Holiday Inn 2008 Annual Report Download - page 36

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34 IHG Annual Report and Financial Statements 2008
Directors’ report continued
Going concern
The wider economic climate currently creates trading uncertainty
for the hotel industry and IHG. The key business risks for IHG are
outlined on pages 26 to 28 of the Business Review but, in particular
over the relatively short term, the main risks are falling consumer
demand, restrictions on the availability of debt for owners, and a
fall in the pace of new room openings. As highlighted in note 20 to
the Group financial statements, the Group refinanced its debt in
May 2008 and meets its day-to-day working capital requirements
through this facility. At the end of 2008, the Group was trading
significantly within its banking covenants and debt facilities. $500m
of the facility expires in November 2010 and, as at the date of this
Report, the Group is not aware of any matters which may preclude
this element being refinanced on acceptable terms in an
appropriate timeframe.
The Group’s fee-based model and wide geographic spread means
that it is well placed to manage through the current downturn, and
our forecasts and sensitivity projections, based on a range of
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of its current facility.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future and, accordingly, they continue to adopt the going concern
basis in preparing the financial statements.
Auditors
The Directors who held office as at the date of approval of this
report confirm that they have taken steps to make themselves
aware of relevant audit information. None of the Directors is aware
of any relevant audit information which has not been disclosed to
the auditors.
Ernst & Young LLP have expressed their willingness to continue in
office as auditors of the Company and their reappointment will be
put to members at the Annual General Meeting.
Annual General Meeting
The Notice convening the Annual General Meeting to be held at
11.00am on Friday, 29 May 2009 is contained in a circular sent
to shareholders with this Report.
By order of the Board
George Turner
Company Secretary
16 February 2009