Holiday Inn 2008 Annual Report Download - page 34

32 IHG Annual Report and Financial Statements 2008
The Directors present their report for the financial year ended
31 December 2008.
Certain information required for disclosure in this report is
provided in other appropriate sections of the full Annual Report and
Financial Statements 2008. 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 4,200 establishments, with nearly 620,000 guest rooms
in nearly 100 countries and territories around the world.
Business review
This Directors’ Report should be read in conjunction with the
Chairman’s statement and the Chief Executive’s review on pages
2 to 4, and the Business Review on pages 6 to 28. 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, key performance indicators,
environmental and employee matters, and social and community
issues.
Significant growth during the year
During 2008, the Group increased its development pipeline to
1,775 hotels (245,085 rooms), up by 6% and 8.5% respectively
compared with 2007.
Results and dividends
The profit on ordinary activities before taxation was $316m. An
interim dividend of 6.4p per share (12.2 cents per ADR) was paid on
3 October 2008. The Directors are recommending a final dividend
of 20.2p per share (29.2 cents per ADR) to be paid on 5 June 2009
to shareholders on the Register at close of business on
27 March 2009. Total dividends relating to the year are expected
to amount to $115m.
Share repurchases
The Company continued its £150m share repurchase programme
throughout the year, during which 9,219,325 ordinary shares were
purchased and cancelled at a cost of £69,995,626 (excluding
transaction costs). These purchases were at an average price
of 759p per share. As at the date of this report, £30m of the
programme has yet to be completed. The programme was deferred
in November 2008 in order to preserve cash and maintain the
strength of IHG’s balance sheet.
Shares purchased and cancelled represented approximately
3.13% 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 2007 and at the Annual General Meeting held
on 30 May 2008.
The share buyback authority remains in force until the Annual
General Meeting in 2009, 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 2008,
2,424,605 such options were outstanding.
During 2008, 1,612,020 options granted in April 2005 under the
IHG Executive Share Option Plan, vested in full. Of these, 77,310
had been exercised by 31 December 2008.
During 2008, conditional rights over 5,060,509 shares were
awarded to employees under the Long Term Incentive Plan and
2,751,895 shares were released under the plan.
A number of employees participated in the Annual Bonus Plan
during the year. Conditional rights over 661,657 shares were
awarded to participants. 471,794 shares were released under
the plan during the year. A number of participants are eligible
to receive a bonus award in shares on 23 February 2009.
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 the majority of awards or grants under the
Company’s share plans with shares purchased in the market.
A number of options granted before 2005 are yet to be exercised
and will be settled with the issue of new shares.
Directors’ report