Holiday Inn 2013 Annual Report Download - page 166

History and developments
The Company was incorporated and registered in England and
Wales with registered number 5134420 on 21 May 2004 as a limited
company under the Companies Act 1985 with the name Hackremco
(No. 2154) Limited. In 2004/05, as part of a scheme of arrangement
to facilitate the return of capital to shareholders, the following
structural changes were made to the Group: (i) on 24 March
2005 Hackremco (No. 2154) Limited changed its name to
New InterContinental Hotels Group Limited; (ii) on 27 April 2005
New InterContinental Hotels Group Limited re-registered as a public
limited company and changed its name to New InterContinental
Hotels Group PLC; and (iii) on 27 June 2005 New InterContinental
Hotels Group PLC changed its name to InterContinental Hotels
Group PLC and became holding company of the Group.
The Group, formerly known as Bass and, more recently,
SixContinents, was historically a conglomerate operating as,
among other things, a brewer, soft drinks manufacturer, hotelier,
leisure operator and restaurant, pub and bar owner. In the last
several years, the Group has undergone a major transformation
inits operations and organisation, as a result of the separation
(asdiscussed below) and a number of significant disposals during
this period, which has narrowed the scope of its business.
On 15 April 2003, following shareholder and regulatory approval,
SixContinents PLC (as it then was) separated into two new listed
groups, InterContinental Hotels Group PLC (as it then was)
comprising the hotels and soft drinks businesses and Mitchells
& Butlers plc comprising a retail and standard commercial
property developmentsbusiness.
The Group disposed of its interests in the soft drinks business
by way of an initial public offering of Britvic (Britannia Soft
Drinks Limited for the period up to 18 November 2005, and
thereafter, Britannia SD Holdings Limited (renamed Britvic plc
on 21 November 2005), which became the holding company of
the Britvic Group on 18November 2005), a manufacturer and
distributor of soft drinks in the UK, in December 2005.
Following separation, the Group has undertaken an asset-disposal
programme, realising, by the end of 2013, proceeds of $6 billion
from the sale of 186 hotels. Of these 186 hotels, 167 remained in the
IHG System through either franchise or management agreements.
The asset-disposal programme has significantly reduced the capital
requirements of the Group whilst largely retaining the hotels in the
IHG System.
A small number of hotels have been sold since the end of 2012,
the most significant of which are set out below.
Recent acquisitions and divestitures
• The Group agreed to dispose of the InterContinental Mark
Hopkins San Francisco for $120 million in cash in February 2014;
• the Group announced its agreement to dispose of 80 per cent
of its interest in the InterContinental New York Barclay for
$240 million on 19 December 2013. TheGroup will continue to
hold the remaining 20 per cent interest by wayof a joint venture;
• the Group disposed of the InterContinental London Park Lane on
1 May 2013 for £301.5 million ($469 million);
• the Group also divested a number of investments for total
proceeds of $41 million in 2013; and
• the Group acquired three existing hotels, which are being
converted to EVEN Hotels.
Capital expenditure
• Capital expenditure in 2013 totalled $269 million compared with
$133 million in 2012 and $194 million in 2011;
• at 31 December 2013 capital committed, being contracts placed
for expenditure on property, plant and equipment and intangible
assets not provided for in the Group Financial Statements,
totalled $83 million; and
• the Group has also committed to invest up to $61 million in
three joint venture arrangements, of which $41 million had
been spent at 31 December 2013.
Risk Factors
The Group is subject to a variety of inherent risks which may have an adverse impact on the business operations, financial condition,
turnover, profits, brands and reputation. The following section describes the main risks that could materially affect the Group’s
business. The risks below are not the only ones that the Group faces. Some risks are not yet known to the Company and some that
the Company does not currently believe to be material could later turn out to be material.
The risk factors below are listed in accordance with the strategic, tactical and operational risks to ensure we’ve thought
holistically about the possible risks that could impact the Group. These should be considered in connection with any financial
and forward-looking information in this Annual Report and Form 20-F and the cautionary statements regarding forward-looking
statements contained on page 188.
Strategic risks
The Group is exposed to the risks of political and economic developments
The Group is exposed to political, economic and financial market developments such as recession, inflation and availability of credit
and currency fluctuations that could lower revenues and reduce income. The current outlook for 2014 may worsen due to escalating
impacts of the US national debt, slowing pace of growth and political stability in China, uncertainty in some eurozone countries and
unrest in the Middle East. The interconnected nature of economies suggests any of these or other events could trigger a recession
which reduces leisure and business travel to and from affected countries and adversely affects room rates and/or occupancy levels
and other income-generating activities. This may result in deterioration of results of operations and potentially reduce the value of
properties in affected economies. The owners or potential owners of hotels franchised or managed by the Group face similar risks
which could adversely impact their solvency and the Group’s ability to retain and secure franchise or management agreements.
Specifically, the Group is most exposed to the US market and, accordingly, is particularly susceptible to adverse changes in the US
economy as well as the US dollar. In addition to trading conditions, the economic outlook also affects the availability of capital to
current and potential owners, which could impact existing operations and health of the pipeline.
164 IHG Annual Report and Form 20-F 2013
Group information