) (1,328) (4,493)Impairment recognised in the income statement – 500

(11,134) 163

11 Basic and diluted earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

2009 2008 US$’000 US$’000

Net profit attributable to ordinary equity holders of the parent 21,842 17,141

2009 2008 Thousands Thousands

Weighted average number of ordinary shares for basic earnings per share 168,512 174,607

The figure for basic and diluted earnings per share is the same, as the impact when exercised of the Company’s long-term incentive plan shares, is not significant.


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12 Property, plant and equipment

Furniture Freehold Leasehold and Motor Construction land improvements Buildings fixtures Equipment vehicles in progress Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Cost At 1 January 2009 262,275 133,534 465,294 96,510 79,212 3,745 170,998 1,211,568 Additions 2,147 41 1,155 13,137 8,629 411 179,046 204,566 Transfer from investment properties – – 27,918 1,950 – – – 29,868 Disposals – (101) (9) (180) (445) (522) (1,006) (2,263) Transfer to real estate held for sale – – – – – – (14,542) (14,542) Other transfers 678 75 80,425 5,084 4,610 3 (90,939) (64) Exchange adjustments 1,303 1,910 12,929 2,119 2,204 61 4,103 24,629

At 31 December 2009 266,403 135,459 587,712 118,620 94,210 3,698 247,660 1,453,762

Depreciation At 1 January 2009 – 13,101 56,872 50,770 34,380 2,474 – 157,597 Depreciation charge for the year* – 3,583 9,722 8,745 6,198 417 – 28,665 Disposals – (34) (9) (94) (352) (472) – (961) Exchange adjustments – 559 3,860 1,189 1,293 46 – 6,947

At 31 December 2009 – 17,209 70,445 60,610 41,519 2,465 – 192,248

Net carrying amount: At 31 December 2009 266,403 118,250 517,267 58,010 52,691 1,233 247,660 1,261,514

*Includes depreciation expense on KHI and development assets amounting to US$855 thousand (2008: US$522 thousand).

The carrying value of property, plant and equipment includes interest of US$9.5 million (2008: US$3.1 million) capitalised during the year.

During the year 2009, the carrying value of US$29.9 million of the Bur Dubai Residences was reclassified from investment properties to property, plant and equipment. The major refurbishments and renovation of the residence building were completed by end of 2008 and it was commissioned as serviced apartments in January 2009.

In 2009, the Group sold its investment in a development project in Da Nang, Vietnam (note 16). This has resulted in the disposal of work in progress of US$1 million during the year, which comprises the total cost of US$6.5 million net of provision of US$5.5 million.

Property, plant and equipment as shown above includes US$595 million (2008: US$313 million) which are mortgaged for borrowings at the year end.



12 Property, plant and equipment (continued)

Furniture Freehold Leasehold and Motor Construction land improvements Buildings fixtures Equipment vehicles in progress Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Cost At 1 January 2008 278,546 127,821 427,628 89,703 69,918 4,117 147,870 1,145,603 Additions 11,534 837 2,863 3,081 3,244 153 158,639 180,351 Transfer from investment properties – – 2,696 – – – – 2,696 Disposals (20,393) – (767) (220) – (181) (6,345) (27,906) Transfer to real estate held for sale (2,496) – – – – – (27,287) (29,783) Project costs provided for (note 8) (2,293) – (551) – (10) (8) (12,100) (14,962) Other transfers – 14,710 51,348 8,007 10,646 – (84,711) – Exchange adjustments (2,623) (9,834) (17,923) (4,061) (4,586) (336) (5,068) (44,431)

At 31 December 2008 262,275 133,534 465,294 96,510 79,212 3,745 170,998 1,211,568

Depreciation At 1 January 2008 – 10,844 52,134 45,631 31,514 2,368 – 142,491 Depreciation charge for the year – 4,052 8,981 8,284 5,764 451 – 27,532 Disposals – – – (220) – (150) – (370) Exchange adjustments – (1,795) (4,243) (2,925) (2,898) (195) – (12,056)

At 31 December 2008 – 13,101 56,872 50,770 34,380 2,474 – 157,597

Net carrying amount: At 31 December 2008 262,275 120,433 408,422 45,740 44,832 1,271 170,998 1,053,971

Included in property, plant and equipment above are development costs of US$26.7 million.

13 Goodwill and other intangible assets

Land use Goodwill rights Total US$’000 US$’000 US$’000

Cost: At 1 January 2009 70,811 44,376 115,187 Disposals – (10,010) (10,010) Exchange adjustments – 93 93

At 31 December 2009 70,811 34,459 105,270

Amortisation and impairment: At 1 January 2009 – 11,399 11,399 Disposal – (10,010) (10,010) Impairment during the year 36,629 – 36,629 Amortisation during the year – 795 795 Exchange adjustments – 10 10

At 31 December 2009 36,629 2,194 38,823

Net book value at 31 December 2009 34,182 32,265 66,447


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13 Goodwill and other intangible assets (continued)

Land use Goodwill rights Total US$’000 US$’000 US$’000

Cost: At 1 January 2008 70,130 43,939 114,069 Acquisition of minority interest (note 3) 681 – 681 Exchange adjustments – 437 437

At 31 December 2008 70,811 44,376 115,187

Amortisation and impairment: At 1 January 2008 – 512 512 Provided for during the year (note 8) – 10,010 10,010 Amortisation during the year* – 877 877

At 31 December 2008 – 11,399 11,399

Net book value at 31 December 2008 70,811 32,977 103,788

*Includes amortisation expense on development projects amounting to US$52 thousands (2008: US$171 thousands)

In March 2009, the Group sold its investment in the development project in Da Nang, Vietnam (note 16). This has resulted in the disposal of land use rights of US$7.8 million, which were provided against last year.

In May 2009, the Group sold its investment in development project in Kampala, Uganda (note 16). This has resulted in the disposal of land use rights for the development project of US$2.3 million, which were provided against last year.

Goodwill is allocated to the individual hotel operations (the cash-generating unit), and has been tested for impairment using a value in use model. The hotel is the lowest level within the Group at which goodwill is monitored for internal management purposes.

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that such carrying value may be impaired.

Following 2009 impairment test, the Group has recognised impairment charges of US$36.6 million against the entire goodwill value ascribed to three hotel properties – Mövenpick Mauritius US$13.0 million, Mövenpick Phuket US$12.3 million and Swissôtel Kunshan US$11.3 million.

The recoverable amounts have been determined based on value in use calculations, using discounted cash flow projections. Management has adopted a five-year period to assess its value in use. The cash flow projections are based on financial budgets issued by the hotel operators and are approved by senior management covering the same period.

Remaining goodwill value carried by the Group ascribes to Four Seasons Damascus, Mövenpick El Quseir and InterContinental Hotel Lusaka with carrying values of US$17.1 million, US$6.5 million and US$10.5 million, respectively.



13 Goodwill and other intangible assets (continued)

Key assumptions used in value in use calculationsThe calculation of value in use is sensitive to the following assumptions:

• Market share• Growth rate• Net profit margins, and• Discount rate

Market share: The key assumption relates to management’s assessment that the properties will maintain their status as premier hotels.

Growth rate: Estimates are based on management’s assessment of market share having regard to forecasted economic growth in the countries in which the hotels operate and the demand for accommodation. A conservative terminal growth rate of 0.5% to 1% per annum has been applied.

Net profit margins: Estimates are based upon management’s assumption of achieving a stabilised level of performance following its first full year of operations.

Discount rate: Management has used a discount rate of 9%-10.5% per annum throughout the assessment period, reflecting the current estimated weighted average cost of capital of the Group and specific market risk profile and cost of debt.

Sensitivity to changes in assumptionsManagement believes that no possible changes of a reasonable nature in any of the key assumptions would cause the carrying values of the hotels to exceed their recoverable amount, after giving due consideration to the economic outlook for the hospitality industry and the commercial assumptions underpinning the cash flow forecast of the hotels.

14 Investment properties

2009 2008At fair value US$’000 US$’000

At 1 January 33,839 33,197Transfer to property, plant and equipment (29,868) (2,696)Additions 94 3,487Foreign currency translation 43 (149)

At 31 December 4,108 33,839

Transfer to property, plant and equipmentIn 2009, Bur Dubai Residences amounting to US$29.9 million were reclassified from investment properties to property, plant and equipment. The major refurbishments and renovation of the residence building were completed by the end of 2008 and the building was commissioned as serviced apartments in January 2009.

In 2008, investment property relating to Marina Moorings (US$2.69 million) in Merryland Pour les Project Touristiques was transferred to property, plant and equipment as management’s intention for use changed and these were no longer available-for-sale.

Fair valueThe fair value of the Group’s investment properties at 31 December 2008 and 2009 approximates to their carrying values primarily represented by advance rentals. The fair values of the properties have not been determined on transactions observable in the market because of the nature of the properties.


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15 Investments in associates

Below is a summary of the movement in investments in associates during the year:

Balance at Share of Balance at 1 January results of Translation Dividends/ 31 December Associate – Operating 2009 Additions associates adjustment Disposals others 2009 Entity Name US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Kingdom 5-KR-35 Ltd (Four Seasons – Paris) 118,233 – 4,420 – – (32,605) 90,048Kingdom 5-KR-30 Ltd (Four Seasons – Cairo) 102,982 – 13,648 118 – (9,295) 107,453Kingdom Sharm El Sheikh Ltd (Four Seasons – Sharm El Sheikh) 36,392 – 946 3,845 (41,183) – –Kingdom 5-KR-147 Ltd (Mövenpick El Gouna) 16,392 – 2,113 21 – – 18,526Anahita Golf Limited (Four Seasons Mauritius Golf Club) – 3,127 (474) (38) – – 2,615

Total balance 273,999 3,127 20,653 3,946 (41,183) (41,900) 218,642

During 2009, the loan due to Kingdom 5-KR-35 Ltd of US$ 29,383 as of 1 January 2009, plus interest, was settled through dividends declared by the associate. This transaction was excluded from the cash flow statement as it was a non-cash transaction.

During 2009, loans and advances of US$3.1 million to Anahita Golf Limited were transferred to investments in associates. This transaction was excluded from the cash flow statement as it was a non-cash transaction.

In March 2009, the Group disposed of its investment in the Four Seasons hotel in Sharm El Sheikh, Egypt for a consideration of US$70 million. The sale resulted in a net gain of US$28.3 million, net after the recognition of a cumulative foreign exchange reserve loss of US$3.85 million (note 10) and transaction costs of US$0.5 million.

Below is a summary of the movement in investments in associates during the previous year:

Balance at Share of Balance at 1 January results of Translation Dividends/ 31 December Associate – Operating 2008 Additions associates adjustment Disposals others 2008 Entity Name US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Kingdom 5-KR-35 Ltd (Four Seasons – Paris) 114,099 – 5,030 (896) – – 118,233Kingdom 5-KR-30 Ltd (Four Seasons – Cairo) 95,738 – 25,118 2,076 – (19,950) 102,982Kingdom Sharm El Sheikh Ltd (Four Seasons – Sharm El Sheikh) 29,070 – 6,421 901 – – 36,392Kingdom 5-KR-147 Ltd (Mövenpick El Gouna) 13,787 – 4,103 375 – (1,873) 16,392Kingdom 5-KR-157 Ltd (Fairmont Palm Hotel & Resort) 14,449 – (65) – (14,384) – –Kingdom 5-KR-187 Ltd (Mövenpick Zanzibar) 1,391 – (182) – (1,209) – –

Total balance 268,534 – 40,425 2,456 (15,593) (21,823) 273,999

In October 2008, the Group sold its investments in Fairmont Palm Hotel and Resort Dubai and Fairmont Zanzibar for a consideration of US$13.9 million with a realised loss of US$0.5 million and US$1.4 million with a realised gain of US$0.2 million, respectively.



15 Investments in associates (continued)

Summarised information The following table illustrates summarised information of the Group’s investments in associates:

2009 2008 US$’000 US$’000

Share of associates’ balance sheets:Current assets 97,025 149,424Non-current assets 165,735 189,186Current liabilities (47,258) (57,780)Non-current liabilities (141,769) (140,322)

Net assets 73,733 140,508

Share of associates’ revenues and results:Revenues 73,428 119,949

Results 20,653 40,425

16 Development projects

2009a) In March 2009, the Group sold its investment in development project in Da Nang, Vietnam held in the name of its subsidiary Kingdom

Da Nang Limited for a consideration of US$2.9 million. The sale of investment resulted in a gain of US$5.7 million.

The major classes of net assets sold were as follows:

US$’000

Property, plant and equipment 565Intangible assets 7,750Capital work in progress 6,475Cash and cash equivalents 451Trade and other receivables 82Other current liabilities (545)Due to related parties (1,751)

Net assets 13,027Non-controlling interest (1,321)

Net assets attributable to the Group 11,706Provision against the net assets (14,457)

Net liabilities disposed of (2,751)Profit on disposal 5,671

Proceeds from sale of development project 2,920


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16 Development projects (continued)

b) In May 2009, the Group sold its investment in development project in Kampala, Uganda held in the name of its subsidiary, Kingdom Kampala Limited, for a consideration of US$2.7 million. The sale of the investment resulted in a gain of US$2.2 million.

The major classes of net assets sold were as follows:

US$’000

Intangible assets 2,260Other current assets 526

Net assets 2,786Provision against the net assets (2,260)

Net assets disposed of 526Profit on disposal 2,211

Proceeds from sale of development project 2,737

2008In November 2008, the Group sold its development project in Phang Nga, Thailand for US$23.9 and incurred a loss of US$3.5 million including selling expense of US$0.7 million.

17 Available-for-sale financial assets

2009 2008 US$’000 US$’000

Quoted shares 15,036 17,963Unquoted shares 35,629 53,995

50,665 71,958

The movement in available-for-sale financial assets is illustrated below:

2009 2008 US$’000 US$’000

At 1 January 71,958 76,002Sold (11,487) (8,200)Net changes in fair value (9,806) 4,156

50,665 71,958

Available-for-sale investment – unquoted equity sharesThe amount of unquoted shares stated at fair value is US$35.6 million as at 31 December 2009 (2008: US$ 43.8 million). In 2008, US$10.1 million was stated at cost, as fair market value could not be reliably determined due to the unpredictable nature of future cash flows.

The fair value of the unquoted ordinary shares has been estimated using a discounted cash flow model. The valuation requires management to make certain assumptions about the model inputs including credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted equity investments.

Available-for-sale financial assets carried at cost primarily comprise private equity entities in a start-up stage, with projects still under construction as of 31 December 2008. The Group intended to hold such investments either for long-term investment purposes or until such time when an appropriate exit is found.

Available-for-sale investment – quoted equity sharesThe Group has investments in listed equity securities. The fair value of the quoted equity shares is determined by reference to published price quotations in an active market.



17 Available-for-sale financial assets (continued)

2009In February 2009, the Group sold its investment in Fairmont Nile City, Cairo for a consideration of US$11.5 million. The sale of the investment resulted in a gain of US$1.3 million.

2008In February 2008, the Group sold its investment in Mövenpick Hotel Pearl Dubai for a consideration of US$8.2 million. The sale of investment resulted in a gain of US$4.5 million.

During 2008, the Group provided for an impairment of the investment in Gaza amounting to US$0.5 million.

18 Other assets

2009 2008 US$’000 US$’000

Advances to contractors 27,107 18,114Deferred real estate commissions 1,965 4,562Others 1,119 1,222

30,191 23,898

Sales commissions directly attributable to contracts entered into for sale of real estate are deferred and recognised as expenses upon recognition of the sales of the related properties in the income statement.

19 Cash and short-term deposits

2009 2008 US$’000 US$’000

Cash at bank and in hand 67,144 87,310Short-term deposits 284,138 169,083

Total cash and bank balances 351,282 256,393

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at rates between 1.5% and 3.25% per annum (2008: between 2.5% and 4.5% per annum).

Included in short-term deposits is restricted cash of US$13.3 million (2008: US$14 million).

For the purposes of the cash flow statement, cash and cash equivalents exclude restricted cash and comprise the following:

2009 2008 US$’000 US$’000

Cash at bank and in hand 67,144 87,310Short-term deposits 270,796 155,077Bank overdrafts (note 22) (9,221) (2,885)

328,719 239,502


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20 Share capital and treasury shares

The share capital of the Company as at 31 December was as follows:

Shares 2009 2008 Thousand US$’000 US$’000

Authorised300,000 thousand ordinary shares of US$5 each 300,000 1,500,000 1,500,000

Issued and fully paid168,570 (2008: 174,739) thousand ordinary shares of US$5 each 168,570 842,851 873,694

Treasury shares20 (2008: 163) thousand ordinary shares (held by a trustee, for employees’ long-term incentive plan) 20 (63) (1,041)

In January 2009, the Company successfully completed a buyback of 6.2 million of its Global Depository Shares (“GDS”) at a purchase price of $1.00 per GDS in a tender auction for 7.5 million GDS. Total payment amounted to US$ 6.7 million, including transaction costs of US$0.5 million.

This buyback was driven by the Company’s belief that the prevailing trading price was not reflective of the value of KHI’s business and future prospects. The buyback also offered GDS holders the opportunity to access liquidity which may otherwise not have been available to them.

The GDS purchased were cancelled during the year and the share capital of the Company has been reduced from 174,739 thousand ordinary shares to 168,570 thousand ordinary shares outstanding as at 31 December 2009.

21 Reserves

Share premiumShare premium represents the excess of proceeds raised from shares issued over their par value, less costs associated with the issue.

Capital reserveCapital reserve primarily represents the difference between the par value and the purchase price of buyback shares. Capital reserve is not available for distribution.

Foreign currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries, associates and joint ventures.

Cumulative changes in fair valueThis reserve records unrealised fair value changes on available-for-sale investments.

Cash flow hedge reserveThis reserve records the change in value of effective cash flow hedges that have not yet been recycled.

Reserve for long-term incentive planThis reserve is made to record the value of share-based payment transactions relating to the Company’s long-term incentive plan (note 31).



22 Interest-bearing loans and borrowings

2009 2008 US$’000 US$’000

CurrentBank overdrafts 9,221 2,885Unsecured loan – 112Mortgages payable – secured 42,125 68,189

51,346 71,186

Non-current Unsecured loan 105,000 48,597Mortgages payable – secured 372,107 285,731

477,107 334,328

Total interest-bearing loans and borrowings 528,453 405,514

The maturities of the non-current portion of the interest-bearing loans are:

2009 2008 US$’000 US$’000

In more than one but less than two years 138,809 26,661In more than two but less than three years 36,341 74,939In more than three but less than four years 77,471 50,691In more than four but less than five years 55,529 62,920In more than five years 168,957 119,117

477,107 334,328

The Group has total unutilised credit facilities amounting to US$156 million as of 31 December 2009 (2008: US$334 million).


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22 Interest-bearing loans and borrowings (continued)

2009

Maturity Loan Interest(Loan amounts in US$’000) Currency date amount rate

Middle East North AfricaMövenpick Beirut US Dollar Variable US$ LIBOR basis 07/2014 29,253 3.5% US Dollar Variable US$ LIBOR basis 12/2009 8,950 3.5% US Dollar Variable US$ LIBOR basis 12/2009 – –Four Seasons Damascus US Dollar Variable US$ LIBOR basis 06/2011 7,000 6.4% US Dollar Variable US$ LIBOR basis 06/2011 2,400 6.5%Mövenpick Hotel Bur Dubai UAE Dirham Variable AED EIBOR basis 07/2011 7,574 7.5% US Dollar Variable US$ LIBOR basis 06/2015 14,400 3.0% US Dollar Variable US$ LIBOR basis 05/2017 24,750 3.0%Kingdom Hotel Investments UAE Dirham Variable, EIBOR basis 08/2011 100,000 4.0% Euro Fixed 09/2012 – –Four Season Beirut US Dollar Variable, US$ LIBOR basis 12/2014 60,000 6.3% US Dollar Variable, US$ LIBOR basis 12/2009 4,082 6.3%

Sub-total loans, Weighted average interest rate 258,409 4.5%

Sub-Saharan AfricaMövenpick Resort & Spa Mauritius US Dollar Variable US$ LIBOR basis 11/2014 20,000 2.0%Fairmont Kenya US Dollar Fixed 05/2020 5,000 0.0%Mövenpick Royal Palm, Dar Es Salam US Dollar Variable US$ LIBOR basis 03/2015 1,400 5.9% TZS Fixed 01/2013 3,035 13.0%InterContinental Lusaka US Dollar Fixed 10/2009 – –Four Seasons Anahita Mauritius US Dollar Variable US$ LIBOR basis 12/2009 196 2.3% US Dollar Variable US$ LIBOR basis 12/2009 – – Mauritius SBM Prime Lending rate 12/2009 369 9.3% Euro Variable, EUROBOR basis 12/2016 21,130 2.3% Mauritius SBM Prime Lending rate 12/2016 9,032 9.3% Mauritius SBM Prime Lending rate 06/2010 1,108 9.3% Euro Four Seasons Loan 06/2029 3,565 2.3%


AsiaMövenpick Phuket Thai Baht Variable, Minimum lending rate 11/2011 23,774 5.8%Four Seasons Langkawi US Dollar Variable US$ LIBOR basis 09/2013 10,000 3.6% US Dollar Fixed 09/2013 15,000 6.0% US Dollar Fixed 09/2013 25,000 6.8%Swissôtel Kunshan China Renminbi Variable, RMB Basic rate 04/2016 18,163 5.3%


Development projectsFour Seasons Marrakech Morocco Dirham Variable, Moroccan Treasury rate 09/2018 62,196 6.4% Morocco Dirham Variable, Moroccan Treasury rate 09/2018 4,574 6.4%Mövenpick Accra, Ghana US Dollar Variable US$ LIBOR basis 12/2017 1,809 4.0%Raffles Praslin, Seychelles US Dollar Variable US$ LIBOR basis 12/2013 20,265 4.0%Raffles Manila, Philippines Philippine Peso Variable, Philippines Treasury rate 12/2019 24,428 4.5%


KHI total loans, Weighted average interest rate 528,453 4.8%



22 Interest-bearing loans and borrowings (continued)

2008

Loan Interest(Loan amounts in US$’000) Currency amount rate

Middle East and North AfricaMövenpick Beirut US Dollar Property mortgage debt (non-recourse) 41,927 5.8% US Dollar Property mortgage debt (non-recourse) – – US Dollar Overdraft 190 5.8%Four Seasons Damascus US Dollar Property mortgage debt (recourse) 13,866 8.3% US Dollar Property mortgage debt (recourse) – –Mövenpick Hotel Bur Dubai UAE Dirham Property mortgage debt (non-recourse) 9,915 4.4% US Dollar Property mortgage debt (non-recourse) 16,000 4.5% US Dollar Property mortgage debt (non-recourse) 26,550 4.5%Kingdom Hotel Investments UAE Dirham Revolver (Unsecured) 43,597 6.0% Euro Property mortgage debt (non-recourse) 29,383 6.8%Four Seasons Beirut US Dollar Property mortgage debt (non-recourse) 38,290 6.4% US Dollar Overdraft 2,695 6.4%


Sub-Saharan AfricaMövenpick Resort & Spa Mauritius US Dollar Property mortgage debt (non-recourse) 23,500 4.2%Fairmont Kenya US Dollar Unsecured 5,000 0.0%Mövenpick Royal Palm, Dar Es Salam US Dollar Property mortgage debt (non-recourse) 1,400 8.1% TZS Property mortgage debt (non-recourse) 3,969 13.0%InterContinental Lusaka US Dollar Unsecured 112 0.0%Four Seasons Anahita Mauritius US Dollar Overdraft – – US Dollar Property mortgage debt (non-recourse) 2,750 4.6% Mauritius Overdraft – – Euro Property mortgage debt (non-recourse) 18,891 6.7% Mauritius Property mortgage debt (non-recourse) 8,734 11.5% Mauritius Property mortgage debt (non-recourse) – – Euro Secured against reclaimed land – –


AsiaMövenpick Phuket Thai Baht Property mortgage debt (non-recourse) 26,790 7.0%Four Season Langkawi US Dollar Property mortgage debt (non-recourse) 50,000 6.5% US Dollar Property mortgage debt (non-recourse) – – US Dollar Property mortgage debt (non-recourse) – –Swissôtel Kunshan China Renminbi Property mortgage debt (non-recourse) 20,309 5.8%


Development projectsFour Seasons Marrakech Morocco Dirham Property mortgage debt (non-recourse) 21,436 6.9% Morocco Dirham Overdraft – –Mövenpick Accra, Ghana US Dollar Property mortgage debt (non-recourse) – –Raffles Praslin, Seychelles US Dollar Property mortgage debt (non-recourse) – –Raffles Manila, Philippines Philippine Peso Property mortgage debt (non-recourse) – –


KHI total loans, Weighted average interest rate 405,514 6.1%


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23 Employees’ end of service benefits

2009 2008 US$’000 US$’000

At 1 January 4,555 3,663Provided during the year 1,556 1,978Paid during the year (797) (612)Foreign currency translation 14 (474)

At 31 December 5,328 4,555

Labour laws in certain countries in which the Group operates require employers to provide for end-of-service benefits. These benefits are payable to employees at the end of their period of employment. The provision for end-of-service benefits is calculated based on the employees’ final salary and length of service, subject to the completion of a minimum service period in accordance with the local labour laws of the jurisdictions in which the Group operates.

24 Retentions payable

Retentions payable represent amounts withheld from the contractors on development projects in accordance with the terms of the contracts.

25 Other liabilities

2009 2008 US$’000 US$’000

Advances received in respect of real estate sales 17,893 42,566Other 1,059 1,198

18,952 43,764

26 Trade and other payables

2009 2008 US$’000 US$’000

Trade payables 42,775 30,152Accruals and other payables* 112,093 62,577

154,868 92,729

*Includes real estate deposits of US$51 million (2008: US$11 million) which will be taken as real estate revenue upon recognition of sales of related properties in the income statement.

Trade payables are non-Interest-bearing and are normally settled on between 30-day and 60-day terms.



27 Commitments and contingencies

Capital commitmentsAt 31 December 2009, the Group had capital commitments in respect of construction work of US$184.5 million (2008: US$335.9 million). Such commitments are expected to be settled throughout the construction period of the properties, i.e. 2 to 3 years from the statement of financial position.

Contingent liabilitiesMerryland Pour les Projects Touristiques (MPPT)The Company was subject to a review by the Department of Value Added Tax for the period to 31 December 2002 and, as a result, was charged taxes and fines in the amount of US$19.6 million. Further to the tax department claim, an interlocutory seizure on the real estate registry is placed on the property as part of the normal proceedings of the tax department pending final judgement. The company has provided for an amount of US$0.4 million as of 31 December 2009 (2008: US$0.4 million), which management believes will be payable following final judgement of the pending assessment.

The company was subject to a review by the income tax authorities for the fiscal years 2003 and 2004 following which was assessed for additional taxes and fines in the amount of US$1.1 million. The Company has provided for an amount of US$0.6 million as of 31 December 2009 (2008: US$0.3 million) which management believes will be payable.

The taxes and fines imposed following the 2002 fiscal year review were closed with no cost to the company during 2009 (2008: provision of US$0.3 million).

The company has provided additional US$0.3 million in connection to defend to these claims.

Kingdom Beirut SALThe company received claims by the contractor for further payments totalling US$24.3 million relating to the construction of the Four Seasons Hotel in Beirut. The company believes any final payment will be considerably and materially less than this sum.

Kingdom Kenya 01 Ltd. The company was subject to tax assessment by the authorities and the total claim of taxes is US$1.3 million (2008: US$1.1 million) relating to payroll tax, corporation tax and withholding tax. The company has objected to these claims and no provision has been made against these as the management is of the opinion that no liability will crystallise.

Bank guaranteesMerryland Pour les Projects Touristiques (MPPT)As at 31 December 2009, the company had contingent liabilities in respect of bank guarantees arising in the ordinary course of business amounting to US$1.0 million (2008: US$1.6 million).

Kingdom BeirutAs at 31 December 2009, the company had contingent liabilities in respect of the bank guarantees arising in the ordinary course of business amounting to US$3.5 million (2008: US$1.8 million).

EHC Maroc SA LimitedAs at 31 December 2009, the company had contingent liabilities in respect of the bank guarantees arising in the ordinary course of business amounting to US$3.8 million (2008: Nil).

KHI Seychelles 01 LtdAs at 31 December 2009, the company had contingent liabilities in respect of the letter of credit arising in the ordinary course of business amounting to US$0.5 million (2008: Nil).

Siam Resorts Co. Ltd As at 31 December 2009, the company had contingent liabilities in respect of the bank guarantees arising in the ordinary course of business amounting to US$0.1 million (2008: US$0.1million).


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28 Related party transactions

The consolidated financial statements include the financial statements of Kingdom Hotel Investments and the subsidiaries listed in note 32. Kingdom Hotel Investments is the ultimate parent entity of the Group.

TransactionsThe following table provides the total amount of transactions which have been entered into with related parties:

Business Management Asset Loans advanced development and incentive management to (from) related Interest income fees expense fee income parties expense US$’000 US$’000 US$’000 US$’000 US$’000

Other related parties 2009 845 (10,316) 415 – (513) 2008 1,768 (11,630) 109 (29,383) (2,233)

Other related parties are hotel operators which are associated with the major shareholder.

All related party income and expenses and the pricing policies and terms of these transactions are entered into in the normal course of business and are approved by the Group’s management.

Compensation of key management personnelThe following is the remuneration of key management personnel of the Group comprising of executive directors of the Company and other senior personnel.

2009 2008 US$’000 US$’000

Short-term employee benefits 4,304 3,888End-of-service benefits 107 114Long-term incentive plan (note 31) 664 1,117

5,075 5,119

Balances due from/to related parties

2009 2008 US$’000 US$’000

Balances due from:Other related parties:Mövenpick Hotels and Resort AG 8 245Anahita Golf Limited 546 2,979Ayala Land Inc 40 44

594 3,268

Balances due to:Other related parties:Four Seasons Hotels Inc. 2,346 1,256Fairmont Hotels and Resorts Inc. 125 18Swissôtel Hotels & Resorts 206 111Raffles Hotels and Resorts 168 –

2,845 1



28 Related party transactions (continued)

2009 2008 US$’000 US$’000

Short-term loans from:Other related partiesFairmont Raffles 5,000 5,000Mövenpick Hotels and Resort AG – 500

5,000 5,500

Long-term loans from:Associate: Kingdom 5-KR-35 Ltd. (note 22) – 29,383

Balances with related parties principally relate to management services from hotels’ operators, asset management services provided, business development income received and loans.

29 Risk management objectives and policies

The Group’s principal financial instruments, other than derivatives, consist of bank loans, cash and short-term deposits, and available-for-sale financial assets. The main purpose of these financial instruments is to finance the Group’s operations and to earn a return until funds are required to fund expansion of the hotel operations and acquisitions. The Group has various other financial instruments such as trade receivables and trade payables, which arise directly from its operations.

The Group also enters into derivative transactions; principally interest rate swaps and collars and forward foreign exchange contracts, to manage the interest rate risk arising from the Group’s operations and its sources of finance. It is the Group’s policy that no trading in financial instruments be undertaken.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, foreign currency risk, interest rate risk and equity price risk. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below:

Credit riskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on its bank balances, trade receivables and certain other assets as reflected in the statement of financial position.

The Group provides its services to a large number of customers. The Group trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not considered significant.

As at 31 December, the ageing of trade and other receivables is as follows:

Neither past

Past due but not impaired

due nor 30-60 60-90 90-120 >120 Total impaired <30 days days day day days US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

2009 Trade and other receivables 24,308 3,121 11,392 4,279 1,969 1,751 1,7962008 Trade and other receivables 21,888 1,653 11,720 3,790 1,437 2,563 725

Unimpaired receivables are expected, on the basis of past experience, to be recoverable. It is not the practice in the industry to obtain collateral over receivables which are unsecured.


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29 Risk management objectives and policies (continued)

Credit risk (continued)As at 31 December 2009, trade and other receivables amounting to US$ 2.0 million (2008: US$ 2.0 million) were impaired. Movements in the provision for impaired receivables are as follows:

2009 2008 US$’000 US$’000

At 1 January 2,039 1,761Charge for the year 306 474Amounts written off (273) (49)Unused amounts reversed (28) (107)Foreign currency translation 10 (40)

At 31 December 2,054 2,039

With respect to credit risk arising from the other financial assets of the Group, which mainly comprise bank balances, due from related parties, and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments as follows:

2009 2008 US$’000 US$’000

Bank balances 350,762 255,920Due from related parties 594 3,268

Liquidity riskThe Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts, revolving credit facilities, term loans and short-term deposits.

The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted payments:


Less than 3 to 12 1 to 4 3 months months years 5 years+ Total US$’000 US$’000 US$’000 US$’000 US$’000

Interest-bearing loans and borrowings * 12,664 56,538 375,198 185,852 630,252Trade payables 41,926 849 – – 42,775Due to related parties 2,639 206 – – 2,845Retentions 3,575 1,627 8,994 – 14,196

Total 60,804 59,220 384,192 185,852 690,068


Less than 3 to 12 1 to 4 3 months months years 5 years+ Total US$’000 US$’000 US$’000 US$’000 US$’000

Interest-bearing loans and borrowings * 10,618 82,538 269,156 127,291 489,603Trade payables 27,012 3,140 – – 30,152Due to related parties 619 766 – – 1,385Retentions 229 2,470 4,638 – 7,337

Total 38,478 88,914 273,794 127,291 528,477

* includes future interest payable of US$101.8 million on outstanding interest-bearing loans and borrowings as at 31 December 2009 (2008: US$84.1 million).




Foreign currency riskThe functional currency of the Company is US dollars. The Group is exposed to foreign currency risk on investments, derivative instruments and assets and liabilities located in countries where the currency is not one that is pegged to the US dollar. The Group manages this risk by funding a significant portion of these assets by loans denominated in the same currencies in which the assets are denominated.

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other variables held constant, of the Group’s equity.

Net assets (liabilities) % change in Effect on Effect on in foreign currency the currency equity equity

2009 2008 rate

2009 2008 US$’000 US$’000 US$’000 US$’000

Effect on the Group’s equityKingdom 5-KR-35 Ltd(Four Seasons – Paris) EUR 90,048 118,233 +10% 9,005 11,823

Kingdom Sharm El-Sheikh Ltd (100%) - subsidiary of KHI EGP – 36,392 +10% – 3,639

Kingdom Nile Plaza – subsidiary of Kingdom 5-KR-30 EGP 107,521 103,050 +10% 10,752 10,305

Kingdom 5-KR-71 Ltd – subsidiary of Damascus Holding SYP 127,813 120,420 +2% 2,556 2,408

Kingdom Amman – subsidiary of KHI JOD 15,528 17,962 +10% 1,553 1,796

Kingdom Beirut – subsidiary of Kingdom 5-KR-59, Ltd LBP 62,340 63,831 +2% 1,247 1,277

Merryland Pour les Projects Touristiques (MPPT) – subsidiary of Kingdom 5-KR-57, Ltd LBP 80,468 74,784 +2% 1,609 1,496

Kingdom KR-181 Ltd – subsidiary of Kingdom 5-KR-166 Ltd KHS 60,947 58,196 +10% 6,095 5,820

Kingdom 5-KR-147 Ltd – subsidiary of KHI EGP 14,527 14,393 +10% 1,453 1,439

Serena Beach Company – subsidiary of Kingdom 5-KR-153, Ltd EGP 29,100 32,675 +10% 2,910 3,267

Tanruss Investment Limited – subsidiary of Kingdom 5-KR-90, Ltd TZS 14,131 13,201 +10% 1,413 1,320

Anahita Hotel Limited – subsidiary of Kingdom 5-KR-182, Ltd MUR 21,199 16,457 +10% 2,120 1,646

Kingdom Ghana 01 Ltd – subsidiary of KR 144 Ltd GHC 42,625 20,097 +10% 4,262 2,010

EHC Maroc – subsidiary of Kingdom 5-KR-172, Ltd MAD 21,000 14,409 +10% 2,100 1,441


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Foreign currency risk (continued)

Net assets (liabilities) % change in Effect on Effect on in foreign currency the currency equity equity

2009 2008 rate

2009 2008 US$’000 US$’000 US$’000 US$’000

Salt Lake Resort – subsidiary of Kingdom 5-KR-188, Ltd MUR 17,881 24,776 +10% 1,788 2,478

SRF and SRC – Indirect Subsidiaries of Kingdom 5-KR-194&195, Ltd THB 61,547 73,130 +10% 6,155 7,313

InterContinental Lusaka – subsidiary of Kingdom Hotels (Cayman) Ltd ZMK 33,021 36,025 +10% 3,302 3,602

Magnum Investment Group Limited - subsidiary of Kingdom Da Nang Limited VND – 3,652 +10% – 365

Mamlaka Langkawi Sdn Bhd – subsidiary of Kingdom Langkawi BV MYR 63,011 62,932 +10% 6,301 6,293

Swissôtel Kunshan CNY 31,337 43,321 +10% 3,134 4,332

PT Permadani Khatulistiwa Nustantaraa - subsidiary of Kingdom Acquisition BV IDR 48,159 45,706 +10% 4,816 4,571

KHI-ALI Manila Ltd – subsidiary of Kingdom Manila BV PHP 73,600 47,380 +10% 7,360 4,738

Total 1,015,803 1,041,022 79,931 83,379




Foreign currency risk (continued)The following table demonstrates the sensitivity to reasonably possible changes in exchange rates, with all other variables held constant, of the Group’s profit before tax.

Net assets (liabilities) % change in Effect on Effect on in foreign currency the currency profit profit

2009 2008 rate

2009 2008 US$’000 US$’000 US$’000 US$’000

Effect on the Group’s profit before taxKingdom Hotel Investments EUR – (29,383) +10% – (2,938)

Tanruss Investment Limited – subsidiary of Kingdom 5-KR-90, Ltd US$ (1,400) (1,400) +10% (140) (140)

Anahita Hotel Limited – subsidiary of Kingdom 5-KR-182, Ltd US$ – (2,750) +10% – (275) Euro (24,694) (18,891) +10% (2,469) (1,889)

Merryland Pour les Projects Touristiques (MPPT) – subsidiary of Kingdom 5-KR-57, Ltd US$ (38,203) (42,117) +2% (764) (842)

Kingdom 5-KR-71 Ltd – subsidiary of Damascus Holding US$ (9,400) (13,866) +2% (188) (277)

Salt Lake Resort – Subsidiary of Kingdom 5-KR-188, Ltd. Mövenpick Hotels & Resort AG US$ (20,000) (23,500) +10% (2,000) (2,350)

Kingdom KR-181 Ltd – subsidiary of Kingdom 5-KR-166 Ltd US$ (5,000) (5,000) +10% (500) (500)

InterContinental Lusaka – subsidiary of Kingdom Hotels (Cayman) Ltd US$ – (112) +10% – (11)

Kingdom Beirut – Subsidiary of Kingdom 5-KR-59 Ltd US$ (64,082) (40,985) +2% (1,282) (820)

Four Seasons Langkawi US$ (50,000) (50,000) +10% (5,000) (5,000)

Kingdom Ghana 01 Ltd – Subsidiary of Kingdom 5-KR-144 Ltd US$ (1,809) – +2% (36) –

KHI Seychelles 01 Ltd – Subsidiary of KHI Seychelles Holding Ltd US$ (20,265) – +2% (405) –

(234,853) (228,004) (12,784) (15,042)


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Interest rate riskThe Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long-term variable rate debt obligations and its cash and bank balances. Interest rate risk arises from the possibility that changes in interest rates will affect future profitability or the fair values of financial instruments. The Group is exposed to interest rate risk as a result of mismatches of interest rate repricing of unhedged assets and liabilities. Assets and liabilities that are covered through effective hedges are not exposed to interest rate risk.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings). An increase in interest rate, as shown below, will result in a corresponding increase/decrease in profit. There is no impact on the Group’s equity:

Floating % change in Effect on profit Effect on profit rate exposure the interest before tax before tax

2009 2008 rate

in 2009 in 2008 US$’000 US$’000 US$’000 US$’000

AssetsVariable rate deposits 218 155,078 +1% 2 1,551

LiabilitiesVariable rate borrowingsKingdom 5-KR-71 Ltd – subsidiary of Damascus Holding 9,400 13,866 +1% (94) (139)

Kingdom Beirut – subsidiary of Kingdom 5-KR-59, Ltd 64,082 40,985 +1% (641) (410)

Merryland Pour les Projects Touristiques (MPPT) – subsidiary of Kingdom 5-KR-57, Ltd 38,203 42,117 +1% (382) (421)

Kingdom 01 FZ-LLC Ltd – indirect subsidiary of Kingdom 5-KR-168, Ltd 46,724 52,465 +1% (467) (525)

Tanruss Investment Limited – subsidiary of Kingdom 5-KR-90, Ltd 1,400 1,400 +1% (14) (14)

Anahita Hotel Limited – subsidiary of Kingdom 5-KR-182, Ltd 35,400 30,375 +1% (354) (304)

EHC Maroc – subsidiary of Kingdom 5-KR-172, Ltd 66,770 21,436 +1% (668) (214)

Salt Lake Resort – subsidiary of Kingdom 5-KR-188, Ltd Mövenpick Hotels & Resort AG 20,000 23,500 +1% (200) (235)

SRF AND SRC – indirect subsidiary of Kingdom 5-KR-194 & 195, Ltd 23,774 26,790 +1% (238) (268)

Swissôtel Kunshan – indirect subsidiary of KHI-11 Ltd 18,163 20,519 +1% (182) (205)

Four Seasons Langkawi – subsidiary of Mamlaka Langkawi Sdn Bhd 10,000 50,000 +1% (100) (500)

Kingdom Hotel Investments 100,000 43,597 +1% (1,000) (436)

Kingdom Ghana 01 Ltd – subsidiary of Kingdom 5-KR-144 Ltd 1,809 – +1% (18) –




Interest rate risk (continued)

Floating % change in Effect on profit Effect on profit rate exposure the interest before tax before tax

2009 2008 rate

in 2009 in 2008 US$’000 US$’000 US$’000 US$’000

LiabilitiesVariable rate borrowingsKHI Seychelles 01 Ltd – subsidiary of KHI Seychelles Holding Ltd 20,265 – +1% (203) –

KHI Manila Property Inc – subsidiary of Kingdom Manila BV 24,428 – +1% (244) –

480,418 367,050 (4,805) (3,671)

Floating % change in Effect on Effect on rate exposure the interest equity equity

2009 2008 rate

2009 2008 US$’000 US$’000 US$’000 US$’000

Interest rate swaps 31,403 33,739 +1% (314) (337)Interest rate collar 15,000 15,000 +1% (150) (150)

46,403 48,739 (464) (487)

Equity price riskThe following table demonstrates the sensitivity of the cumulative changes in fair value to reasonably possible changes in equity prices, with all other variables held constant. The effect of decreases in equity prices is expected to be equal and opposite to the effect of the increases shown.

Change in Effect on Change in Effect on equity price equity equity price equity 2009 2009 2008 2008 US$’000 US$’000 US$’000 US$’000

At fair valueQuoted – Amman, Jordan 20% 3,007 20% 3,593Unquoted 20% 7,126 20% 8,767

In 2009, the Company had unquoted investments stated at cost of US$10.1 million. For these investments, the impact of changes in equity prices will only be reflected when the investment is sold or deemed to be impaired and the statement of income is impacted.

Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may buy back shares, adjust the dividend payment to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2009 and 31 December 2008.

The Group monitors capital using a gearing ratio, which is net debt, divided by total capital plus net debt. The Group’s policy is to target a gearing ratio of 50%. The Group includes within net debt, interest-bearing loans and borrowings, less cash and cash equivalents. Capital includes total equity of the Group.


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Capital management (continued)

2009 2008 US$’000 US$’000

Interest-bearing loans and borrowings 528,453 405,514Less cash and short-term deposits (351,282) (256,393)

Net debt 177,171 149,121

Equity 1,310,355 1,292,435

Capital and net debt 1,487,526 1,441,556

Gearing ratio 12% 10%

30 Financial instruments

Fair valuesSet out below are details by category of the carrying amounts of the Group’s financial instruments:

Carrying amount

2009 2008 US$’000 US$’000

Financial assetsAvailable-for-sale financial assets* 50,665 71,958Trade and other receivables 24,308 21,888Due from related parties 594 3,268Cash and short-term deposits 351,282 256,393

Financial liabilitiesInterest-bearing loans and borrowings 528,453 405,514Trade payables 42,775 30,152Retentions payable 14,196 7,337Due to related parties 2,845 1,385

* Market values for available-for-sale investments have been used to determine the fair values of listed available-for-sale financial assets with a carrying value of US$ 15 million as of

31 December 2009 (2008: US$ 18.0 million). The amount of unquoted shares stated at fair value is US$35.6 million as at 31 December 2009 (2008: US$ 43.8 million). In 2008, available-for-

sale investments of US$10.1 million were stated at cost.

With the exception of available-for-sale investments carried at cost as at 31 December 2008, the fair values of financial assets and liabilities approximate their carrying values.

The fair value of derivatives has been calculated by discounting the expected future cash flows at prevailing interest rates.



30 Financial instruments (continued)

Hedging activitiesCash flow hedgesThe Group uses interest rate swaps and collars to hedge against the cash flow risks arising on the floating rate term loans, and forward currency contracts to hedge against cash flow risk arising on fluctuation in certain foreign currencies. In all such cases the hedging relationship and objective, including details of the hedged item and hedging instrument, are formally documented and the transactions are accounted for as cash flow hedges.

The fair value of the derivative financial instrument, which is equivalent to the market value, together with the notional amount is set out below.

The notional amount is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at the year-end and are indicative of neither the market risk nor credit risk.

2009 2008

Negative Notional Negative Notional fair value amount fair value amount US$’000 US$’000 US$’000 US$’000

Derivatives held as cash flow hedges:Interest rate swaps (1,794) 31,403 (2,500) 33,739Interest rate collar (629) 15,000 (863) 15,000Foreign currency contracts (926) 24,694 (3,583) 20,506

The derivatives above are effective cash flow hedges and have maturities up to March 2013.

Fair value hierarchyAs at 31 December 2009, the Group held the following financial instruments measured at fair value:

• Available-for-sale financial assets• Derivative financial instruments

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilitiesLevel 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectlyLevel 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The following table shows an analysis of financial instruments recorded at the fair value by level of the fair value hierarchy:

Level 1 Level 2 Level 3 Total 31 December 2009 US$’000 US$’000 US$’000 S$’000

Financial assets:

Available-for-sale financial assets 15,036 – 35,629 50,665

15,036 – 35,629 50,665

Financial liabilities:

Interest rate swaps – 1,794 – 1,794Interest rate collar – 629 – 629Foreign currency contracts – 926 – 926

– 3,349 – 3,349


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30 Financial instruments (continued)

Fair value hierarchy (continued)Sensitivity of Level 3 financial instruments measured at fair value to changes in key assumptionsThe following table shows the sensitivity of the fair value of Level 3 instruments to changes in key assumptions, by class of instrument:

Effect of possible change in key assumptions

Alternative Carrying Change in carrying Effect on amount assumptions amount equity 2009 US$’000 US$’000 US$’000

Financial assets:Available-for-sale investmentsUnquoted equities 35,629 +10% 39,192 3,563

35,629 -10% 32,066 (3,563)

In absence of reliable data, the unquoted investments in equity securities are recorded at historical cost.

31 Long-term incentive plan

On 4 March 2009, the Board of Directors approved the grant of a fixed number of the Company’s shares to senior employees for a three-year cliff vesting period. The 2008 grants were also for a fixed number of Company shares for a three-year cliff vesting period. There are no cash settlement alternatives.

Number of shares (’000) Total fair value (US$’000)

2009 2008 2009 2008

As at 1 January 346 248 2,907 2,282Granted during the year 502 170 1,255 1,292Vested during the year (245) (72) (1,575) (667)

As at 31 December 603 346 2,587 2,907

Movements in the reserve for long-term incentive plan during the year are shown in the following table:

2009 2008 US$’000 US$’000

Balance at 1 January 1,809 1,181Expense recognised during the year 716 1,295Vested at cost (1,575) (667)

Balance at 31 December 950 1,809

The weighted average remaining contractual life for the share incentives outstanding as at 31 December 2009 is 2 years and 1 month. (2008: 2 years and 6 months)

The weighted average fair value of share incentives granted during the year is US$2.5 (2008: US$7.5).



32 Subsidiaries, joint venture and associates

At 31 December 2009, the Group had investments in the following subsidiaries, incorporated joint ventures and associates:

Percentage controlled by the Group’s subsidiary

Operating entity Name and location 2009 2008

Subsidiaries:Kingdom 5-KR-168 Ltd Kingdom 01FZ-LLC Mövenpick – 100% 100% (100%), through its Bur Dubai, subsidiary Kingdom 5- United Arab KR-161 Ltd (100%) Emirates

Kingdom 5-KR-57 Ltd Merryland Pour les Mövenpick – 93% 93% (100%) Projects Touristiques Beirut, (MPPT) Lebanon

Kingdom 5-KR-59 Kingdom Beirut S.A.L Four Seasons – 57% 57% Ltd (66%) Beirut, Lebanon

Kingdom 5-KR-90 Ltd (100%) Tanruss Investment Ltd Mövenpick – 96% 96% Tanzania

Kingdom 5-KR-172 Ltd Société EHC Maroc Four Seasons – 78% 78% (100%), through its S.A.R.L. Marrakech, subsidiary Kingdom 5- Morocco KR-178 Ltd (100%), through its subsidiary Kingdom 5-KR-177 Ltd (100%)

Kingdom Hotels Asset N/A Cayman Islands 100% 100% Management Services Limited

Kingdom 5-KR-144 Ltd Ghana 01 Ltd Mövenpick (100%) Hotel 100% 100% Ambassador – Accra, Ghana

Kingdom 5-KR-195 Ltd Siam Resorts Fund & Mövenpick 100% 100% (100%), through its Company Ltd Karon Beach – subsidiary Siam Resort Phuket, Holdings Ltd (100%) Thailand

Kingdom 5-KR-188 Ltd Salt Lake Resort Ltd Mövenpick (100%) Resort & Spa – 100% 100% Mauritius


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32 Subsidiaries, joint ventures and associates (continued)



Subsidiaries (continued):Kingdom Hotels (Cayman) Ltd Marasa Holdings InterContinental 100% 100% through its subsidiaries Limited Hotel Kingdom Lusaka Hotel Company, Lusaka, Zambia (Antilles) NV (100%) Kingdom Hotels (Netherlands) Cooperatief Kingdom Lusaka Hotel (Netherlands) BV (100%) Societe de l’Hotel Kingdom Lusaka S.A. (100%)

Damascus Holding (100%) and Syrian Saudi Tourism Four Seasons – Kingdom 5-KR-184 Ltd Investments Co. Damascus, (100%) through its (SSTIC) Syria 55% 55% subsidiary Kingdom 5- KR-71 Ltd (100%)

Kingdom Da Nang Limited (80%) Vegas Hotels Raffles Sold 80% through its subsidiaries & Villas Da Nang, Vietnam Magnum Investment Group Limited

KHI-7 Ltd through its subsidiaries Mamlaka Langkawi Four Seasons 90% 90% Kingdom Hotels (Cayman) Ltd (100%) Sdn. Bhd Hotel Kingdom Lusaka Hotel Company, Langkawi, Malaysia (Antilles) NV (100%) Kingdom Hotels (Netherlands) Cooperatief Kingdom Lusaka Hotel (Netherlands) BV (100%) Kingdom Langkawi BV (90%)

KHI-11 Ltd through its subsidiaries Kunshan Traders Swissôtel 100% 100% First Shanghai Hotel Group Limited Park Hotel Kunshan, China (100%) Company Ltd Sino Dragon Asset Limited (100%)

Kingdom Cambodia Ltd (100%) Raffles Grand Raffles Grand 100% 100% Hotel Pte. Ltd Siem Reap Cambodia

Kingdom Cambodia Ltd (100%) Raffles Royal Raffles Royal 100% 100% Hotel Pte. Ltd Hotel, Phnom Penh, Cambodia






Subsidiaries (continued): KHI through its subsidiaries KHI-ALI Manila Fairmont/Raffles 80% 80% economic Kingdom Hotels (Cayman) Ltd Ltd Manila interest (100%) Kingdom Lusaka Hotel KHI Manila Philippines Company (Antilles) NV (100%) Property, Inc. Kingdom Hotels (Netherlands) Cooperatief Kingdom Lusaka Hotel (Netherlands) BV (100%) Kingdom Manila BV (100%)

KHI through its subsidiaries Kingdom Mövenpick Hotel, Sold 99.9% Kingdom Kampala (Cayman) Kampala Ltd Kampala Ltd (100%) Kingdom Lusaka Hotel Company (Antilles) (100%) Kingdom Hotels (NDL) Cooperatief (100%) Kingdom Lusaka Hotel (NDL) BV (100%)

KHI through its subsidiaries Pudipitchaya Raffles Phang Nga, 99.9% 99.9% Kingdom Phang Nga Ltd (100%) Com Ltd Thailand Phang Nga Corp Ltd (80%)

Kingdom Jakarta Ltd through its PT Permadani Four Seasons 81.9% 81.9% subsidiaries Kingdom Hotels Khatulistiwa Hotel (Cayman) Ltd (100%) Kingdom Nustantaraa Jakarta, Indonesia Lusaka Hotel Company (Antilles) NV (100%), Kingdom Hotels (Netherlands) Cooperatief (100%) Kingdom Acquisitions BV (100%)

Kingdom 5-KR-166 Ltd Kingdom Kenya 01 Fairmont – 100% 100% (100%), through its Ltd Aberdare, Ark subsidiary Kingdom 5- Lodge, Mount KR-181 Ltd (100%) Kenya, Safari Kenya and Norfolk

Kingdom 5-KR-153 Ltd Serena Beach Company Mövenpick – (100%) El Quseir, Egypt 94% 94%

Kingdom Seychelles Ltd through KHI Seychelles Raffles Hotel 91.2% 91.2% its subsidiaries KHI Seychelles 01 Ltd Seychelles Holding Ltd (91.2%), KHI Seychelles 01 Ltd (100%)


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Interest in joint venture:Kingdom 5-KR-182 Ltd Anahita Hotel Ltd Four Seasons – 50% 50% (100%) Mauritius

Associates:Kingdom 5-KR-147 Ltd El Gouna for Hotels Co. Mövenpick – 29% 29% (100%) El Gouna, Egypt

Kingdom 5-KR-30 Ltd (100%), through its Nova Park Cairo Co. Four Seasons – subsidiary Kingdom Nile Cairo, Egypt 43% 43% Plaza Ltd (100%)

Kingdom Sharm Alexandria Saudi Co Four Seasons – El Sheikh Ltd (100%) for Touristic Projects Sharm El Sold 39% Sheikh, Egypt

Kingdom 5-KR-35 Ltd HGV BV (100%), through its (formerly Calogne Amsterdam) Four Seasons – 25% 25% subsidiary Shercock NV (100%) Paris, France

Anahita Golf Limited Anahita Golf Limited Four Seasons- 39% 39% Mauritius Golf Club

2009During the year, the Group disposed of its investments in Kingdom Da Nang Ltd (note 16), Kingdom Kampala Ltd (note 16) and Kingdom Sharm El Sheikh Ltd (note 15).

The development projects sold during the year did not have any operations and, hence, separate disclosure of discontinued operations is not applicable.

2008Raffles Seychelles Resort and Residences, Praslin, SeychellesOn 8 January 2008, KHI Seychelles Ltd, a wholly owned subsidiary of the Company, acquired a 91.2% stake in KHI Seychelles Holding Ltd. for US$6 million which in turn acquired a 100% in KHI Seychelles 01 Ltd. KHI Seychelles 01 Ltd has development rights to build a 90-villa luxury hotel and 17 private residential villas for sale. The total cost of the project is US$144 million.

Four Seasons Hotel Jakarta, IndonesiaDuring the year 2008, an existing US$2.3 million shareholder advance due to minority shareholders was converted into a 9.1% equity share under an agreement that pre-dates the acquisition, which resulted in a dilution of KHI’s equity interest to 81.9%.



33 Reclassifications

Certain prior year amounts have been reclassified to conform to the presentation adopted in the current year. The specific line items to which the reclassification adjustments have been made in the consolidated statement of financial position as at 31 December 2008 are as follows:

Consolidated statement of financial position

2008 2008 2008 US$’000 US$’000 US$’000 (Reclassified) (Original) (Variance)

AssetsCurrent assetsTrade and other receivables 21,888 21,400 488Pre-payments 30,898 31,386 (488)

LiabilitiesNon-current liabilitiesRetentions payable 4,638 4,375 263

Current liabilitiesTrade and other payables 92,729 94,247 (1,518)Retentions payable 2,699 1,444 1,255

Guest ledger balances in Mövenpick Hotel in Mauritius amounting US$0.488 million have been reclassified from pre-payments to trade receivables.

Long-term retentions payable related to development in Seychelles amounting to US$0.263 million have been reclassified from trade and other payables to long-term retentions payable.

Short-term retentions payable amounting to US$1.255 million relating to hotels in Kenya (US$0.687 million), Cambodia (US$0.564 million) and El Quseir (US$0.004 million) have been reclassified from trade and other payables to short-term retentions payable.


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End of audited accounts


Shareholder information

Our aim is to communicate with the financial community on a regular basis.

Kingdom Hotel Investments

Dubai International Financial CentreP.O. Box 121223DubaiUnited Arab Emirates

Website

The information contained in this Annual Report and other information about the Company is available on www. kingdomhotels.com.

Financial calendar

AGM 11 May 2010

Share listings

The Company’s Ordinary Shares are listed on NASDAQ Dubai. They are listed under ISIN – KYG5257E1017.

The Company also has listed Global Depository Shares on the London Stock Exchange. They are listed under ISIN US49567W1018 and CUSIP 49567W101.

Number of shares Ownership %

Kingdom 5-KR-124 75,416,240 43.2%Kingdom 5-KR-51 19,100,000 10.9%Other founding shareholders 13,356,962 15.6%Free float 60,697,011 30.3%Total 168,570,213 100.0%

Contacts

Contact details

Investor Relations Kingdom Hotel Investments Dubai International Financial Centre Shilpa Mathai P.O. Box 121223 Dubai United Arab Emirates [email protected]

Registrar Maples and Calder PO Box 309, Ugland House South Church Street, George Town Grand Cayman KY1-1104 Cayman Islands

GDS Depositary Citibank N.A. Depositary Receipt Services 388 Greenwich Street New York, New York 10013 United States

Public Relations Brunswick Group Dubai International Financial Centre Gate Village Building 1 PO Box 506691 Dubai, UAE

Auditors Ernst & Young P.O. Box 9267 Al Attar Business Tower, 28th floor Sheikh Zayed Road Dubai United Arab Emirates


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Hotel EBITDA, NOI or Net Operating Income

Is income before fixed charges less other expenses like lease costs, insurance, real estate taxes etc before deduction of FF&E reserve.

Hotel EBITDA POST-FF&E

Is hotel EBITDA less FF&E reserves (Furniture, Fixtures and Equipment Reserves are contractual deductions as a percentage of revenues that are set aside to accumulate funds required for future replacements of furniture, fixtures and equipment).

Hotel Revenue

Consists of (i) Rooms revenue (revenue generated by hotel guests paying for rooms), (ii) Food and beverage revenue (revenue generated from food and beverage sales from hotel restaurants and for group meetings and social affairs primarily driven by occupancy and non-guest customers), and (iii) Operating services revenue (ancillary hotel revenue such as telephone, parking, laundry, golf course, spa, entertainment and other guest services primarily driven by occupancy).

Income Before Fixed Charges

Is GOP less management fees (base and incentive fees paid to hotel management companies).

KHI EBITDA

Is EBITDA (net income before interest expense or income, income tax expense, and depreciation and amortisation charges) adjusted to exclude non-recurring gains and losses and non-cash effects of equity investments and minority interests. Examples of non-recurring gains or losses are gains and losses on dispositions of assets or investments, amortisation of deferred gains, impairment losses and write-offs, foreign currency gains or losses and debt pre-payment penalties.

Net Debt

Is defined as interest-bearing loans and borrowings less cash and short-term deposits.

Definitions

The following KHI and hotel industry definitions and statistics are part of the indicators used by the Company to manage its business and may or may not be included in this release or other announcements by KHI.

Adjusted KHI EBITDA

Is KHI EBITDA adjusted for the full impact of our share in the EBITDA of unconsolidated equity investments and the share of KHI minority partners in the EBITDA of our subsidiaries. The Adjusted KHI EBITDA measure does not include the effect of actual cash distributions from our equity investments or cash distributed to our minority shareholders.

ADR or Average Daily Rate

Is the total room revenue generated by paying guests divided by the number of rooms occupied during the reporting period.

Development Budget

Is the Board-approved estimation of project cost.

FF&E

Furniture, Furnishings and Equipment

Gross Operating Profit or GOP

Is the hotel revenue less (i) hotel departmental expenses which is the sum of rooms cost (payroll expenses and costs of rooms linens and other consumables), food and beverage cost (payroll expenses and costs related to food and beverage provided at hotel restaurants and related outlets and for group meetings and social affairs), and other operating costs (costs related to telephones, health club, spa, laundry, etc) and (ii) undistributed operating expenses which is the sum of hotel general & administrative costs (payroll expenses, audit, consultancy fees, cost of supplies, travel, etc), sales and marketing costs (payroll expenses and costs of promotions, events and advertising), property operation & maintenance (payroll expenses, cost of maintenance contracts and expenses for air conditioning, pool, telephone and others) and utilities cost (fuel, water and electricity cost).


Occupancy or Occupancy Rate

Is a measure of the percentage of daily rooms occupied for the reporting period.

Occupied Rooms

Is the total rooms sold including complimentary rooms.

RevPAR or Revenue Per Available Room

Is the product of ADR and Occupancy for the reporting period, but does not reflect any food and beverage or other hotel operations such as telephone, parking, laundry or other guest services.

Rooms

Refers to the number of permanent rooms or villas owned by the hotel and available for rent during the reporting period, and doesn’t include any ancillary real estate rooms, villas or apartments for sale. Rooms available under rental pool arrangements are included in room count.

Total RevPAR or Total Revenue Per Available Room

Is RevPAR in addition to food and beverage and other hotel revenue per room for the reporting period.

Designed and produced by Merchant. www.merchant.co.uk

Kingdom Hotel InvestmentsDubai International Financial CentreP.O. Box 121223DubaiUnited Arab Emirates

Tel: + 971 4 361 1800Fax: + 971 4 362 0500

[email protected]

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