1、ANNUAL REPORT AND FINANCIAL STATEMENTS 2005financial highlightsTransformation to a managed and franchised business nearingcompletion. InterContinental Hotels Group now delivers more stable earnings and has a clear growth focus.Continuing operating profit* up 42% from 134m to 190mwith operating profi
2、t margin up 4 percentage points. Group operating profit 317m, up 20m. Adjustedearnings per share from continuing business up 44%from 17.3p to 24.9p. Group basic earnings per share up 77%from 53.9p to 95.2p driven by gain on disposal of operations.Final dividend up 7% from 10.00p to 10.70p per share:
3、 total 2005 dividend up 7% from 14.30pto 15.30p per share.9.0% RevPAR#growth across the Groups 3,600 hotels, mostly rate driven with strongest trading in the Americas. 70,000 rooms signed in 2005, up 57% over 2004. Our contract pipeline is the industrys largest at 108,500 rooms, 20% of existing room
4、 count. Room count up 3,300 to 537,500 rooms.500m special interim dividend to be paid during the second quarter of 2006.* Excludes Britvic and hotel assets sold or held for sale at 31 December 2005; operating profit before other operatingincome and expenses.Excludes special items and gain on disposa
5、l of assets, net of related tax.Excludes special interim dividend paid in December 2004.#Room revenue divided by the number of room nights available.1 OPERATING AND FINANCIAL REVIEW18 DIRECTORS REPORT20 CORPORATE GOVERNANCE24 AUDIT COMMITTEE REPORT25 REMUNERATION REPORT34 FINANCIAL STATEMENTS Group
6、income statement Group statement of recognised income and expenseGroup cash flow statement Group balance sheet38 CORPORATE INFORMATION AND ACCOUNTING POLICIES42 NOTES TO THE FINANCIAL STATEMENTS76 US GAAP INFORMATION80 DIRECTORS RESPONSIBILITIES IN RELATIONTO THE GROUP FINANCIAL STATEMENTS81 REPORT
7、OF THE INDEPENDENT AUDITOR82 COMPANY FINANCIAL STATEMENTS83 NOTES TO THE COMPANY FINANCIALSTATEMENTS86 DIRECTORS RESPONSIBILITIES IN RELATIONTO THE COMPANY FINANCIAL STATEMENTS87 REPORT OF THE INDEPENDENT AUDITOR88 GLOSSARY89 SHAREHOLDER PROFILE AND FORWARD-LOOKING STATEMENTSFront cover photo: Louis
8、e Wang, waitress, Plaza Bar, Crowne Plaza, Pudong, ShanghaiThis operating and financial review (OFR) provides a commentary on the performanceof InterContinental Hotels Group PLC (the Group or IHG) for the financial year ended31 December 2005.The financial statements for the year ended 31 December 20
9、05 are the first annualfinancial statements that the Group has produced in line with International FinancialReporting Standards (IFRS). This OFR therefore compares financial year ended31 December 2005 with financial year ended 31 December 2004 under IFRS.FIGURE 1Percentage of branded hotel rooms by
10、region2004North America65%Europe25%South America20%Middle East25%East Asia25%Source: MintelUS market data shows a steady increase in demand in the hotelmarket, broadly in line with Gross Domestic Product, and showsgrowth of approximately 1-1.5% per annum in real terms since1967 driven by a number of
11、 underlying trends: demographics as the population ages, increased leisure timedrives more travel and hotel visits; disposable income rising as the global population becomes olderand wealthier; travel volumes increasing as low cost airlines grow rapidly; globalisation of trade and tourism; the incre
12、asing affluence and freedom to travel of the Chinesemiddle class; and brand preference amongst consumers is increasing.Suppressing this demand are potential negative trends includingincreased terrorism, environmental considerations and economicfactors such as rising oil prices. Currently, however, t
13、here are no indications that demand is being significantly affected by these factors.Supply growth in the industry is cyclical, averaging between zeroand 5% per annum historically. The Groups profit is to a large extentinsulated from supply pressure due to its model of third-partyownership of hotels
14、 under IHG management and franchisecontracts.BUSINESS OVERVIEWMarket and Competitive EnvironmentThe Group operates in a global market, providing hotel rooms toguests. Total room capacity in hotels and similar establishmentsworldwide is estimated at 18.4 million rooms. This has been growingat approxi
15、mately 3% per annum over the last five years. The hotelmarket is geographically concentrated with 12 countries accountingfor two-thirds of worldwide hotel room supply. The Group has aleadership position (top three by room numbers) in six of these 12countries US, UK, Mexico, Canada, Greater China and
16、 Australia more than any other major hotel company.The hotel market is, however, a fragmented market with the fourlargest companies controlling only 11% of the global hotel roomsupply and the 10 largest controlling less than 20%. The Group isthe largest of these companies (by room numbers) with a 3%
17、market share. The major competitors in this market include othermajor global hotel companies, smaller hotel companies andindependent hotels. Within the global market, a relatively low proportion of hotel roomsare branded (see figure 1), but there has been an increasing trendtowards branded rooms and
18、 market research company, Mintel,estimates that the proportion of branded rooms in Europe hasgrown from 15% in 2000 to 25% in 2004. Larger branded companiesare therefore gaining market share at the expense of smallercompanies and independent hotels. IHG is well positioned tobenefit from this trend.
19、Hotel owners are increasingly recognisingthe benefits of belonging to a branded portfolio, particularly a bigbrand family like IHG that can offer various brands to suit differentopportunities an owner may have available. Furthermore, hotelownership is increasingly being separated from hotel branding
20、 andthis requires hotel owners to use third-parties like the Group tooperate or brand their hotels.InterContinental Hotels Group 20051operating and financial reviewStrategyThe Group owns, operates and franchises hotels globally. The strategy is to become the preferred hotel company for guests and ow
21、ners by building the strongest operating system in the industry, focused on the biggest markets and segmentswhere scale really counts. The Group has four stated strategic priorities: brand performance to operate a portfolio of brands attractive to both owners and guests that have clear market positi
22、ons inrelation to competitors; excellent hotel returns to generate higher owner returnsthrough revenue delivery and improved operating efficiency; market scale and knowledge to accelerate profitable growth inthe largest markets where the Group currently has scale; and aligned organisation to create
23、a more efficient organisation with strong core capabilities.Executing the four strategic priorities is designed to achieve: organic growth of 50,000 to 60,000 net rooms by the end of 2008; out-performance of Total Shareholder Return (TSR) against a competitor set; and improved Return on Capital Empl
24、oyed (ROCE).Growth is expected to come predominantly from managing andfranchising rather than owning hotels. The managed and franchisedmodel is attractive because it enables the Group to achieve itsgoals with limited capital. With a relatively fixed cost base, suchgrowth yields high incremental marg
25、ins for IHG, and is primarilyhow the Group has grown to date. For this reason, the Group hasexecuted a disposal programme of its owned hotels, releasingcapital and enabling returns of funds to shareholders. The main characteristic of the managed and franchised businessmodel on which the Group has fo
26、cused is that it generates surpluscash, with high ROCE. Currently, 88% of continuing earnings beforeinterest, tax and regional and central overheads is derived frommanaged and franchised operations and over 3,500 hotels operatingunder Group brands are managed or franchised (see figure 2).The Group a
27、ims to deliver its growth targets through the strongestoperating system in the industry which includes: a strong brand portfolio across the major markets, including two iconic brands: InterContinental and Holiday Inn; market coverage a presence in nearly 100 countries andterritories; hotel distribut
28、ion 3,606 hotels, 537,533 rooms, 126 millionguest stays per annum; IHG global reservation channels delivering over $4.8bn ofrevenue in 2005, $1.7bn from the internet. IHG reservationsystems take over 22 million calls per annum; a loyalty programme, Priority Club Rewards, contributing $3.8bnof system
29、 room revenue; and a strong web presence. holiday- is the industrys mostvisited site, with 75 million total site visits per annum.With a clear target for rooms growth and many brands withsignificant market premiums offering excellent returns for owners,the Group is well placed to execute its strateg
30、y and achieve its goals.6005004003002001000FIGURE 2Global room count by ownership typeOwned & leasedManagedFranchised20042005Thousandsoperating and financial review2InterContinental Hotels Group 2005SIGNIFICANT DEVELOPMENTSBritvic Initial Public OfferingIn December 2005, IHG disposed of all of its i
31、nterests in the BritvicGroup (Britvic), by way of an initial public offering (IPO) of Britvicplc. IHG received approximately 371m in proceeds and additionaldividends, before transaction costs. The disposal of Britvic leavesthe Group focused solely on the hotel business. The results ofBritvic up to 1
32、4 December 2005 are included in the Group results.Hotel DisposalsDuring 2005, IHG made significant further progress in its assetdisposal programme, including: the sale of 13 hotels in the US, Canada and Puerto Rico toHospitality Properties Trust (HPT) for $425m before transactioncosts. Completion of
33、 the sale on 12 hotels was on 16 February2005, with the sale of the InterContinental Hotel in Austin, Texascompleting on 1 June 2005. IHG entered into a managementcontract with HPT on 12 of the hotels and operates theInterContinental San Juan on a lease agreement; the acquisition by Strategic Hotels
34、 Capital, Inc. (SHC) of an 85% interest in the InterContinental Miami and InterContinentalChicago, for $287m in cash before transaction costs. Theacquisition completed on 1 April 2005 and IHG entered into a management agreement with SHC on both of the hotels; the sale of 73 hotels in the UK to LRG A
35、cquisition Limited (LRG), a consortium comprising Lehman Brothers Real Estate Partners,GIC Real Estate and Realstar Asset Management. The transactioncompleted on 24 May 2005, with IHG receiving an initial 960m incash before transaction costs with a further 40m to be receivedsubject to meeting perfor
36、mance targets over the next three years.IHG entered into a management agreement with LRG on 63 of thehotels and operates the other ten hotels under a temporarymanagement agreement; the sale of nine hotels in Australia and New Zealand to EurekaFunds Management Ltd (Eureka) for A$390m in cash beforetr
37、ansaction costs, and the sale of the Holiday Inn, Suva, to asubsidiary of Fiji National Provident Fund (FNPF) for A$15m incash. Both transactions completed by 31 October 2005, with IHGentering into management agreements with Eureka and FNPF on these hotels; the sale of the InterContinental Hotel Par
38、is for 315m. The transaction completed on 1 November 2005 and the hotel left the IHG system; and the sale of a further 13 hotels for proceeds of approximately159m.Since the end of 2005, the Group has made further announcementsin relation to hotel disposals: on 25 January 2006, the sale to HPT of two
39、 hotels in the Americasfor $35m, marginally below net book value; and on 31 January 2006, the Group announced that it had placed afurther 31 hotels in Europe on the market. The book value ofthese hotels is approximately 600m, and constitutes the finaltranche of hotels that the Group had previously a
40、nnounced itwould sell.The asset disposal programme which commenced in 2003 hassignificantly reduced the capital intensity of the Group whilstlargely retaining the hotels in the system via management andfranchise agreement.Since the separation of Six Continents PLC in April 2003 (Separation),the Grou
41、p has sold or announced the sale of 144 hotels foraggregate proceeds of approximately 2.3bn (see figure 3). Of these144 hotels, 126 have remained in the system under Group brandsthrough either franchise or management agreements.FelCor RelationshipOn 25 January 2006, the Group announced a restructure
42、dmanagement agreement with FelCor Lodging Trust Inc., (FelCor),covering all of the hotels (15,790 rooms) owned by FelCor andmanaged by the Group. Seventeen hotels (6,301 rooms) will beretained by FelCor and managed by the Group, with revisedcontract terms (duration extended to 2025) and rebased ince
43、ntivefees on all the hotels. HPT have purchased seven of the hotels(2,072 rooms) from FelCor for $160m, retaining the Group flag onthese assets. There is no increase in the guarantees to HPT as aresult of this deal. Nine further hotels (2,463 rooms) can be sold by FelCor, retaining a Group brand. Fe
44、lCor has the right to sell orconvert a further 15 hotels (4,954 rooms); these may retain theGroup flag.Since the year end, the Group has sold its entire shareholding in FelCor for $191m in cash.InterContinental Hotels Group 20053Return of FundsIHGs second 250m on-market share repurchase programme wa
45、sannounced in September 2004 and commenced in December 2004.In 2005, 30.6 million shares were repurchased at an average priceof 672p making the total purchased under the second programme211m. On 8 September 2005, IHG announced a further 250mshare repurchase programme to commence on completion of the
46、second programme. The precise timing of share purchases will bedependent on, amongst other things, market conditions. Purchasesare under the existing authority from shareholders which will berenewed at the Annual General Meeting. Any shares repurchasedunder this programme will be cancelled.On 8 July
47、 2005, IHG returned a further 996m capital toshareholders following the capital reorganisation of the Groupcompleted in June 2005. Under the reorganisation, shareholdersreceived 11 new ordinary shares and 24.75 cash in exchange for every 15 existing ordinary shares held on 24 June 2005.A more detail
48、ed explanation of the capital reorganisation iscontained in the Directors Report on page 18.In March 2006, IHG announced that a 500m special dividend will be paid to shareholders in the second quarter of 2006.Since April 2003, IHG has announced the return of 2.75bn of funds to shareholders by way of
49、 special dividends, sharerepurchase programmes and capital returned (see figure 4).Management and OrganisationDuring 2005, a number of key organisational changes were made to support the achievement of IHGs strategic priorities, including: the appointment of Stevan Porter as Global Leader, Franchise
50、Strategy with responsibility for the development and deploymentof best practice in franchising globally in addition to his role asPresident, The Americas; the appointment of Peter Gowers as Chief Marketing Officer, with responsibility for the development of IHGs worldwide brandpriorities and brand m
