Holiday Inn 2010 Annual Report Download

Download and view the complete annual report

Please find the complete 2010 Holiday Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

IHG Annual Report and
Financial Statements 2010
Annual Report and Financial Statements 2010
make a booking at
www.ihg.com
InterContinental Hotels Group PLC
Broadwater Park, Denham
Buckinghamshire UB9 5HR
United Kingdom
Telephone +44 (0) 1895 512 000
Fax +44 (0) 1895 512 101

Table of contents

  • Page 1
    IHG Annual Report and Financial Statements 2010

  • Page 2
    ...'s statement Chief Executive's review Message from the IAHI Great brands Business review Industry and market trends Our strategy Measuring our success Where we compete How we win Group performance Regional performance Central and System Fund results Other financial information Our people Corporate...

  • Page 3
    ... of financial position Group statement of cash flows Accounting policies Notes to the Group financial statements Useful information Glossary Shareholder profiles Investor information Dividend history and Financial calendar Contacts Forward-looking statements BUSINESS REVIEW THE BOARD, SENIOR...

  • Page 4
    ... and and Financial Financial Statements Statements 2010 2010 Headlines Signings of 55,598 rooms (319 hotels) with development pipeline now totalling 204,859 rooms (1,275 hotels) Total number of rooms operating under IHG brands 647,161 (4,437 hotels) 2,956 hotels operating under the new Holiday Inn...

  • Page 5
    ... of hotel openings expected across the industry, forward trends look favourable. Our global scale, attractive brands, powerful system and experienced management team position us well to drive market share and improve margins into the future. PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION...

  • Page 6
    ... Hawaii market with Holiday Inn and formed an innovative alliance with Las Vegas Sands Corp., bringing The Venetian and Palazzo Resorts into the InterContinental system. In 2010, 68 per cent of rooms revenue came through our reservations channels or by Priority Club Rewards members direct to hotels...

  • Page 7
    ..., Hotel Indigo, this year and are looking forward to an escalated roll-out next year. Our brands are benefiting from the opportunities opening up in emerging markets where we are building a strong position. PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION Andrew Cosslett Chief Executive For...

  • Page 8
    ... they need us. 288 hotels 28,253 rooms Development pipeline 120 hotels www.candlewoodsuites.com Priority Club® Rewards Unleash the power of your points The world's first and largest hotel loyalty programme, Priority Club Rewards, offers members more ways to earn and redeem points than any other...

  • Page 9
    ... Share price and market capitalisation Capital structure and liquidity management Our Vision Room to be yourself Winning Ways London 2012 Celebrating diversity External recognition Ensuring health and safety Our approach Review of 2010 Reducing our environmental footprint Supporting communities...

  • Page 10
    8 IHG Annual Report and Financial Statements 2010 Business review This Business Review for the financial year ended 31 December 2010 provides a review of the business environment and strategy of InterContinental Hotels Group PLC (the Group or IHG), Key Performance Indicators, and commentaries on ...

  • Page 11
    ... strategic priorities Growing our core business in the largest markets where scale really counts, and also in key global gateway cities and resort destinations Seek opportunities to leverage our scale in new business areas Financial returns Our people Guest experience THE BOARD, SENIOR MANAGEMENT...

  • Page 12
    10 IHG Annual Report and Financial Statements 2010 Business review continued IHG continuing operating profit* by ownership type for the year ended 31 December 2010 IHG global room count by ownership type at 31 December 2010 Franchised Managed Owned and leased * Before regional and central ...

  • Page 13
    ... to 27 for more information. OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS Scale 4,437 hotels. Over 146 million room nights per annum System Fund Annual fund totalling $1.1bn Loyalty programme Priority Club Rewards, the largest in the...

  • Page 14
    ...• deal signings focused in scale markets and key gateway cities. Current status and 2010 developments • System size maintained at 647,161 rooms; • over 90% of deals signed in scale markets and key gateway cities; • re-entry into Hawaii with a Holiday Inn Resort; • opening our second Hotel...

  • Page 15
    ... loyalty programme, with enhanced member offer. 2008 2009 2010 Total gross revenue (TGR) Actual US$bn 64% 68% 68% BUSINESS REVIEW 2008 2009 2010 System contribution to revenue (reservations channels and PCR members direct) As percentage of rooms revenue THE BOARD, SENIOR MANAGEMENT...

  • Page 16
    14 IHG Annual Report and Financial Statements 2010 Business review continued Group performance Group results 12 months ended 31 December 2010 $m 2009 $m % change Revenue Americas EMEA Asia Pacific Central Operating profit Americas EMEA Asia Pacific Central Operating profit before exceptional items...

  • Page 17
    ... occur for a number of reasons such as withdrawal of financing and changes in local market conditions. GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS Hotels At 31 December 2010 Change over 2009 2010 Rooms Change over 2009 Total 319 (26) 55,598 2,707 USEFUL INFORMATION

  • Page 18
    16 IHG Annual Report and Financial Statements 2010 Business review continued The Americas Americas strategic role 2011 priorities To leverage our outstanding brand portfolio, focusing on our substantial midscale franchise sector. • Execute our strategic plans of becoming a brand-led business by...

  • Page 19
    ... Suites, achieved openings of 41 hotels (3,862 rooms). Removals of 215 hotels (26,959 rooms) were mainly from Holiday Inn and Holiday Inn Express hotels. BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES Americas pipeline Hotels At 31 December 2010 Change over 2009 2010 Rooms...

  • Page 20
    .... 2011 priorities • Execute our strategic plans of becoming a brand-led business by delivering Great Hotels Guests Love and increasing revenue share; • drive growth strategies of our portfolio of brands in agreed scale markets and key gateway cities; • build upon the success of the Holiday Inn...

  • Page 21
    ... 25 openings and 32 removals. BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES EMEA pipeline Hotels At 31 December 2010 Change over 2009 2010 Rooms Change over 2009 Analysed by brand InterContinental 24 Crowne Plaza 25 Holiday Inn 41 Holiday Inn Express 47 Staybridge Suites...

  • Page 22
    ... is to drive profitable growth in emerging key markets and cities. 2011 priorities • Execute our strategic plans of becoming a brand-led business by delivering Great Hotels Guests Love and increasing revenue share; • grow our portfolio of brands in key strategic markets, especially India...

  • Page 23
    Business review 21 OVERVIEW Asia Pacific hotel and room count Hotels At 31 December 2010 Change over 2009 2010 Rooms Change over 2009 Analysed by brand InterContinental 51 Crowne Plaza 81 Holiday Inn 104 Holiday Inn Express 30 Hotel Indigo 1 Other 18 Total 285 Analysed by ownership type ...

  • Page 24
    ... marketing, the Priority Club Rewards loyalty programme and the global reservation system. The operation of the Fund does not result in a profit or loss for the Group and consequently the revenues and expenses of the Fund are not included in the Group Income Statement. Other financial information...

  • Page 25
    ... The IHG share price closed at £12.43 on 31 December 2010, up from £8.93 on 31 December 2009. The market capitalisation of the Group at the year end was £3.6bn. Capital structure and liquidity management 2010 $m 2009 $m OVERVIEW Net debt* at 31 December Borrowings: US dollar Euro Other Cash Net...

  • Page 26
    ... Annual Report and Financial Statements 2010 Business review continued Our people IHG directly employed an average of 7,858 people worldwide during 2010 whose costs are borne by the Group. When the whole IHG estate is taken into account (including staff working in the franchised and managed hotels...

  • Page 27
    ... career. Room for you You will be rewarded and recognised for your contributions and we will value the significance of your life beyond work. OVERVIEW BUSINESS REVIEW Veronica Holiday Inn Winning Ways Strategic priorities THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES The key success...

  • Page 28
    ...to support managers in hotels and corporate offices. These include the assessment of individual potential and capability, together with clarity on expectations and business-related education. The Leaders Lounge, an online leadership development system for IHG senior managers, provides cost-effective...

  • Page 29
    ... Review and in the online Corporate Responsibility Report at www.ihgplc.com/responsibility BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES London 2012 Olympic and Paralympic Games The selection of Holiday Inn and Holiday Inn Express as the Official Hotel Services Provider...

  • Page 30
    28 IHG Annual Report and Financial Statements 2010 Business review continued Corporate responsibility Corporate responsibility (CR) is central to the way we do business. Acting responsibly creates value for our brands while helping our hotels to manage costs, drive revenue and be prepared for the ...

  • Page 31
    ...our operations worldwide. A Confidential Disclosure Channel also provides employees with a means to report any ethical concerns they may have. The Code is applicable to all employees and is available on the Company's website at www.ihgplc.com/investors under corporate governance. USEFUL INFORMATION

  • Page 32
    ...funding provided by Priority Club Rewards members who want to convert to email statements and pass the savings to a good cause. Community • Refined Community Strategy; - surveyed all owned and managed hotels to understand their current and future community activities; - at corporate level, defined...

  • Page 33
    ... key messages to the Executive Committee and the Board. Strategy: The strategy function provides a strong link to forward-looking value creation opportunities and asset protection requirements of the business. Risk Management: The risk management function focuses on driving action to support...

  • Page 34
    ... the Corporate Governance section of this Annual Report on pages 42 to 46. The Risk Working Group and the Company Secretary provide operational leadership to risk governance and appropriate access to the Board, its Committees and both the Chief Executive and the Chairman. Capital availability - the...

  • Page 35
    ...STANDARDS GUEST SAFETY STAFF SAFETY FOOD SAFETY REVIEW & REPORT MANAGE RISK WAYS OF WORKING RISK FINANCING OPERATE & CONTROL TRAINING & COMMS As a result of our holistic approach to risk, we are able to maintain and develop risk management strategies to assess and control individual types of...

  • Page 36
    ...agreements. This is an inherent risk for the hotel industry and franchise business model. Competition with other hotel companies may generally reduce the number of suitable franchise, management and investment opportunities offered to the Group and increase the bargaining position of property owners...

  • Page 37
    ... system and increased competition in reservations infrastructure The Group is exposed to inherent risks in relation to technology and systems GROUP FINANCIAL STATEMENTS The Group is exposed to the risks of the hotel industry supply and demand cycle PARENT COMPANY FINANCIAL STATEMENTS The Group...

  • Page 38
    36 IHG Annual Report and Financial Statements 2010 Business review continued The Group is exposed to the risk of litigation The Group could be at risk of litigation from many parties, including guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/...

  • Page 39
    ... Bonus Plan Long Term Incentive Plan Performance graph Total compensation Shareholding policy Policy regarding pensions Non-Executive Directors' pay Service contracts Audited information on Directors' emoluments BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL...

  • Page 40
    ...hotel operations, branding, development and franchise relations. Joined the Group as an Executive Committee member with responsibility for the Americas region in January 2009 from Global Hyatt Corporation, where he served as Head of Development, The Americas. Previously Senior Vice President, Hilton...

  • Page 41
    ...he held the position of Executive Vice President & Chief Technology Officer. Responsible for global technology, including IT systems and information management throughout the Group. Age 50. The Board of Directors and members of the Executive Committee together comprise the IHG Senior Leadership Team...

  • Page 42
    ... Company's share plans with shares purchased in the market. A number of options granted up to 2005 are yet to be exercised and will be settled with the issue of new shares. The Company has not utilised the authority given by shareholders at any of its Annual General Meetings to allot shares for cash...

  • Page 43
    ... at the Annual General Meeting. BUSINESS REVIEW Employees IHG directly employed an average of 7,858 people worldwide during 2010, whose costs are borne by the Group. When the whole IHG estate is taken into account (including staff working in the franchised and managed hotels) approximately 335...

  • Page 44
    ... and will report on the Group's compliance with the new UK Code as part of its 2011 Corporate Governance statement. In this section of the Annual Report, we continue formally to report our compliance against the provisions of the Combined Code, applicable for our 2010 financial year. However...

  • Page 45
    ... To support the principles of good corporate governance, the Board and Committee structure operates as set out below. Directors of the Company during 2010 were: OVERVIEW Date of original appointment1 Position The Board The Board's current composition of the Non-Executive Chairman, four Executive...

  • Page 46
    ... IHG Annual Report and Financial Statements 2010 Corporate governance continued The Company's Articles of Association allow the Directors to authorise conflicts and potential conflicts of interest, where appropriate. The Board has conflicts of interest as a standing agenda item at each meeting and...

  • Page 47
    ... meetings during 2010 is provided in the table below: Corporate Nomination Responsibility Committee Committee 8 n/a n/a n/a n/a n/a n/a n/a n/a n/a 8 n/a 8 n/a 2†7†8 3 8 n/a 8 n/a 8 3 OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS...

  • Page 48
    ... Annual Report and Financial Statements 2010 Corporate governance continued Disclosure Committee The Disclosure Committee, chaired by the Group's Financial Controller, and comprising the Company Secretary and other senior executives, reports to the Chief Executive, the Chief Financial Officer and...

  • Page 49
    ... scope of the annual Global Internal Audit plan, Global Internal Audit's approach to delivering assurance, its resourcing and the results of its reviews; THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES BUSINESS REVIEW OVERVIEW • oversight of the financial control self-assessment process...

  • Page 50
    ... per share (EPS)* +9.6% * Annualised. 2009 Remuneration in 2011 During 2010, the Remuneration Committee spent a significant amount of time considering more strategically relevant long-term performance measures, which also drive shareholder value. Based on this review and consultation with key...

  • Page 51
    ... who provide advice to the Committee on remuneration proposals: David Webster (Chairman of the Board) Andrew Cosslett (Chief Executive) Tracy Robbins (Executive Vice President, Human Resources & Group Operations Support) Lori Gaytan (Senior Vice President, Global Compensation & Benefits) None...

  • Page 52
    50 IHG Annual Report and Financial Statements 2010 Remuneration report continued 2. Remuneration policy and structure IHG's overall remuneration is intended to: • attract and retain high-quality executives in an environment where compensation is based on global market practice; • drive aligned ...

  • Page 53
    ... Executive Directors hold no Non-Executive Directorships of other companies. THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES 3. Base salary and benefits The salary for each Executive Director is reviewed annually and is based on both individual performance and relevant competitive market...

  • Page 54
    ... below. 50% TSR Annual Bonus for 2011 70% EBIT 30% Individual 50% Cash Performance measures Structure LTIP 2011/2013 25% Rooms 25% RevPAR 100% Shares For 2011, the maximum bonus opportunity for the Executive Directors will revert to 200% of salary. Under the financial measure, the EBIT...

  • Page 55
    ...0 31 Dec 2005 PARENT COMPANY FINANCIAL STATEMENTS 31 Dec 2006 31 Dec 2007 FTSE 100 - Total Shareholder Return Index 31 Dec 2008 Dow Jones World Hotels - Total Shareholder Return Index 31 Dec 2009 31 Dec 2010 Source: Datastream InterContinental Hotels Group PLC - Total Shareholder Return Index...

  • Page 56
    ... Company's share plans with shares purchased in the market. A number of options granted up to 2005 are yet to be exercised and will be settled with the issue of new shares. The following table shows the guideline and actual shareholdings of the Executive Directors. Actual shareholding at 31 Dec 2010...

  • Page 57
    ... InterContinental Hotels Group International Savings and Retirement Plan or other local plans. OVERVIEW 10. Non-Executive Directors' pay policy and structure BUSINESS REVIEW Non-Executive Directors are paid a fee which is approved by the Board, taking into account fees paid in other companies of...

  • Page 58
    ... as applicable to the individual's work location. This includes the cost of expatriate benefits related to Kirk Kinsell's international assignment. 3 Messrs Abrahamson and Kinsell were appointed as Directors on 1 August 2010. Base salaries, performance payments and benefits have been pro-rated from...

  • Page 59
    ...providing benefits on a defined contribution basis, with the member and the relevant company both contributing. The following table sets out the pension benefits of the Executive Directors in the final salary plans: Andrew Cosslett £ Richard Solomons £ BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT...

  • Page 60
    ... recruitment terms in 2009. Vesting each year is subject to continued service. The details are set out below: Value based on share price of Planned 1243p at vesting 31 Dec 2010 date £ Director James Abrahamson Awards held at 1 Jan 2010 Award date Market price per share at award Shares vested...

  • Page 61
    ... 2010 £ Directors Andrew Cosslett Maximum LTIP awards held at 1 Jan 2010 Award date Market price per share at award LTIP shares vested during the year Market price per share at vesting Value at vesting £ Vesting date Maximum LTIP awards held at 31 Dec 2010 BUSINESS REVIEW 2009 2010 2011...

  • Page 62
    ...closing market value share price on 31 December 2010 was 1243p and the range during the year was 887p to 1266p per share. No Director exercised options during the year; therefore there is no disclosable gain by Directors in aggregate for the year ended 31 December 2010 (2009 £437,732). This report...

  • Page 63
    ... reserves Operating leases Capital and other commitments Contingencies Related party disclosures System Fund Principal operating subsidiary undertakings THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION Holiday...

  • Page 64
    ... profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and • the Annual Report, including the Directors' report, and the Group financial statements include a fair review of the development and performance of the business and the position of the Company...

  • Page 65
    ...the part of the Corporate Governance statement relating to the Company's compliance with the nine provisions of the June 2008 Combined Code specified for our review; and • certain elements of the report to shareholders by the Board on Directors' remuneration. THE BOARD, SENIOR MANAGEMENT AND THEIR...

  • Page 66
    ...Annual Report and Financial Statements 2010 Group financial statements Group income statement 2010 Before exceptional items $m Exceptional items (note 5) $m Before exceptional items $m Exceptional items (note 5) $m 2009 For the year ended 31 December 2010 Note 2 Total $m Total $m Revenue Cost...

  • Page 67
    ... 2010 $m 2009 $m OVERVIEW Profit for the year Other comprehensive income Available-for-sale financial assets: Gains on valuation Losses reclassified to income on impairment/disposal Cash flow hedges: Losses arising during the year Reclassified to financial expenses Defined benefit pension plans...

  • Page 68
    ... Annual Report and Financial Statements 2010 Group financial statements continued Group statement of changes in equity Shares Equity Capital held by share redemption employee capital reserve share trusts $m $m $m Unrealised gains and Other losses reserves reserve $m $m Currency translation reserve...

  • Page 69
    ...Other losses reserves reserve $m $m Currency translation reserve $m Retained earnings $m IHG shareholders' equity $m Noncontrolling interest $m Total equity $m OVERVIEW At 1 January 2009 Profit for the year Other comprehensive income: Gains on valuation of availablefor-sale financial assets Losses...

  • Page 70
    68 IHG Annual Report and Financial Statements 2010 Group financial statements continued Group statement of financial position 31 December 2010 Note 2010 $m 2009 $m ASSETS Property, plant and equipment Goodwill Intangible assets Investment in associates Retirement benefit assets Other financial ...

  • Page 71
    ... position and Group statement of cash flows 69 Group statement of cash flows For the year ended 31 December 2010 2010 $m 2009 $m OVERVIEW Profit for the year Adjustments for: Net financial expenses Income tax charge/(credit) Depreciation and amortisation Impairment Other exceptional operating...

  • Page 72
    ...-based Payment: Group Cash-settled Share-based Payment Arrangements' provides guidance on accounting for inter-group cash-settled share-based payment transactions in the separate financial statements of an entity. • IFRS 5 (amendment) 'Non-current Assets Held for Sale and Discontinued Operations...

  • Page 73
    ... assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION

  • Page 74
    ...IHG Annual Report and Financial Statements 2010 Accounting policies continued Associates An associate is an entity over which the Group has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity. Associates...

  • Page 75
    ... course of business and recognised when services have been rendered. The following is a description of the composition of revenues of the Group. BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION

  • Page 76
    ... Annual Report and Financial Statements 2010 Accounting policies continued Franchise fees - received in connection with the license of the Group's brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of rooms revenue. Revenue...

  • Page 77
    ...revenues for the hotels. The Fund is used to pay for marketing, the Priority Club Rewards loyalty programme and the global reservation system. The Fund is planned to operate at breakeven with any short-term timing surplus or deficit carried in the Group statement of financial position within working...

  • Page 78
    ... functions include costs of global functions, including technology, sales and marketing, finance, human resources and corporate services; revenue arises principally from technology fee income. Central liabilities include the loyalty programme liability and the cumulative short-term System Fund...

  • Page 79
    ... BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES Americas $m EMEA $m Asia Pacific $m Central $m Group $m Other segmental information Capital expenditure (see below) Non-cash items: Onerous management contracts Depreciation and amortisation* Impairment losses Share-based payments cost 37...

  • Page 80
    78 IHG Annual Report and Financial Statements 2010 Notes to the Group financial statements continued 2. Segmental information continued Year ended 31 December 2009 Americas $m EMEA $m Asia Pacific $m Central $m Group $m Revenue Franchised Managed Owned and leased Central Total revenue* 437 110 ...

  • Page 81
    ... disclosed when it represents 10% or more of total revenue. 31 December 2010 $m 31 December 2009 $m PARENT COMPANY FINANCIAL STATEMENTS Non-current assets United Kingdom United States France People's Republic of China (including Hong Kong) Rest of World Total 366 726 344 335 320 2,091 389 805...

  • Page 82
    ... above employees are borne by IHG. In addition, the Group employs 4,489 (2009 4,561) people who work in managed hotels or directly on behalf of the System Fund and whose costs of $282m (2009 $267m) are borne by those hotels or by the Fund. 2010 $m 2009 $m Directors' emoluments Base salaries, fees...

  • Page 83
    ... to the Group financial statements 81 5. Exceptional items Note 2010 $m 2009 $m OVERVIEW Continuing operations Exceptional operating items Cost of sales: Onerous management contracts Administrative expenses: Holiday Inn brand relaunch Reorganisation and related costs Enhanced pension transfer...

  • Page 84
    ... is $2m (2009 $2m) payable to the Priority Club Rewards loyalty programme relating to interest on the accumulated balance of cash received in advance of the redemption of points awarded. 7. Tax Note 2010 $m 2009 $m Income tax UK corporation tax at 28% (2009 28%): Current period Adjustments in...

  • Page 85
    ...tax disputes, litigation or tax planning activities are subject to internal risk review and management approval procedures. GROUP FINANCIAL STATEMENTS 8. Dividends paid and proposed 2010 cents per share 2009 cents per share 2010 $m 2009 $m PARENT COMPANY FINANCIAL STATEMENTS Paid during the year...

  • Page 86
    84 IHG Annual Report and Financial Statements 2010 Notes to the Group financial statements continued 9. Earnings per ordinary share Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders by the weighted average number of ordinary shares...

  • Page 87
    ... 1,836 1,684 BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS The impairment charge in 2010 arose in respect of one hotel in the Americas following a re-assessment of its recoverable amount, based on value in use. Estimated future cash flows were...

  • Page 88
    ... of the write-down discounted at a pre-tax rate of 12.5%. The valuation adjustments were included within impairment on the face of the Group income statement. 2010 $m 2009 $m Consideration Current year disposals: Cash consideration, net of costs paid Management contract value Net assets disposed of...

  • Page 89
    ... Goodwill has been allocated to cash-generating units (CGUs) for impairment testing as follows: Cost 2010 $m 2009 $m 2010 $m Net book value 2009 $m THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES Asia Australasia franchised and managed operations Americas managed operations 92 141 233 82...

  • Page 90
    ...statement. The weighted average remaining amortisation period for management contracts is 21 years (2009 22 years). 14. Investment in associates The Group holds five investments (2009 five) accounted for as associates. The following table summarises the financial information of the associates: 2010...

  • Page 91
    ... assets 2010 $m 2009 $m OVERVIEW Non-current Equity securities available-for-sale Other Current Equity securities available-for-sale 87 48 135 - 66 64 130 5 BUSINESS REVIEW Available-for-sale financial assets, which are included in the Group statement of financial position at fair value...

  • Page 92
    ...on payment terms of up to 30 days. The fair value of trade and other receivables approximates their carrying value. The maximum exposure to credit risk for trade and other receivables, excluding prepayments, at the end of the reporting period by geographic region is: 2010 $m 2009 $m Americas Europe...

  • Page 93
    ... does not operate as a profit centre. The treasury function seeks to reduce the financial risk of the Group and manages liquidity to meet all foreseeable cash needs. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps...

  • Page 94
    ...December 2010 (2009 $1,241m). The structure is managed to maintain an investment grade credit rating, to provide ongoing returns to shareholders and to service debt obligations, whilst maintaining maximum operational flexibility. A key characteristic of IHG's managed and franchised business model is...

  • Page 95
    ... or loss in the same periods that the cash flows are expected to occur. Credit risk The carrying amount of financial assets represents the maximum exposure to credit risk. 2010 $m 2009 $m PARENT COMPANY FINANCIAL STATEMENTS Equity securities available-for-sale Loans and receivables: Cash and cash...

  • Page 96
    ...deposits. Equity securities available-for-sale and derivatives are held in the Group statement of financial position at fair value as set out in notes 15 and 23. The fair value of other financial assets approximates book value based on prevailing market rates. The fair value of borrowings, excluding...

  • Page 97
    ... the 99-year lease on the InterContinental Boston, are payable as follows: 2010 Minimum lease payments $m Present value of payments $m Minimum lease payments $m 2009 Present value of payments $m PARENT COMPANY FINANCIAL STATEMENTS Less than one year Between one and five years More than five years...

  • Page 98
    ... recorded at their fair values, estimated using discounted future cash flows taking into consideration interest and exchange rates prevailing on the last day of the reporting period. Currency swaps At 31 December 2010, the Group held currency swaps with a principal of $415m (2009 $415m). These swaps...

  • Page 99
    ... to manage US dollar surplus cash and reduce euro and Hong Kong dollar borrowings whilst maintaining operational flexibility. The foreign exchange swaps have been designated as net investment hedges. OVERVIEW BUSINESS REVIEW 24. Net debt 2010 $m 2009 restated* $m Cash and cash equivalents Loans...

  • Page 100
    ... the Group income statement, in administrative expenses, are: Pension plans UK 2010 $m 2009 $m 2010 $m US and other 2009 $m Post-employment benefits 2010 $m 2009 $m 2010 $m Total 2009 $m Current service cost Interest cost on benefit obligation Expected return on plan assets Operating profit before...

  • Page 101
    ... recognised in the Group statement of financial position are: Pension plans UK 2010 $m 2009 $m 2010 $m US and other 2009 $m Post-employment benefits 2010 $m 2009 $m 2010 $m Total 2009 $m OVERVIEW Retirement benefit assets Fair value of plan assets Present value of benefit obligations Surplus in...

  • Page 102
    ... 58 48 678 565 113 678 Pension plans UK US and other 2010 $m 2009 $m Post-employment benefits 2010 $m 2009 $m 2010 $m Total 2009 $m Movement in plan assets Fair value of plan assets at 1 January Company contributions Members' contributions Benefits paid Enhanced pension transfer Expected return on...

  • Page 103
    ... are: 2010 Long-term rate of return expected % Long-term rate of return expected % 2009 OVERVIEW Value $m Value $m UK pension plans Liability matching investment funds Equities Bonds Hedge funds Cash Other Total market value of assets US pension plans Equities Fixed income Total market value of...

  • Page 104
    ... Report and Financial Statements 2010 Notes to the Group financial statements continued 26. Deferred tax Property, plant and equipment $m Deferred gains on loan notes $m Employee benefits $m Other short-term Intangible temporary assets differences $m $m Losses $m Total $m At 1 January 2009...

  • Page 105
    ...) such options outstanding at prices ranging from 308.5p to 434.2p. The latest date that any options may be exercised is 3 October 2012. OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION

  • Page 106
    ... Plan Number of shares awarded in 2010 2,602,773 The Group uses separate option pricing models and assumptions depending on the plan. The following tables set forth information about options granted in 2010 and 2009: Long Term Incentive Plan 2010 Valuation model Weighted average share price...

  • Page 107
    ...1.3 BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES The above awards do not vest until the performance and service conditions have been met. Sharesave Plan Number of shares thousands Range of option prices pence Weighted average option price pence Number of shares thousands...

  • Page 108
    ... at the Annual General Meeting on 29 May 2009 amending the Articles of Association in line with the Companies Act 2006, from 1 October 2009 the Company no longer has an authorised share capital. Number of shares millions Nominal value $m Share premium $m Equity share capital $m Allotted, called up...

  • Page 109
    ...Board and Executive Committee. 2010 $m 2009 $m PARENT COMPANY FINANCIAL STATEMENTS Total compensation of key management personnel Short-term employment benefits Post-employment benefits Termination benefits Equity compensation benefits 13.6 0.6 - 9.4 23.6 9.8 0.6 0.8 9.5 20.7 USEFUL INFORMATION...

  • Page 110
    ... policies set out on page 75 of the financial statements. The following information is relevant to the operation of the Fund: 2010 $m 2009 $m Income:* Assessment fees and contributions received from hotels Proceeds from sale of Priority Club Rewards points Key elements of expenditure:* Marketing...

  • Page 111
    ... 1 2 3 4 5 6 7 8 BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT AND THEIR RESPONSIBILITIES 113 114 Statement of Directors' responsibilities Independent auditor's report to the members GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS USEFUL INFORMATION Staybridge Suites Newcastle, UK

  • Page 112
    ... one year Net assets Capital and reserves Called up share capital Share premium account Capital redemption reserve Share-based payment reserve Profit and loss account Equity shareholders' funds Signed on behalf of the Board Richard Solomons 14 February 2011 3 4 5 2,915 27 (2,147) (2,120) 795 (248...

  • Page 113
    ...2. Directors 2010 2009 Average number of Non-Executive Directors 7 2010 £m 6 2009 £m GROUP FINANCIAL STATEMENTS Remuneration costs 1 1 Detailed information on the emoluments, pensions, option holdings and shareholdings for each Non-Executive Director is shown in the Remuneration Report on...

  • Page 114
    ... 2010 Option exercise price per ordinary share (pence) Final exercise date * The weighted average option price was 478.6p for shares exercised under the Executive Share Option Plan. 5,870 (2,497) (82) 3,291 308.5-619.8 4 April 2015 The authority given to the Company at the Annual General Meeting...

  • Page 115
    Notes to the parent company financial statements and Statement of Directors' responsibilities 113 8. Reconciliation of movements in shareholders' funds 2010 £m 2009 £m OVERVIEW Earnings available for shareholders Dividends Issue of ordinary shares Share-based payments capital contribution Net ...

  • Page 116
    ... financial statements of InterContinental Hotels Group PLC for the year ended 31 December 2010 which comprise the parent company balance sheet and the related notes 1 to 10. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting...

  • Page 117
    ... and Financial Statements 2010 and some analyses of our share ownership at the end of 2010. We also provide a range of information designed to be helpful to shareholders and contact details for the Company and for a number of service providers. OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT...

  • Page 118
    ...average daily rate). number of rooms franchised, managed, owned or leased by IHG. revenue generated from the sale of room nights. rooms revenue that a franchisee pays to the brand owner for use of the brand name. a company over which the Group exercises control. the number of hotels/rooms franchised...

  • Page 119
    ... GROUP FINANCIAL STATEMENTS Shareholder profile as at 31 December 2010 by geographical location Percentage of issued share capital1 Country/Jurisdiction England and Wales Rest of Europe US (including ADRs) Rest of World Total 55.70 11.10 29.00 4.20 100 PARENT COMPANY FINANCIAL STATEMENTS...

  • Page 120
    ... Company's website www.ihgplc.com/investors under shareholder centre/tax information. Corporate Responsibility Report IHG has published an online Corporate Responsibility Report for 2010 covering progress on a range of environmental, social and community issues. This is available on our corporate...

  • Page 121
    ... 171 690 (calls charged at 75p per minute from a BT landline). Further details of the share price may be found on the Company's website www.ihgplc.com/investors under share price. Share price 2010: InterContinental Hotels Group PLC v FTSE 100 1,300 1,200 1,100 OVERVIEW BUSINESS REVIEW 1,000 (pence...

  • Page 122
    ... Report and Financial Statements 2010 Contacts Registered office Broadwater Park Denham Buckinghamshire UB9 5HR Telephone +44 (0) 1895 512 000 Fax +44 (0) 1895 512 101 www.ihg.com For general information about the Group's business please contact the Corporate Affairs department at the above address...

  • Page 123
    ... benefits under its pension plans. The main factors that could affect the business and financial results are described in the Business review of the Annual Report and Financial Statements 2010 and also in the Company's Annual Report on Form 20-F. OVERVIEW BUSINESS REVIEW THE BOARD, SENIOR MANAGEMENT...

  • Page 124
    InterContinental Hotels Group PLC Broadwater Park, Denham Buckinghamshire UB9 5HR United Kingdom Telephone +44 (0) 1895 512 000 Fax +44 (0) 1895 512 101 make a booking at www.ihg.com