Holiday Inn 2004 Annual Report Download - page 3

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On 15 April 2003, following shareholder and regulatory approval, Six Continents
PLC separated into two new groups, InterContinental Hotels Group PLC (IHG)
comprising the Hotels and Soft Drinks businesses, and Mitchells & Butlers plc
(MAB), comprising the Retail and Standard Commercial Property Development
businesses (the Separation).
This operating and financial review provides a commentary on the performance
of the Hotels and Soft Drinks businesses of InterContinental Hotels Group PLC
(the Group) for the financial year ended 31 December 2004. To assist
shareholders, unaudited pro forma comparatives for the 12 months ended
31 December 2003 are provided.
Soft Drinks turnover increased by 4.7% despite the summer of
2004 experiencing poorer weather than the very favourable
summer conditions of 2003. This growth was boosted by 2004
including an extra week’s trading, 2004 being a 53 week financial
year for Soft Drinks.
IHG operating profit before exceptional items was £331m
compared with £283m for the 12 months ended 31 December
2003. Hotels operating profit increased by 25.5% to £251m while
Soft Drinks fell by £3m to £80m.
Exceptional items after tax netted to income of £68m and included
an operating exceptional charge before tax of £19m and a non-
operating exceptional charge before tax of £80m. Further details
are given in Exceptional Items below.
Basic earnings per share for the 12 months ended 31 December
2004 was 42.1p (2.6p for the 15 months ended 31 December
2003). Adjusted earnings per share, after excluding the distorting
effect of exceptional items, was 32.5p for the year, compared with
20.8p pro forma adjusted earnings per share for the 12 months
ended 31 December 2003. Dividends for 2004 totalled 86.3p
including a 72.0p special dividend paid in December 2004.
In addition to the special dividend, in the 12 months ended
31 December 2004, IHG repurchased 46.4 million shares
returning a further £255m to shareholders.
REPORTING BASIS
In 2003, in order to bring its financial reporting timetable into line
with other major European and US hotel companies, IHG changed
its financial year end from 30 September to 31 December. The
statutory financial period covered by these financial statements
is therefore the 12 months ended 31 December 2004, with
comparatives for the 15 months ended 31 December 2003. The
comparatives include the results of MAB up until the Separation.
GROUP RESULTS
IHG turnover for the 12 months ended 31 December 2004
was £2,204m compared with £2,161m for the 12 months ended
31 December 2003.
In the Hotels business all regions reported revenue and profit
growth in US dollar terms as the hotel industry showed some
recovery from the impact of global insecurity, Severe Acute
Respiratory Syndrome (SARS) and depressed travel experienced
in 2003. The relative strength of sterling against the US dollar
(weighted average US dollar exchange rate to sterling for the year
was $1.82 against $1.63 for 2003) converted a 13.0% growth in
Hotels turnover expressed in US dollars to a 0.7% growth when
expressed in sterling. If currency exchange rates had been the
same in 2004 as in the 12 months ended 31 December 2003,
Hotels turnover growth would have been 5.9%.
InterContinental Hotels Group 2004 1
Operating and financial review