Holiday Inn 2007 Annual Report Download - page 30

28 IHG Annual Report and Financial Statements 2007
Directors’ report
The Directors present their report for the financial year ended
31 December 2007.
Certain information required for disclosure in this report is
provided in other appropriate sections of the full Annual Report
and Financial Statements 2007. These include the Business
Review, the Corporate Governance and Remuneration Reports,
and the Group financial statements and these are, accordingly,
incorporated into this Directors’ Report by reference.
Activities of the Group
The principal activities of the Group are in hotels and resorts,
with franchising, management, ownership and leasing interests
in almost 4,000 establishments, with over 585,000 guest rooms
in nearly 100 countries and territories around the world.
Business review
This Directors’ Report should be read in conjunction with
the Message from the Chairman and Chief Executive on pages
2 and 3, and the Business Review on pages 6 to 24. Taken
together, these provide a fair review of the Group’s strategy and
business and a description of the principal risks and uncertainties
it faces. The development and performance of the business during
and at the end of the year are described, together with main
trends, factors and likely developments, environmental and
employee matters, and social and community issues.
Significant growth during the year
During 2007, the Group increased its development pipeline
to 1,674 hotels (225,872 rooms), up by 35% and 43% respectively
compared with 2006.
Return of shareholders’ funds
and share consolidation
In June 2007, the Company completed a £250m share repurchase
programme and commenced a further £150m share repurchase
programme which is well under way. Additionally, £709m was
returned to shareholders on 15 June 2007 by way of a special
interim dividend of 200p per share. This special dividend was
accompanied by a consolidation of the Company’s ordinary share
capital on the basis of 47 new ordinary shares for every 56 existing
ordinary shares, effective from 4 June 2007. The nominal value
of the new shares is 13 29⁄47p per share.
Results and dividends
The profit on ordinary activities before taxation was £230m.
In addition to the special dividend referred to above, an interim
dividend of 5.7p per share was paid on 5 October 2007. The
Directors are recommending a final dividend of 14.9p per share
to be paid on 6 June 2008 to shareholders on the Register at
close of business on 28 March 2008. Total dividends relating
to the year are expected to amount to £770m.
Share repurchases
During the year, 7,724,844 ordinary shares were purchased and
cancelled at a cost of £80,772,397 (excluding transaction costs)
under IHG’s planned share repurchase programmes. Of these
shares, 2,237,264 were 11 3⁄7p shares in the capital of the
Company, purchased at an average price of 1227p per share and
5,487,580 were 13 29⁄47p shares in the capital of the Company,
purchased at an average price of 972p per share.
Shares purchased and cancelled represented approximately 2%
of the issued share capital of the Company at the start of the year
and were purchased and cancelled under the authorities granted
by shareholders at an Extraordinary General Meeting held on
1 June 2006 and at the Annual and Extraordinary General
Meetings held on 1 June 2007.
The share buyback authority remains in force until the Annual
General Meeting in 2008, 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 shares. At 31 December 2007,
2,696,883 such options were outstanding.
During 2007, 101,846 options granted to employees in
December 2003 under IHG’s Sharesave Plan matured. Of these,
99,678 were exercised during the year.
During 2007, 6,211,990 options granted in April 2004 under
the IHG Executive Share Option Plan, vested in full. Of these,
3,428,514 had been exercised by 31 December 2007.
During 2007, conditional rights over 3,538,535 shares were
awarded to employees under the Performance Restricted Share
Plan (now called the Long Term Incentive Plan) and 1,694,173
shares were released to employees under the plan.
A number of employees participated in the Short Term Deferred
Incentive Plan (now called the Annual Bonus Plan) during the
year. Conditional rights over 675,515 shares were awarded to
participants. 418,450 shares were released under the plan during
the year. A number of participants are eligible to receive a bonus
award in shares on 25 February 2008.
No options were granted under either the Executive Share Option
Plan or the Sharesave Plan during the year. Neither the Hotels
Group Share Incentive Plan nor the US Employee Stock Purchase
Plan was operated during the year.
During the year, no awards or grants over shares were made that
would be dilutive of the Company’s ordinary share capital. Current
policy is to settle all awards or grants under the Company’s share
plans with shares purchased in the market, with the exception of
a number of options granted before 2005, which are yet to be
exercised and settled with the issue of new shares.