Annual Review 2004
Total Page：16
File Type：pdf, Size：1020Kb
Annual review and summary financial statement 2004 Financial highlights Operating profit up 17% Dividend† up 6% Disposals £1.75bn announced Return of funds £2bn committed 296 331 39 119 262 283 92 19 03 04 03 04 03 04 03 04 Group Americas EMEA* Asia Pacific Operating profit Operating profit Operating profit Operating profit (£m) ($m) (£m) ($m) Note: Operating profit is shown before exceptional items; 2003 comparatives are unaudited pro forma figures for the 12 months ended 31 December 2003. † Full year dividend per share, excluding special interim dividend paid in December 2004. * EMEA – Europe, Middle East & Africa. Contents 1 Chairman’s review 18 Brand innovation 3 Chief Executive’s statement 19 Britvic soft drinks 4 Global overview 20 Corporate social responsibility 5 The business model 23 Summary directors’ report 6 Brand ownership 24 Summary financial statement 7 Brand management: 26 The Board 8 InterContinental Hotels & Resorts 28 Corporate governance and 10 Crowne Plaza Hotels & Resorts summary audit committee report 12 Holiday Inn Hotels & Resorts 29 Summary remuneration report 14 Holiday Inn Express 32 Investor information 16 Staybridge Suites 33 Financial calendar and contacts 17 Candlewood Suites Front cover photo Gerard Rodriguez, Restaurant Server, Au Pied de Cochon, InterContinental Buckhead, Atlanta. InterContinental Hotels Group 2004 1 Chairman’s review InterContinental Hotels Group (IHG) made considerable progress in achieving its vision and goals in 2004. We delivered strong operational performance, with growth right across our hotel operations. ACHIEVING OUR VISION AND GOALS We saw a change of leadership of the Group during the year, with Richard North stepping down as Chief Executive on 30 September 2004, having led the Group through its early life as a new and separate business. He was the right man for that role and achieved notable success, and he goes with our good wishes and thanks. Andrew Cosslett, our new Chief Executive, joined the Group on 3 February 2005. He comes to IHG with an impressive track record with two of the world’s most respected brand-focused companies. I would like to welcome Andrew to the Group and very much look forward to working with him. He brings great expertise in global brand management and a wealth of international experience at a time when we are concentrating on developing our world-leading brands and growing our managed and franchised operations. STRONG OPERATING RESULTS 2004 was a year of much improved performance. Adjusted earnings per share increased 56 per cent, to 32.5p* per share. Operating profit before exceptional items increased 17 per cent to £331 million. With recovery continuing in our hotel operations across the US, UK and Asia Pacific, Hotels operating profit (before exceptional items) increased 26 per cent to £251 million, despite the impact of a weak US dollar. Had the US dollar not lost value, Hotels operating profit would have increased by 36 per cent. DRIVING REVENUE We continued to drive revenues in 2004 with considerable success. We increased membership of our loyalty programme, Priority Club Rewards, by 23 per cent to 23.7 million, making it the largest in the industry. Our call centre revenues increased 14 per cent to $1.5 billion, while internet revenues grew by over 44 per cent, and now account for 13 per cent of total rooms revenues. Rooms revenue delivered to hotels through our own reservation channels increased by nearly 23 per cent from $3.3 billion to $4.0 billion. We added approximately 24,000 rooms to our system, and grew our pipeline of new rooms by 16 per cent to 83,000 rooms. Our continued focus on quality accounted for over 10,000 of the 26,000 rooms that left our system during the year. * Compared with 20.8p pro forma adjusted earnings per share for the 12 months ended 31 December 2003. Note: 2003 comparatives are unaudited pro forma figures for the 12 months ended 31 December 2003. 2 InterContinental Hotels Group 2004 Chairman’s review During the year we increased further the global distribution of our flagship InterContinental 8.9 brand, opening new hotels in Atlanta, US; Kigali, Rwanda; Cairo, Egypt; and Makkah, Saudi Arabia, with Beijing, China; Paphos, Cyprus; Dusseldorf and Berchtesgaden, Germany due to open in 2005. We also signed eight new InterContinental hotels in 2004, 7.0 and a further three since the year end, which will continue to increase our brand distribution. In addition, we launched a new lifestyle hotel brand, Hotel Indigo, in the US, our new Holiday Inn prototype in Atlanta, US, and have now opened our first Express 4.5 by Holiday Inn in China. BRITVIC Britvic Soft Drinks, in which we have a controlling interest, continued to increase revenues, despite the lower demand for soft drinks experienced in 2004 due to wetter and cooler summer weather. During the year we secured an agreement with Britvic’s other shareholders which will allow us to make an Initial Public Offering of shares in the company at any time before 31 December 2008. 02 03 04 CREATING STRONGER RETURNS During 2004, we announced further planned ROOM NIGHTS VIA disposals of hotel assets, taking to £2.1 billion the total value of assets we have put on IHG WEBSITES the market since the Group separated from Six Continents in April 2003. We have now (per cent) announced agreements to sell £1.75 billion of these hotel assets, with proceeds approximately equalling net book value. This is strong evidence of our determination to deliver on our promise, made at the time of Separation, to optimise our deployment of capital and increase our return on invested capital. In 2004 we also announced the return of £1 billion of funds to shareholders, of which £767 million has been completed to date, £266 million through a share repurchase programme and £501 million through a special dividend. Since the year end we have announced the planned return of a further £1 billion of funds 23.7 to shareholders, which will take total returns to £2 billion, just over half the net book value of our hotel assets at Separation. The Group’s debt facilities were also refinanced in October 2004, 19.2 reducing our borrowing costs and providing us with additional financial flexibility. In line with our policy of increasing our dividend by more than inflation, the Board 15.6 has recommended a final dividend of 10.0p per share, making a full year dividend (excluding the special dividend) of 14.3p, a 6 per cent increase over 2003. Subject to approval at the Annual General Meeting, the final dividend will be paid on 3 June 2005 to shareholders on the register on 1 April 2005. SENIOR INDEPENDENT DIRECTOR David Kappler joined the Board as Senior Independent non-executive Director and Chairman of the Audit Committee on 21 June 2004. David recently retired as Chief Financial Officer of Cadbury Schweppes plc and his extensive financial experience makes him ideally suited for these important roles. 02 03 04 A TALENTED AND MOTIVATED TEAM Our people are our greatest asset. We are PRIORITY CLUB fortunate to have a strong team of committed employees and franchisee partners. REWARDS MEMBERSHIP It is the efforts of the people who work for and with the Group across the world that will (million) allow us to achieve our ambition of becoming the world’s most preferred, admired and respected hotel company. In particular, I pay tribute to those of our people affected by the Asian tsunami at the very end of 2004, who have responded so magnificently. We believe in looking after all our employees, and I offer them my sincere thanks for their dedication and hard work in 2004, and a commitment to continue to offer them every opportunity to achieve their potential in the future. David Webster Chairman InterContinental Hotels Group 2004 3 Chief Executive’s statement I am delighted to be leading the Group in what promises to be an exciting period for its development. FIRST THOUGHTS Since joining the Group, I have spent most of my time getting to know the senior management, local management teams, and some of our hotel owners and operators. I have been able to visit our operations in Asia, the US and Europe. The people who work for IHG across the globe are central to our success and I was particularly impressed with how our employees in Asia have coped with the impact of the tsunami. We are an ambitious company and we have much to be confident about. We operate in a growth industry, have strong market positions globally and a powerful brand family, including Holiday Inn, one of the most popular brands in the hotel industry. Our infrastructure network, including our reservation call centres, internet sites, and loyalty programme, allows us to drive revenues to our hotels, benefiting our franchisees and owners, which is fundamental to our continued growth. PRIORITIES FOR 2005 My priorities for 2005 are to continue our focus on generating shareholder value through further disposals of hotel assets, returning additional funds to shareholders, and retaining and enhancing our powerful brand positions and infrastructure. We will also maintain our focus on corporate social responsibility, where we seek to be an industry leader. Our business is well positioned to prosper from an expected continued industry recovery in 2005, and we can look to the future with confidence. Andrew Cosslett Chief Executive 4 InterContinental Hotels Group 2004 Global overview We are the world’s largest hotel operator, represented in nearly 100 countries and territories with seven brands spanning the upscale and midscale markets. The Americas Over 70 per cent of our total rooms are concentrated in the Americas which has 2,783 hotels and 386,327 rooms, with a further 55,339 rooms planned.