Holiday Inn 2012 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 of the 2012 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 144

  • 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
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

4 IHG Annual Report and Financial Statements 2012
In my first few months after taking over
from David Webster, I am delighted to
share my perspective and impressions
of our Company. Since I joined in January,
I have spent much of my time getting to
know the business better – meeting with
employees, shareholders, owners and
guests and visiting our operations around
the world.
Several things have struck me as a
newcomer to IHG. This is a business
with a clear strategy and a consistent
track record of implementation
throughout its 10-year history. There is
a focus across the whole organisation on
creating Brands that are preferred by both
our guests and owners, and at the heart of
this is the People. I have been particularly
impressed by the skills, commitment and
energy of all those I’ve met, who either
work in IHG’s corporate offices or in one
of IHG’s hotels, and on behalf of the Board,
I would like to thank all our People for
their focus, dedication and commitment.
Lastly, the integral role that Responsible
Business practices play in IHG’s strategy
is underpinned by a strong set of values
and unique culture seen across the
business.
Performance
IHG’s strong performance in 2012
demonstrates the effectiveness of
our strategy, despite the challenging
economic environment. We converted
4 per cent revenue growth into operating
profit growth of 10 per cent (before
exceptional items) and adjusted earnings
per share growth of 9 per cent.
We continue our long track record of
dividend growth for shareholders, with
the Board recommending a 10 per cent
increase to the final dividend for 2012,
taking it to 43.0 cents (27.7 pence). This
will give a full-year dividend of 64.0 cents
per share up 16 per cent on 2011. This
converts to a sterling full-year dividend
of 41.2 pence per share, up 19 per cent on
2011. Subject to shareholder approval, the
final dividend will be paid on 31 May 2013.
Financial position and
shareholder returns
We remain committed to an efficient
balance sheet while maintaining an
investment grade credit rating
through the cycle. During the year we
announced a $1 billion return of funds
to shareholders, split between a
$0.5 billion special dividend with share
consolidation and a $0.5 billion share
buyback programme. The special dividend
was paid on 22 October 2012 and $107
million of shares had been bought back
by year end. Once the share buyback
programme is complete, total funds
returned to shareholders since the 2003
demerger, excluding ordinary dividends,
will amount to $7.6 billion.
Year-end net debt of $1,074 million was up
$536 million on 2011, reflecting this return
of funds to shareholders. Nevertheless,
the business continues to be strongly
cash generative, with free cash flow of
$463 million, up 10 per cent on 2011. In
November 2012 we issued a £400 million
10-year bond, diversifying our sources
of funding and extending our average
debt maturity.
Board
David Webster retired at the end of 2012,
having served on IHG’s Board since the
original listing of the Company in April
2003 and as Chairman since January
2004. During this period IHG has executed
the move to an asset-light business model,
grown net room count by over 25 per cent,
whilst successfully completing the
relaunch of the Holiday Inn brand. We
thank him for his invaluable contribution
and wish him a happy and fulfilling
retirement.
Graham Allan left the Board on 15 June 2012,
following his appointment as Chief Operating
Officer of Dairy Farm International Holdings
Limited based in Hong Kong. I would like
to thank Graham for his contributions as
an independent Non-Executive Director
and as a member of the Audit, Nomination
and Corporate Responsibility Committees.
We are in the process of recruiting a new
Non-Executive Director to replace Graham.
Dale Morrison, who has been a
Non-Executive Director since June 2011,
was appointed to the Corporate
Responsibility Committee in November
2012. This adds to his existing roles on
the Audit and Nomination Committees.
Chairman’s Statement
I feel privileged to be the Chairman of IHG, a company with
an impressive history and successful track record of driving
superior returns for shareholders. My fellow Board members
and I look forward to guiding IHG to even greater achievements
as we focus on brand building and the strategic global
expansion of the business in the near term and future.