“2008 was a good year for IHG. We grew both sales and profits,* outperforming the industry in all our major markets, and we have been preparing the business for a tougher environment in 2009.”
Dear shareholder
Performance
Our continuing revenue increased 5 per cent to $1.9 billion, with continuing operating profit before exceptional items of $535 million, up 13 per cent. Adjusted continuing earnings per share increased 26 per cent from 93.8 cents to 117.8 cents. We had a $132 million exceptional charge in the year. This consisted of $35 million in relation to the Holiday Inn relaunch; $19 million of cost savings-related severance charges; $96 million of non-cash asset impairments, reflecting the poorer trading environment expected in 2009; and other items including gains on asset sales, which netted to an $18 million credit.
The Board is recommending that the final dividend for 2008 is maintained at 29.2 cents per share, taking the full-year dividend to 41.4 cents per share, up 2 per cent on 2007. This converts to a sterling full-year dividend of 26.6 pence, up 29 per cent over 2007.
Reporting currency
We changed the reporting currency of our Group accounts from sterling to US dollars with our 2008 half-year results. This means we can reflect better the Group’s profile of revenues and operating profits which are largely US dollar-based. Dividends are now determined in US dollars and converted into sterling immediately before announcement.
Board and executive committee
Stevan Porter 1954–2008
We were all deeply saddened by the loss of Steve Porter, a Board member and President of the Americas, who passed away in August 2008 after a short illness. Under Steve’s inspired leadership the Americas region has been established as a dominant force. He is greatly missed.
We must thank Richard Solomons, Finance Director, for taking on the additional role of leading the Americas region when Steve became seriously ill in July. Richard did an outstanding job, ensuring a smooth transition to Jim Abrahamson, who was appointed as our new President of the Americas in January this year. Jim joined IHG from Global Hyatt Corporation, where he was Head of Development, The Americas. Two of our Non-Executive Directors, Sir David Prosser and Robert Larson, retired from the Board in May and December 2008, respectively. I thank them for their excellent service and contribution. George Turner became Company Secretary in January 2009, taking over from Richard Winter who retires in April 2009. I thank Richard for his service over the past 15 years and wish him well for the future.
Financial position and shareholder returns
We continue with our prudent approach to managing our balance sheet. We successfully refinanced our debt facilities in May 2008, and have lowered our overall net debt position by $400 million to $1.3 billion. During the year, we continued with our existing share buyback programme, taking the total funds returned since March 2004 to more than £3.5 billion. We have deferred the remaining £30 million of the buyback programme in order to preserve cash and maintain the strength of our balance sheet.
Outlook
Our solid performance in 2008 can be attributed to the exceptional efforts of all our people. Trading will undoubtedly be tough in 2009, but our strong balance sheet, resilient business model, great brands and excellent management team, led by Andy Cosslett, give me continued confidence in the future for the Group.
David Webster
Chairman
* Before exceptional items.
