Annual report and summary financial statements 2006 

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Useful information

Glossary

Adjusted

excluding the effect of special items, gain/loss on disposal of assets and any relevant tax.

Average daily rate

room revenue divided by the number of room nights sold. Also known as average room rate.

Basic earnings per share

profit available for IHG equity holders divided by the weighted average number of ordinary shares in issue during the year.

Capital expenditure

cash expended on purchases of property, plant and equipment and purchases of intangible assets, associates and other financial assets.

Cash-generating unit

a portfolio of similar assets that are subject to the same economic and commercial influences.

Comparable RevPAR

a comparison for a grouping of hotels that have traded in all months in both financial years being compared. Principally excludes new hotels, hotels closed for major refurbishment and hotels sold in either of the two years.

Contingent liability

a liability that is contingent upon the occurrence of one or more uncertain future events.

Continuing operations

operations not classified as discontinued and including acquisitions made during the year.

Currency swap

an exchange of a deposit and a borrowing, each denominated in a different currency, for an agreed period of time.

Derivatives

a financial instrument used to reduce risk, the price of which is derived from an underlying asset, index or rate.

Discontinued operations

operations that have been sold and assets classified as held for sale when the results relate to a separate line of business, geographical area of operations, or where there is a co-ordinated plan to dispose of a separate line of business or geographical area of operations.

Extended-stay hotel

a hotel designed for guests staying for periods of time longer than a few nights and tending to have a higher proportion of suites than normal hotels (e.g. Staybridge Suites, Candlewood Suites).

Franchisee

operator who uses a brand under licence from the brand owner (e.g. IHG).

Franchisor

brand owner (e.g. IHG) who licenses brands for use by operators.

Gearing

net debt expressed as a percentage of IHG shareholders’ equity.

Goodwill

the difference between the consideration given for a business and the total of the fair values of the separable assets and liabilities comprising that business.

Hedging

the reduction of risk, normally in relation to foreign currency or interest rate movements, by making offsetting commitments.

Holidex fees

charges to hotels under management and franchise agreements for the use of Holidex, IHG’s proprietory reservation system.

IFRS

International Financial Reporting Standards.

Interest rate swap

an agreement to exchange fixed for floating interest rate streams (or vice versa) on a notional principal.

Management contract

a contract to operate a hotel on behalf of the hotel owner.

Market capitalisation

the value attributed to a listed company by multiplying its share price by the number of shares in issue.

Midscale hotel

a hotel in the three/four star category (e.g. Holiday Inn, Holiday Inn Express).

Net debt

borrowings less cash and cash equivalents.

Occupancy rate

rooms occupied by hotel guests, expressed as a percentage of rooms that are available.

Operating margin

operating profit before other operating income and expenses expressed as a percentage of revenue.

Pipeline

signed/executed agreements, including franchises and management contracts, for hotels which will enter the Group’s system at a future date.

Revenue per available room (RevPAR)

room revenue divided by the number of room nights that are available (can be mathematically derived from occupancy rate multiplied by average daily rate).

Room count

number of rooms owned, managed or franchised by IHG.

Room revenue

revenue generated from the sale of room nights.

Royalty rate

the percentage of room revenue that a franchisee pays to the brand owner for use of the brand name.

Special items

items which are disclosed separately because of their size or incidence.

Subsidiary undertaking

a company in which the Group holds an equity stake and over which it exercises control.

System size

the number of hotels/rooms owned, managed or franchised by IHG.

Total gross revenue

total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels.

Total shareholder return (TSR)

the theoretical growth in value of a shareholding over a period, by reference to the beginning and ending share price, and assuming that gross dividends, including special dividends, are reinvested to purchase additional units of the equity.

UK GAAP

United Kingdom generally accepted accounting practice.

Upscale hotel

a four/five star full-service hotel characterised by superior service (e.g. InterContinental, Crowne Plaza).

Weighted average exchange rate

the average of the monthly exchange rates, weighted by reference to monthly operating profit.

Working capital

the sum of inventories, receivables and payables of a trading nature, excluding financing items such as corporate taxation.

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