Holiday Inn 2005 Annual Report Download - page 20

The Directors present their report for the financial year ended
31 December 2005.
ACTIVITIES OF THE GROUP
The principal activities of the Group are in hotels and resorts, with
worldwide interests through franchising, management, ownership
and leasing and until December 2005, the Group was involved in
the manufacture and distribution of soft drinks in the UK.
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The Operating and Financial Review (OFR) on pages 1 to 17,
together with the Chairman’s Statement, the Chief Executive’s
Review and the business reviews presented in the Annual Review
and Summary Financial Statement provide information about the
Group’s strategy, its businesses, their financial performance during
the year, the principal risks and uncertainties facing the Group and
likely developments.
SIGNIFICANT DISPOSALS DURING THE YEAR
During 2005, the Group made further significant progress in its
hotels disposal programme, details of which are provided in the
OFR on page 3. In December 2005, the Group disposed of its entire
interest in the Britvic Group, a manufacturer and distributor of soft
drinks in the UK.
RESULTS AND DIVIDENDS
The profit on ordinary activities before taxation was £284m. An
interim dividend of 4.60p per share was paid on 17 October 2005.
The Directors are recommending a final dividend of 10.70p per
share to be paid on 5 June 2006 to shareholders on the Register at
close of business on 31 March 2006. Total dividends relating to the
year will amount to £66m.
The Group intends to return a further £500m to shareholders
during the second quarter of 2006 by way of a special interim
dividend and, subject to shareholder approval, an accompanying
share consolidation.
FINANCIAL INSTRUMENTS
The Group’s financial risk management objectives and policies
can be found on pages 13 and 14 of the OFR.
CAPITAL REORGANISATION AND SCHEME OF ARRANGEMENT
The Group returned £996m to shareholders under a
Court-approved scheme of arrangement which resulted in a new
listed company becoming the parent company of the Group. The
former parent company of the Group was re-registered as a limited
company and renamed InterContinental Hotels Limited shortly
after introduction of the new parent company of the Group.
As a result of the scheme of arrangement, shareholders received
11 ordinary shares and £24.75 in cash for every 15 ordinary shares
held on the record date of 24 June 2005.
The scheme of arrangement was approved by the High Court
of Justice in England and Wales on 24 June 2005 and became
effective on 27 June 2005. The shares in the capital of the former
parent company of the Group held by its shareholders were
cancelled and new shares of equivalent nominal value were issued
to the new parent company on 27 June 2005.
On 29 June 2005, the High Court of Justice in England and Wales
approved a reduction of capital of the Company by decreasing the
nominal amount of each share issued from £6.25 to 10p. The
reduction of capital became effective on 30 June 2005. The cash
payment was made to shareholders on 8 July 2005.
SHARE REPURCHASES
During the year, 30,600,010 ordinary shares were purchased and
cancelled at a cost of £205,672,566 (excluding transaction costs)
under IHG’s planned share repurchase programmes. Of these,
19,460,010 were 112p shares in the capital of the former parent
company of the Group, purchased at an average price of 631p per
share and 11,140,000 were 10p shares in the capital of the new
parent company of the Group, purchased at an average price of 744p.
Shares purchased and cancelled represented approximately 7%
of the issued share capital of InterContinental Hotels Group PLC
at the start of the year and were purchased and cancelled under
the authorities granted by shareholders at Extraordinary General
Meetings held on 10 December 2004 and 1 June 2005 respectively.
The share buyback authority remains in force until the Annual
General Meeting in 2006, and a resolution to renew the authority
will be put to shareholders at that Meeting.
SHARE PLANS
Under the terms of the separation of Six Continents PLC in 2003,
holders of options under the Six Continents Executive Share Option
Schemes were given the opportunity to exchange their Six Continents
options for equivalent value new options over InterContinental Hotels
Group PLC (IHG PLC or the Company) shares. During the year,
4,138,482 such options were exercised, leaving a total of 7,909,002
such options outstanding at prices ranging from 308.48p to 593.29p.
Following Separation, the Six Continents PLC shares held by
the Trustee of the Six Continents Employee Profit Share Scheme
on behalf of beneficiaries were exchanged for IHG PLC and
Mitchells & Butlers plc shares. During 2005, the Trust released
659,665 IHG PLC shares out of profits previously appropriated to
them by the Six Continents PLC Board in 2002. This was the final
release of shares held in the Trust under the Scheme which is
no longer operational. Consequently, at 31 December 2005, there
were no shares held in the Trust.
During 2005, 581,242 shares were awarded under the
Britvic Share Incentive Plan to be retained in trust by
Hill Samuel ESOP Trustee Limited as free and partnership shares
on behalf of 2,798 eligible employees, subject to the Plan rules.
Following the disposal of IHG’s interest in the Britvic Group on
14 December 2005, no further awards over IHG PLC shares will
be made in respect of the Plan. Shares accumulated in the Trust
prior to the disposal of IHG’s interest in the Britvic Group will
continue to be held in trust for a maximum period of five years.
In 2005, options were granted under the Executive Share Option Plan
to 58 employees, over 2,104,570 IHG PLC shares at 619.83p per share.
directors’ report
18 InterContinental Hotels Group 2005